Cue reports poor reservoir quality at Mangga-1 well

Despite a good gas and oil shows, Cue Energy Limited and the operator of Sampang production sharing contract (PSC) offshore East Java, Santos Limited, declined to join Elpaso to conduct a further evaluation of the Mangga-1 prospect on a sole-risk basis.

?The zone is interpreted to have poor reservoir quality,? Cue said in a statement to the Australian Stock Exchange on Wednesday.

?Cue has declined to join the sole risk on the basis that there is a significant risk that the poorer reservoir quality in which the hydrocarbon shows have been seen limits the commercial potential of these zones and hence does not warrant the substantial cost for Cue to participate in evaluating them,? the statement said.

On Wednesday (today), the Mangga-1 well was circulating and conditioning the mud at a total depth of 1,633 meters.

Cue reported that good gas shows were encountered over a 25-meter interval at the top of the Mundu formation, which was penetrated at a depth of 1,343 meters. Meanwhile, gas and oil shows were encountered in an over pressured zone from 1,574 to 1,633 meters.

According to Cue, the further evaluation would include evaluating the possibility of an oil zone immediately beneath the top Mundu gas zone and the running of a 7-inch liner to enable evaluation of the gas and oil shows seen from 1,574 to 1,633 meters in poor reservoir quality rock. Consideration would also be given to deepening the well.

Cue has 15 percent working interest in the PSC, while Santos and Coastal Indonesia Sampang (Elpaso) hold 45 percent and 40 percent, respectively. (robert)