The analysis was delivered yesterday afternoon as part of Cue's supplementary target's statement, in which it again reiterated its advice that its shareholders reject the NZOG offer.
According to the expert, the offer values Cue at $70 million through its bid of 10c per share, 15% below the bottom end of its own valuation of 11.7-15.2c per share, or $82-106 million.
Grant Samuel's assessment of Cue did however concede that the nature of its assets meant the company's value could change materially, in the short term.
"A substantial proportion of Cue Energy's value is contributed by its cash holding (approximately 5c per share based on Cue Energy's cash holding as at 31 December 2014). However, a significant proportion of this cash is expected to be spent on exploration," the independent reviewer said.
"Exploration outcomes are intrinsically uncertain. Moreover, the value of
Cue Energy's Maari interest is subject to uncertainty, given a lack of clarity about its operational prospects and its exposure to volatile oil prices. As a result, the value of Cue Energy could change, perhaps materially, in the short to medium term."
Cue's cash holding at the close of 2014 was about $US35 million ($A45.07 million), representing about 5c per share, with about $22 million of that earmarked for exploration over the coming three years.
The junior's 5% Maari interest is the other major asset in its portfolio, but also carries some inherent risks.
The field has been subject to a number of initiatives designed to increased production and field life, however, Grant Samuel said these yielded generally disappointing results, characterised by cost overruns, delays and below expected well performance.
Oil and gas advisory firm RISC has also assessed considerable uncertainty in relation to the production performance of existing and planned wells at Maari.
Another question for shareholders to consider, according to Grant Samuel, is whether or not they could bank on a competing offer for control of Cue.
At the time of the supplementary report, NZOG had upped its interest in the company marginally from 19.99% to 20.1%.
According to Grant Samuel the interest, "while not an absolute obstacle to a third party proposal, does significantly reduce shareholders' prospects of realising value through some alternative change of control transaction".
The independent expert also pointed out, however, that Cue's next three biggest shareholders collectively hold about 36% of the company and could therefore deliver control to an alternative bidder.
Cue has previously said that it sees the NZOG bid as an opportunistic undervaluing of the company in the low oil price environment.
