Cue Energy Resources Ltd (Cue) has executed a sale and purchase agreement (the transaction) to acquire interests in the Mereenie, Dingo and Palm Valley onshore gas and oil fields in the Northern Territory, Australia from Central Petroleum Limited (ASX: CPT) (Central).
Cue will acquire a 7.5% interest in the Mereenie gas and oil field (OL4 and OL5 production licences), a 15% interest in the Palm Valley gas field (OL3 production licence), and a 15% interest in the Dingo gas field (L7 Production Licence), all located in the Amadeus Basin, onshore Northern Territory
Through the transaction Cue will acquire 4.4mmboe of 2P reserves, with further upside potential. A reserves and resources statement is included with this announcement. Cue will pay Central $8.7m cash on completion and fund $12m of Central's exploration, appraisal, and development costs in the fields. The carried development is expected to include 4 well recompletions and up to 10 wells.
The transaction will be funded from Cue's existing cash and future cashflows. The effective date is 1 July 2020 and a working capital adjustment will be applied on completion, which includes Cue's share of revenues and costs from 1 July 2020. Central will remain as operator of the fields and will manage gas and oil sales on behalf of Cue. Cue's major shareholder, New Zealand Oil & Gas, is also a party to the transaction and will acquire interests in all three Central assets.
Conditions to completion of the transaction include Foreign Investment Review Board approval, approval of New Zealand Oil & Gas shareholders to enter into the transaction, and other customary conditions for a transaction of this nature. Cue CEO Matthew Boyall says that the acquisition is in line with Cue's strategy of investment in onshore assets and will add value to Cue through immediate production and future development. 'This is a great opportunity for Cue to add producing assets onshore Australia to our portfolio. Acquisition of the interests in the Mereenie, Palm Valley and Dingo fields will provide a fourth revenue stream for Cue, with existing sales under long term contracts into the strong Eastern Australia gas markets.'
'All three fields are operated by a good operator in Central Petroleum and have existing production and near-term development plans which provide multiple pathways to growth. 'Cue will acquire 4.4mmboe of 2P reserves, which will increase the company's 2P reserves by more than 350%. The value of this investment to Cue is further enhanced by the opportunity to utilise accrued tax losses against profits from production.' As is customary in oil and gas joint ventures, each interest holder will provide and receive cross security from each other interest holder in the Mereenie, Dingo and Palm Valley projects. In order for Cue to provide such security to New Zealand Oil & Gas, Cue will require shareholder approval pursuant to ASX Listing Rule 10.1 and will proceed to convene a shareholders meeting to obtain such approval.Completion of the transaction is not conditional upon obtaining such shareholder approval.
Contact:
Tel: +61 3 8610 4000
Email: mail@cuenrg.com.au
About Cue Energy
Cue Energy Resources Limited is an Australian Stock Exchange (ASX:CUE) listed oil and gas exploration and production company. Cue's FY20 revenue was A$24million from oil production in the Maari field, offshore New Zealand and gas production in the Sampang PSC, offshore Indonesia. Cue has operated and non-operated interests in exploration permits in the Carnarvon Basin, offshore Western Australia and onshore Indonesia. Various statements in this report constitute statements relating to intentions, future acts and events. Such statements are generally classified as forward looking statements and involve unknown risks, expectations, uncertainties and other important factors that could cause those future acts, events and circumstances to differ from the way or manner in which they are expressly or impliedly portrayed herein.
Some of the more important of these risks, expectations and uncertainties are pricing and production levels from the properties in which the Company has interests and the extent of the recoverable reserves at those properties. In addition, the Company has a number of exploration permits. Exploration for oil and gas is expensive, speculative and subject to a wide range of risks. Individual investors should consider these matters in light of their personal circumstances (including financial and taxation affairs) and seek professional advice from their accountant, lawyer or other professional adviser as to the suitability for them of an investment in the Company
EXCITE TECHNOLOGY SERVICES LIMITED 
