JAKARTA (RAMBUENERGY.com) – Australian-based oil and gas company Cue Energy Resources Ltd (ASX:CUE) said that as part of its strategy of delivering disciplined growth through attractive opportunities in Indonesia, and subject to final government approvals, the Sampang Joint Venture has approved the Sampang Sustainable Project (SSP), offshore East Java.
Sampang PSC Joint Venture approves proceeding with the Sampang Sustainability Project (SSP) to extend field life by at least 2 years to 2020 or beyond. The project benefits include reduction in production costs by approximately 50 percent per annum, a 2P reserve increase of 37% (~17bcf), and margin increase of 34 percent.
The Sampang Joint Venture partners are Santos 45 percent which is also the operator, Singapore Petroleum Company 40 percent and Cue Energy 15 percent.
This initiative will involve switching the Oyong and Wortel Fields to a gas only production system and ceasing uneconomic oil production. Operator production forecasts based on implementation of the SSP show an increase of 2P reserves of ~17 billion cubic feet (bcf) associated with the extended life of the Wortel and Oyong fields, Cue Energy said in a statement.
The current project schedule estimates switching to gas only operations in September 2017 allowing both the Floating Production Storage Offloading vessel, Seagood, and the Floating Storage Offloading vessel, Surya Putra Jaya, to be decommissioned in the fourth quarter of 2017.
This should reduce total annual production costs from circa US$50 million in 2016 to about US$22 million by 2018. The extension of low cost gas production from Sampang will provide Cue with continued, stable, positive non-oil linked cash flows which protect the Company from low oil prices, the company said in a statement signed by its Executive Chairman Grant Worner.
Near Term Exploration Potential
It said the existing reservoirs for the Oyong and Wortel Fields are in structural and structural or stratigraphic trap closures in the Mundu Formation.
The joint venture has reviewed other Mundu Formation prospects, including the Paus prospect, which is believed to be a low risk prospect and potentially a drilling candidate in 2018.
The joint venture is yet to make a its decision to proceed with this near term exploration potential but if drilling is approved and is successful, Paus could be tied back through the Oyong facilities and further extend the gas production from the Sampang PSC for many years. Cue will keep the market informed of any developments. (*)