Cue picks Sampang over Australia's Yolla field

Australian oil and gas company Cue Energy Resources Limited (Cue) has sold its 14 percent stake in the Yolla gas and condensate field offshore Tasmania, Australia, and would use the proceeds of that sale for its investment in the Sampang exploration block on the island of Madura in East Java, according to a Cue executive, A Knox.

Aside from Cue, which already controls 15 percent of the Sampang block, other investors in that venture are Australia?s largest oil and gas firm Santos Limited (45%) and Coastal Indonesia Sampang (40%). The block is planned to start production in two years.

Cue?s 15-percent interest in the Sampang exploration block had contributed to the discovery of the Oyong-1 well.

Two Oyong wells, Oyong-2 and Oyong-3, had demonstrated that a potentially economically viable field exists, the Cue's executive said in a statement on Monday.

The third well, Oyong-3, had been spudded and will further appraise the field, he added.

The Oyong-1 well alone flowed 762 barrels of 41.9 degree API oil per day accompanied by 1.22 million cubic feet of gas per day during the initial flow period.

Cue viewed that it would have faced difficulties if it had concurrently sustained the Yolla and Sampang projects because both required large investment capital.

It held that the sale of the Yolla interest was advisable and that the Sampang interest may boost greater and more immediate creation of shareholder value, the executive added.(*)