Cue Energy 2P Reserves Fall As Portfolio Review Flags Impairment

Cue Energy Resources (ASX: CUE) has reported Proved and Probable (2P) reserves of 4.5 million barrels of oil equivalent (MMboe) at 30 June 2026, down from 5.5MMboe a year earlier after production and portfolio revisions.

The movement reflects 0.6MMboe of production during FY26, with net downward revisions of 0.4MMboe following updated technical and commercial assessments across the portfolio.

Cue expects the reserve changes to result in a non-cash impairment of up to $5 million across its Maari and Sampang assets in its FY26 financial statements, subject to finalisation of the full-year accounts, auditor processes, and board approval.

The portfolio review also identified additional infill drilling opportunities at Mahato and a new unrisked 2U Prospective Resource of 0.7MMboe at Mereenie Footwall.

Downward Production Revisions

Cue’s Proved (1P) reserves closed FY26 at 2.6MMboe compared with 4.2MMboe a year earlier, reflecting 0.6MMboe of production and 1.0MMboe of downward revisions.

Mahato was the only asset to record a 2P reserve increase, adding 0.2MMboe after further infill drilling opportunities were identified within the Bekasap Formation of the PB field.

Sampang 2P reserves fell by 0.2MMboe, primarily due to deferral of the Grati booster compressor project into FY27 and Cue’s intention to withdraw from the Sampang production sharing contract (PSC) when the licence expires in December 2027.

Maari reserves were revised down by 0.2MMboe after unscheduled downtime and updated economic assumptions, with current estimates indicating economic production will cease in 2030 based on forecast costs and commodity prices.

Mereenie recorded the largest individual downward 2P revision at 0.4MMboe following a performance-based assessment of reservoir behaviour and the current evaluation of future Pacoota Formation infill drilling opportunities.

Shifting Resource Inventory

Cue’s 2C Contingent Resources decreased from 5.6MMboe to 3.9MMboe after 2.4MMboe associated with Paus Biru and Jeruk was removed in line with the planned withdrawal from the Sampang PSC at licence expiry.

The Mereenie Footwall resource adds 0.7MMboe of unrisked 2U Prospective resources, equivalent to 4.0 petajoules of gas, within a stacked reservoir sequence southwest of the main field.

Cue assigns the opportunity a 31% geological chance of success and assesses the chance of development at about 100% if geological success is achieved, reflecting the potential to appraise, develop, and tie in the resource using existing Mereenie infrastructure.

Prospective resources remain subject to both discovery and development risk, with further exploration, appraisal, and evaluation required to determine whether a significant quantity of hydrocarbons exists.

“While the updated assessment results in lower reported reserves and non-cash accounting charges at year end FY26, it also highlights additional drilling opportunities at Mahato and new prospective gas resources at Mereenie,” chief executive officer Matthew Boyall said.

Paus Biru Impairments

Cue has separately written off approximately $4m of capitalised costs associated with Paus Biru following its previously announced decision to withdraw from the project.

The 2026 reserve assessment followed Cue’s change in ownership and board composition and reflects updated technical assessments rather than any material change in the fields themselves.

Australia holds the largest regional share of Cue’s 2P reserves at 3.1MMboe, compared with 1.1MMboe across its Indonesian interests and 0.2MMboe from Maari and Manaia in New Zealand.

Cue expects to work with its joint venture partners to further evaluate the Mereenie Footwall opportunity while continuing to assess infill drilling opportunities across the producing portfolio.

“Cue remains focused on disciplined investment and maximising the value from its portfolio of high-quality oil and gas assets,” Mr Boyall added.