Australia's Cue to restore participation at E. Java's Jeruk wells

Australian oil firm Cue Energy Limited said Monday it had decided to reinstate its right to participate in any future development of the Jeruk wells in Sampang PSC offshore East Java.

?Cue's option to reinstate its right to participate in the development of the Jeruk discovery is triggered at the time of presentation to Cue of the formal plan of development for the field,? the company said in a statement.

Sampang Block is operated by Australian firm Santos Limited with a 45 percent working interest, while American firm El Paso (recently acquired by Singapore Petroleum Company) and Cue hold 40 percent and 15 percent, respectively.

Cue and El Paso have decided not to participate in the drilling of both the Jeruk-1 and Jeruk-2 wells, leaving Santos (Sampang) Pty Ltd. to shoulder the risks and costs by itself. Later, Santos clinched a deal with Indonesian firm PT Medco Energi Internasional Tbk for a 50:50 joint venture to explore both wells.

Santos recently announced the discovery of oil Jeruk-2 well, which flow at 7,488 barrels per day during tests.

According to the statement, under the provisions of the Joint Operating Agreement for the Sampang PSC, Cue can reinstate its full 15 percent share of production in the discovery by paying the costs of the wells and a premium of 10 times of the costs of the Jeruk -1 well and 5 times of the costs of the Jeruk -2 well at 15 percent each.

Cue also said a large 3D seismic survey over a substantial portion of the block was planned to begin in late 2004. ?The survey is designed to follow up on the Jeruk discovery and to investigate several other prospects which are candidates for 2005 exploration drilling,? Cue added. (Robert)