Forum Archive Index - April 2004

["mick" <mick100@extra.co.nz>]

 

 

ANALYST'S UPDATE

Earnings are likely to grow rapidly with first revenues to be received in the second half from the Oyong field, although this is likely to be recycled into further exploration and field development. However, an increase in scale could help its share price and it is is well placed to grow given its strong balance sheet and cash reserves.

	IRG Indicator: 4/9	Recommendation: SPECULATIVE BUY

BUSINESS PROFILE

Issuer Code: CUE
Listing Date: September 1981
Web Site: www.cuenrg.com.au
Registered Address: BDO House, 99-105 Customhouse Quay, Wellington
Phone: (04) 472 5850
Fax: (04) 473 3582
Share Registry: Computershare Investor Services Ltd, Private Bag 92119, Auckland
Registry Phone: (09) 488 8700
Dividend Details (Latest Year): Nil
Major Stakeholders (at 25/09/03): Todd Petroleum Marketing Co Ltd;Octanex NL

BUSINESS: Petroleum exploration, development and production.

OVERVIEW: The company made a public issue of 18 million ordinary shares in 1981 and has been variously an active explorer and oil/ gas investor in the subsequent period. Its diverse portfolio of oil/gas interests, including (1) a 5.4% stake in PDL 3, the SE Gobe Project in Papua New Guinea, where production commenced in April 1998 contributing the major share of production income ($8.25m in 2001-2, compared with $12.1m in the previous year); (2) other permits in PNG, the Carnarvon Basin (WA) and the Cooper-Eromanga Basin (central Queensland); (3) joint venture interests in the South Sumatra Basin, Indonesia (including Tanjung Jabung PSC, and Sampang PSC offshore in the East Java region, Indonesia). To focus capital development on the Sampang project (15%) the company sold its promising 14% interest in the Yolla gas/condensate field in Bass Strait, Tasmania for A$6.7m (in 2001), with proceeds used to clear debt related to the SE Gobe development. The company's diverse portfolio includes several high quality and highly prospective projects, although its cash flow is generated almost entirely from SE Gobe production. The company's investment activities have seen a variety of plays in areas unrelated to its principal operations, but more recently these have given way to a refocus on oil exploration and production.

PERFORMANCE: The operating surplus for the year to 30 June 2003 was $690,787 (2002:$3.9m which includes profit on sale of TRL/1(Yolla) of $2.9m), principle components of which comprise the following individual items: Production income $7.5m, interest received $96,055, foreign exchange loss $714,599, amortisation of production property $2.4m, investments written down $19,228. Production income of $7.5m represented production from the SE Gobe oil field in Papua New Guinea. For the 6 months to 31 December 2003, the company reported a net profit of $427,000 compared with a profit of $12,000 in the previous corresponding period. Revenue was 10% lower at $3.4m. Cue's oil production revenue received during the half year from the SE Gobe field in Papua New Guinea was US$1.9m and equated to 63,738 barrels. No interim dividend was announced (2002: nil).

OUTLOOK: The company looks forward to the results of continued exploration drilling in the Sampang PSC and to beginning the development of the Oyong field.