“This effectively negates the requirement for Cue to forego production to the value of approximately US$50 million (A$68 million) out of Cue’s share of first production from Jeruk and allows Cue to participate in first cash flow from Jeruk,” Cue CEO Robert J Coppin said.

“In addition, Medco will reimburse Cue in cash for the Medco proportional share of the past Jeruk expenditures and working capital, cash called and paid up, equating to approximately US$6 million.”

Coppin described the deal as an “excellent outcome” for the company, as it also more closely aligned the interests of the Jeruk partners.

Cue’s interest in the rest of the Sampany PSC, including the Oyong development, remains unchanged at 15%.

Coppin said the Jeruk-3 well was planned for drilling later this month, in addition to another well, Jeruk-4, scheduled for later in the year.

The field, which is Santos’ biggest oil discovery, is aimed towards early production.

In September, Santos announced that Jeruk was flowing oil at 3000 barrels a day with gas from the Jeruk-2 appraisal sidetrack. At the time, these results raised hopes that Jeruk could be bigger than the pre-drill estimate of 170 million barrels.

Suggestions of it being a 500 million barrel find came during early enthusiasm for Jeruk-2 results. But Santos said that any upgrade to its estimates would wait until the results of Jeruk 3-6 were known.

The new economic interests in the Sampang PSC are: Santos (operator - 50%); Medco (25%); Singapore Petroleum Sampang (21.82%); and Cue Sampang (8.18%).