Junior partner Cue had elected to not participate in the drilling of both the Jeruk -1 and Jeruk -2 wells, which were drilled on a sole risk basis by Santos.

Now Cue says it is considering its right to participate in any future development of the Jeruk discovery, providing it pays a sole risk premium and a 15% share of the cost of the two wells.

Under the joint venture provisions for the Sampang PSC, Cue’s sole risk premium would be 10 times its 15% share of the cost of the Jeruk -1 well and 5 times its 15% share of the costs of the Jeruk -2 well.

Cue said the premium payable can be satisfied by foregoing its share of production from a Jeruk development until the value of Cue’s share of gross well head production reaches the total premium payable by Cue. From then on, Cue would receive its full 15% share of production.

“Cue’s option to reinstate its right to participate in the development of the Jeruk discovery is triggered at the time of presentation to Cue of the formal plan of development for the field,” said Cue CEO Bob Coppin.

“Cue also continues to retain its 15% equity in the remaining contract area outside the area of the Jeruk discovery.”

A large 3D seismic survey over a substantial portion of the block is planned to begin in late 2004. The survey is designed to follow up on the Jeruk discovery and to investigate several other prospects which are candidates for 2005 exploration drilling.

Participants in the Sampang PSC are: Santos (Sampang) Pty Ltd 45% (operator); Cue Sampang Pty Ltd 15%; and Singapore Petroleum Company Limited 40%.