Weathering the oil price collapse on cue

WITH almost 70% of its revenue from non-oil linked gas sales, as well as being debt-free and cashed-up, Cue Energy Resources is in relatively good shape to take advantage of the buyer’s market for oil and gas assets if something comes across its desk it likes.
Weathering the oil price collapse on cue Weathering the oil price collapse on cue Weathering the oil price collapse on cue Weathering the oil price collapse on cue Weathering the oil price collapse on cue

Haydn Black


Cue might be regretting its decision not to hedge its US, Indonesian and New Zealand oil production in the current market, but its bottom line is substantially protected by its heavy investment in the Indonesian gas market.

Last quarter the company gained revenue of $13.92 million from sales of 76,525 barrels of oil at an average price of $US44 per barrel and one billion cubic feet of gas at an average price of $9.26/mcf.

The company ended 2015 with $29.61 million cash on hand and two wells drilling ahead.

Unfortunately the Te Kiri North-1 well, drilled onshore New Zealand, was a duster, so the company is pinning its hopes on the Naga Selatan-2 oil exploration well in the 100%-owned Mahakam Hilir PSC, Indonesia. A result there should be known by mid-February.

The only other well on the horizon could be drilled within the Mahato PSC (12.5%) in Indonesia. Planning is underway by the operator to sink one well and acquire 2D seismic in 2016-2017.

Operationally, the Maari field (5%) in NZ's offshore Taranaki Basin is producing a gross 13,500 barrels of oil per day, and Cue should increase from the net 698bopd once planned workovers of several wells are completed by operator OMV this quarter.

An upgrade to the Maari mooring system and repair to the water injection flow-line is also planned.

The Santos-operated Oyong and Wortel offshore fields in the Sampang PSC (15%) in Indonesia are producing at a total combined gross rate of 1100bopd and 75MMcfcd, with Oyong benefiting from higher gas prices.

The company and its partners are examining extending production from the fields to capture more value from the assets.

Production from the 80%-owned Pine Mills field in Texas, purchased by Cue last June, is averaging a gross 56bopd with Cue's share a net 35bopd, however, that should almost double over the quarter following initiatives to increase production and reduce costs.

The company is also considering shooting 3D over the field for the first time.

Cue is also seeking a partner to drill the 15Tcf Ironbark Mungaroo Formation prospect in the Carnarvon Basin, offshore WA.

A well is required by October 2017, with WA-359-P suspended for 12 months.

In NZ the company is seeking a similar delay over the offshore PEP54865 (20%) because it and Todd Energy have so far been unable to secure a seismic vessel for the mandatory 3D seismic shoot.

Cue also needs to decide by July 30 if it wants to proceed with the next stage of PEP51313 (14%), the large permit updip of the Maari field.

Operator OMV is considering shooting of additional 3D to reduce the geologic risk of the remaining prospects along the Matariki trend. If Cue sticks with the permit it will need to fund its share of the seismic shoot.

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