0ver sold, page-14

re: jeruk 1 / django gonzales In answer to your question as follows:

Quote :- 'In April 2004, the Jeruk -1 well tested an oil and water emulsion (up to 80% water) from an open hole test at the top of the carbonate objective at a rate of 4700 barrels per day on a 3/8 inch choke.'

'In July 2004, Santos began drilling the Jeruk -2 appraisal well approximately 1.6 kilometres east of Jeruk -1. Jeruk -2 subsequently tested 7488 barrels of 33o API oil per day on a half inch choke over an 18 metre interval from 5134 to 5132 metres measured depth, at the top of the carbonate. The flow was constrained by the throughput capacity of the surface production test facilities. The well was deepened to 5726 metres measured depth where an open hole test recovered 57 barrels of formation water from poor quality reservoir. Due to mechanical difficulties, the well was then sidetracked to 5460 metres measured depth and an open hole test run over a 30 metre interval. Oil, gas and water were recovered, but the flow potential could not be established due to debris in the test string. The qualities of the oil recovered and the pressure data from the test indicated that the oil is part of the same hydrocarbon column tested by the shallower Jeruk -2 test and that consequently, an oil column of at least 380 metres is likely to be present.
In a release to the ASX on 20 January 2005, the parent of the operator for the Sampang PSC, Santos Limited,
advised that likely recoverable oil volumes could indicate an oil accumulation with potential to contain in excess of 170 million barrels of recoverable oil. Further appraisal drilling, integrated with the 3D seismic data which has been aquired and is now being processed, will be required to narrow the potential recoverable oil volumes of the field.'-End Quote


Source:- Cue Prospectus dated 19 May 2005 (Pages 18/19)

** Comment :- Obviously the potential and size of the field has been significantly upgraded via further drilling and the confirmed 3D seismics since the initial testing results as above.
Hence after carefully evaluating the results, Cue elected to re-instate its rights in the Jeruk discovery.
Cue firmly believes that the potential value of its 15% interest in Jeruk will significantly exceed any and all premiums, which, in any event, will only be paid out of the future Jeruk oil production.
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