Cue Energy reports Indonesian operation

The following is an edited excerpt from Australian energy firm Cue Energy Resources? quarterly report ended December 31, 2011 released on Tuesday.

Sampang PSC- Madura Strait (15% interest)
Operator: Santos

? Oyong Field
Oil production was lower in the fourth quarter due to production shutdowns associated with tying in the Wortel project Production averaged approximately 1000 bopd for the quarter (Cue share 1 5obopd) compared with the previous quarter average of 2400 bopd. The lower production resulted in no liftings and revenue in fourth quarter 2011.

Cue?s share of gas sales was 525,193 million cubic feet which generated A$1 .6 million in revenue received during the quarter.

On 8th January the COSL Boss drilling rig completed the Wortel development drilling and moved over the Oyong wellhead platform to drill the Oyong-11 infill production well.

? Wortel Field
The Wortel gas field development is progressing well. During the quarter the Wortel-3 and Wortel-4 development wells were drilled and completed with the COSL Boss jackup drilling rig. Drilling was successfully completed on 8th January. The subsea pipeline connecting the Wortel and Oyong wellhead platforms was commissioned and is ready to receive gas. The construction and precommissioning of the platform topsides was completed in the fabrication yard and transported to the site on 12th January and were successfully installed on the 14th January. Hook-up and commissioning work is 75% complete and first gas production is expected by the end of January 2012.

The combined Oyong and Wortel gas production rate is expected to be around 90 mmscf per day from the beginning of 2012. The project is expected to be completed within the USD$105.1 million budget (Cue share USD$15.8 million).

Mahakam Hilir PSC (40% interest)
Operator: Singapore Petroleum

? Naga Utara & Naga Selatan
Drilling of the first two exploration wells called Naga Utara (Northern Dragon) and Naga Selatan (Southern Dragon) began on 4 January, 2012. The most likely recoverable reserves have been estimated to be 8OBCF of gas and 20 million barrels of oil from the two prospects, respectively. At the time of writing this report the drilling rig HPS Rig #6 was drilling the 17% inch hole section to a depth of 88 feet after drilling a 12% inch pilot hole to the same depth; The pilot hole was drilled to mitigate the risk of encountering shallow gas. (end of edited excerpt)