Melbourne-headquartered Cue says the September quarter highlights include the Highlands Gas Project consortium’s decision to proceed to FEED on the PNG to Queensland pipeline; and the Indonesian approval of the environmental and development plans for Oyong, with early oil development likely by third quarter 2005.

Cue believes that its substantial volumes of recoverable gas will ultimately add significant value to the company as a result of the PNG-Queensland pipeline FEED and operator Oil Search's efforts to commercialise gas with a range of initiatives such as methanol manufacture, CNG exports or gas-to-liquids developments.

At the end of the quarter, the SE Gobe field was producing at an average rate of approximately 6500 bopd, with Cue's oil production revenue being approximately US$805,614 from about 18,819 barrels.

The planned Oyong development will consist of a well head structure, with development wells will be drilled through and between the conductors.

Oil and gas will be processed on a nearby moored barge, with oil exported by shuttle tanker and gas will be sent by pipeline to the PT Indonesia electricity generating station at Grati, East Java. First gas is expected around mid-2006.

In addition, recent analysis of the Mundu formation reservoir rock indicated peak oil production rate could reach 20,000 bopd for a six-well oil development and should average 9000 bopd for the first two years.

A joint venture decision on development is expected before the end of the year. PT Indonesia Power has rights to all gas in the Oyong field.

Todd Energy holds a 10% share in Cue, which lists chief executive Richard Tweedie as chairman and exploration manager Ken Hoolihan as a director of one of New Zealand's smallest listed companies.