“Cue has reinstated its rights in Jeruk to give shareholders exposure to what could be a very significant oil accumulation,” the company said.
“Cue believes that the information obtained from the two Jeruk wells could indicate an oil accumulation with potential to contain in excess of 170 million barrels of recoverable oil. Further appraisal drilling, integrated with the new 3D seismic data currently being acquired, will be required to narrow the potential reserve range of the field.”
Cue’s option to reinstate its rights was triggered by Santos’ proposal to further appraise the Jeruk discovery. Santos plans to reenter the Jeruk-2 well and to further sidetrack, core and production test the well, beginning in mid May 2005.
Santos also proposes to drill four appraisal wells beginning in around October 2005, at which time 3D seismic data currently being acquired should be available, Cue said in a statement.
The additional Jeruk appraisal drilling activity will follow up encouraging results from Jeruk-1 and 2, which were drilled by Santos on a sole risk basis.
Cue's share of the Jeruk-2 sidetrack, coring and testing is expected to be about A$3 million and its share of the proposed four wells is estimated to be roughly A$14.5 million.
To reinstate its rights Cue must pay in cash a lump sum amount of about US $9 million (A$11 million), equivalent to the cost it would have incurred if it had participated in the Jeruk-1 and 2 wells. The lump sum must be paid by 29 May 2005. In addition, Cue will be required to pay a penalty out of oil production. Cue ssaid it had sufficient cash funds on hand to pay the lump sum, as well as Jeruk -2 sidetrack coring and testing costs.
“Cue views Indonesia and the Sampang PSC as a core value contributor,” the company said.
“Jeruk complements the ongoing exploration programme in the Sampang PSC where there are several remaining undrilled prospects, including Oyong lookalikes. Cue expects that at least one of these undrilled prospect wells will be drilled in the second half of 2005.
“With Oyong first production in 2005, Jeruk appraisal wells and further exploration including possible Oyong exploration look alike wells, Indonesia will deliver significant value to Cue shareholders.”
Cue shares rose three cents this morning to 22.5c at press time.
Participants in the Sampang PSC in which the Oyong field is located are Santos (Sampang) Pty Ltd 45% (operator), Cue Sampang Pty Ltd 15%, and Singapore Petroleum Company Limited 40%.
