Cue Energy gearing up for 2023 drill run onshore Indonesia in the Sumatra Basin

Energy smallcap Cue Energy (ASX:CUE), overseeing the revenue-making and oil-producing Mahato Project, is preparing to spud its BA-01 exploration well in the Central Sumatra Basin onshore Indonesia, the company confirmed on Friday. 

The Mahato Project or Mahato PSC sees Cue with a 12.5% interest. It shares the project with three other Indonesian companies: Texcal (51%), Bukit Energy (25%) and Central Sumatra Energy (11.5%). 

Texcal is overseen by Indonesian government energy regulator Skkmigas and is the state-owned component of the project. 

Under Indonesian petroleum laws, PSC permits must see foreigners team up with the government, such that Indonesian government revenues are not missed out on from potential project successes. 

Texcal’s majority stake would give strength to the theory that upcoming environmental permits needed to proceed will likely go ahead without issue.

Mahato an oil producing field 

The project boasts oil production since early 2021 after discovery wells were only first drilled less than a year prior, in late 2019.

Cue’s BA-01 target will be the first going after the known BA prospect on-site.

“The Central Sumatra Basin is a very oil rich area and contains the largest onshore oilfields in Indonesia,” company CEO Matthew Boyall said. 

“The PB field is a good example of the success that is possible in the Mahato PSC and we hope to replicate this with the BA-01 well.” 

“PB” refers to the series of successful previously completed wells at Mahato that hit oil. Cue discovered the PB field back in 2019. 

So far, the Mahato PSC provided Cue $14.9m in revenue in FY22. 

Multiple targets 

The BA-01 well will be the first of multiple BA targets to test the validity of models suggesting large oil deposits at the BA prospect. It will be sunk vertically to 2,800ft (only 850m, depending on how you look at it.) 

Cue notes there is a 38% chance of success attached to BA-01, a fairly high reading in comparison to some other energy exploration plays. 

The Indonesian-law-compliant prospective oil resource estimate for the BA Prospect gives a high read of 172 million barrels of oil (MMbbl). 

The “Low” estimate is 67MMbbl, with “Best” (read: highest confidence) estimate at 93MMbbl. 

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