Release: Cue Energy updates E. Java Oyong field development

The following is report of Cue Energy Resources to The Australian Stock Exchange, Wednesday, March 19, 2003.

Substantial progress has been achieved towards the development of the Oyong oil and gas field, which is located in the Sampang PSC offshore east Java, Indonesia.

Contracts have been awarded for front end engineering design, for pipeline route and platform location surveys and for an environment impact assessment study.

Negotiations are proceeding rapidly on a Gas Sale Agreement which is expected to incorporate the terms of the Heads of Agreement which was signed on 1 February 2003 between the Sampang PSC participants and PT Indonesia Power for the sale of the entire gas reserves of the field.

First gas supplies from the Oyong field are expected to begin in late 2004 at a minimum rate of 40 million cubic feet of gas per day delivered to the Indonesia Power electricity generating plant at Grati.

The field will be developed using a single centrally located platform with both oil and gas being transported to Grati in a multiphase 14 inch pipeline.

Oil and gas will be separated and processed onshore, where the gas will be delivered to Indonesia Power and the oil stored for export.

FINANCE

Cue is currently in detail discussions with potential lenders who have expressed an interest in project financing Cue's A$25 million share of the estimated approximately US$100 million gross capital cost.

BACKGROUND

Oyong was discovered in mid 2001 and has been delineated by the Oyong - 1, -2 and -3 wells. The field has a 120 metre gas column underlain by a 38 metre oil column. The gas consists of mainly methane with approximately 1% carbon dioxide and no hydrogen sulphide. The oil is approximately 41 deg API with no sulphur. The field is assessed to contain approximately 90 billion cubic feet of recoverable gas and an initial, conservative recovery of 5 million barrels of oil from the 80 million barrels of oil that are estimated to be in place.

The gas is planned to be produced from 2 centrally located production wells and the oil from 2 or 3 horizontal wells. The oil will be initially produced at moderate rates to determine reservoir performance with additional horizontal wells being drilled as required. Additional oil reserves may be produced, depending on field performance.

The Sampang PSC also contains a number of attractive undrilled prospects, one of which is assessed to have the potential to hold in excess of 2 trillion cubic feet of recoverable gas. Addition infill 2D seismic was acquired over a number of prospects in 2002 and early 2003. This data is currently being evaluated. Cue expects that the two most attractive prospects are likely to be drilled in third quarter 2003.

Participants in the Sampang PSC are:-

Cue Sampang Pty Ltd 15 percent

Santos (Sampang) Pty Ltd 45 percent (Operator)

Coastal Indonesia Sampang Ltd 40 percent

Any queries regarding the announcement should be directed to the company on (03) 96297577.