CUE 3.33% 15.5¢ cue energy resources limited

still a bargain

  1. 1,747 Posts.
    From the Oil and Gas Bulletin, still a bargain.

    Regards M.

    6. CUE ENERGY RESOURCES (CUE)
    Highest % Gain Achieved in Quarter – 12.0
    Highest % Loss Suffered in Quarter – 12.0
    Well it could be said those figures are “even steven”
    which, perhaps, could be regarded as an acceptable
    performance for the quarter it was. As that Estimated
    2003 High of 12 cents shows, the bulletin was not
    expecting anything really sensational from CUE this
    year, even if it was looking for a more than doubling in
    its share price. That will come, the bulletin is
    convinced, as a result of corporate activity, rather than
    from a more positive perception of the company by the
    market, even if this is now entirely warranted. As the
    March quarterly shows, CUE is now generating revenue
    of more than US$4 million a year from its small stake in
    PNG’s SE Gobe Oil Field where production has been
    steadily increasing. Incidentally, the company had no
    hedging in place during that quarter. While the very
    nature of CUE’s operations may not get people lining up
    to buy its shares, the company is undoubtedly a very
    tempting morsel for any predator, and especially one
    with common interests, and an urgent desire to build up
    both reserves and revenue. The bulletin hardly needs
    to say the company it is talking about is Santos (STO).
    While CUE, with a market valuation of only $15 million,
    may generally be regarded as far too small for a
    company of STO’s size to bother about, it would be
    quite amazing if that company wasn’t seriously
    considering making a move on CUE. Apart from the
    fact that this company’s assets are being absurdly
    discounted at its current share price of around 4.5
    cents, which has to be an attraction for any company
    regardless of its size, STO is about to start developing
    the Oyong gas and oil field in Indonesia where, as far
    as the bulletin knows, the company is the operator, and
    holds a 45% stake. A market for this field’s estimated
    90 billion cubic feet of recoverable gas reserves has
    already been arranged, an the field’s very
    conservatively estimated five million barrels of
    recoverable oil will be produced along with the gas, with
    first production scheduled for next year. As it happens,
    CUE has a very meaningful 15% stake in this project,
    one-third the size of STO’s, and although that company
    (CUE) has said several parties are interested in
    providing it with the needed project finance, it does
    seem with its estimated share of development costs of
    at least $25 million, substantially greater than its market
    valuation, it really does seem just too big a commitment
    for a company of CUE’s size to take on, and the bulletin
    wouldn’t be at all surprised if STO feels the same way,
    and worried about what could happen. Furthermore,
    CUE and STO have many common interests in PNG
    where the former company derives all its revenue, and
    web site http://petroleum.co.nz 5 e-mail [email protected]
    it’s hard not to feel STO wouldn’t be at all averse to
    increasing its interests in these as well, particularly as
    some of them have far better than average potential.
    Any offer would need to be set at least at the bulletin’s
    Estimated 2003 High of 12 cents which, after all, values
    CUE at only $40 million. For that, a successful bidder
    would get $3.6 million in cash (as at March 31),
    production interests in PNG where revenue is steadily
    climbing and stood at around $6.5 million annually at
    last count, stakes in further potential revenue producing
    projects in PNG and, finally, that 15% stake in the
    Oyong field and the surrounding highly prospective
    acreage. The Oyong stake, alone, would have to be
    worth 6 cents a share at the very least, especially as
    there must be a very strong chance of considerably
    more than 5 million barrel’s of the field’s estimated inplace
    reserves of 100 million barrels, being recovered.
    The bulletin is getting pretty excited about CUE!
 
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