Cue Energy buys into Taranaki Basin oil fields

Former "penny dreadful" company Cue Energy has bought a stake in one of the Taranaki Basin's biggest undeveloped oil fields, which it hopes will start producing oil within two years.

It has paid $6.7 million to take a 5 per cent stake in the Maari field, which it describes as the "largest undeveloped offshore oil field in New Zealand." A development decision on the field, which is 80km offshore and under a water depth of 100 metres, is expected to be made in April, with the oil due to start flowing in the second quarter of 2007.

European energy giant OMV owns 69 per cent of the Maari oil field and is the operator. Todd owns 16 per cent and Australian company Horizon Oil has 10 per cent.

With world oil prices reaching near record peaks, the business case for bringing oil fields into production is compelling. While Cue has its primary listing on the New Zealand Stock Exchange, its head office is in Sydney and its exploration work has been in Indonesia and Papua New Guinea. Shares in Cue traded for between 5c and 10c each through most of last year, before soaring in price in October.

Cue's shares, which are also traded in Australia, closed yesterday at 35c each, up 1c.

The company raised $10.8 million with a placement of 40 million shares in December last year.

Todd Energy owns just under 10 per cent of Cue Energy.

The new equity raised is being used to finance the expansion, and move to production, of its interest in the Oyong oil and gas field, in the Madura Strait close to Surabaya, Indonesia's second largest city.