Operator Santos said an interval between 2417m and 2475m in the Iagifu sandstone had demonstrated hydrocarbons in the mud cuttings.
The forward plan is to drill ahead to 2540m and run wireline logs to evaluate the discovery.
The well is located approximately 10km SE of the south east Gobe field.
While encouraged by the shows, Cue CEO Bob Coppin said they needed to reserve judgement until the results were in.
Partners are Santos 31.278%, Oil Search 31.278%, Cue Energy 10.947% and Murray Petroleum 26.497%.
