Release: Cue Energy Resources Ltd.: Jeruk-1 drilling report

Santos Ltd, the operator for the Sampang PSC in offshore East Java, has announced that the Jeruk-1 well began drilling on 21 November 2003 and at 6.00 am on 27 November 2003 was at a depth of 948.5 metres and preparing to run blow out preventers after having set surface casing. Jeruk-1 is located 35km WSW of the Oyong field and 40km SE of Surabaya.

The Jeruk-1 well is programmed to a planned total depth of 5,172 metres to evaluate a carbonate objective and is expected to take around 50 days to reach total depth.

Santos Ltd is drilling the well on a sole-risk basis.

Both Cue and Elpaso have declined to join the sole-risk.

Cue has declined to join the sole-risk on the basis that, in its opinion, the reward in a most likely success case does not warrant, the very considerable well cost (Cue share approximately A$2 million on a dry hole basis) and the technical risk associated with both drilling the well and the viability of the potential trap.

Cue retains its rights to participate in any appraisal or development of a discovery, subject to a sole-risk premium.

Cue will again report on the well at the completion of drilling.

Participations in the Sampang PSC are: Cue Sampang Pty Ltd 15%; Santos (Sampang) Pty Ltd 45% (Operator); Coastal Indonesia Sampant Ltd (Elpaso) 40%.

Any queries regarding the announcement should be directed to the company on (03) 96297577 or email mail@cuenrg.com.au. Contact: Robert J. Coppin, Chief Executive officer. (*)