CONSOLIDATED RESULTS: The consolidated loss of the economic entity for the half year amounted to NZ$1,552,756.
DIRECTORS: The directors of the Company in office during and since the half year are as follows: Michael Tilley (Chairman), Peter Jermyn (not re-appointed 27/11/00), Leon Musca, Andrew Knox (appointed 07/12/00), David Quigg alternate for Leon Musca (appointed 28/03/00), John Horner alternate for Peter Jermyn (appointed 22/11/00), alternate for Michael Tilley (appointed 01/12/00).
REVIEW OF OPERATIONS:
CORPORATE: During the half year Cue, through its wholly owned subsidiary, Cue Exploration Pty , accepted offers from Apache Northwest Pty ("Apache") and Tap (Harriet) Pty ("Tap") to acquire the whole of Cue's participating 17.65% interest in EP363 in the Carnarvon Basin of Australia. Apache and Tap will pay all ongoing costs associated with the Cue equity and have granted Cue an option to acquire a 10% interest in every production licence derived from EP363. In late October 2000, Cue announced that it had agreed to farmin to a 25% interest in exploration permit ATP 541P in the Eromanga/Cooper Basin of Central Queensland. The farmin was undertaken to give Cue shareholders exposure to 2 near term, oil focussed, exploration wildcats. The first well, Cashmere-1 was plugged and abandoned after the end of the half year and the second well, Sable-1 was plugged and abandoned in February 2001, after failing to encounter any significant hydrocarbons. On 08/11/00, the Company was obliged to pay US$2.6m (A$5.1m) as its share of capital readjustment associated with the SE Gobe redetermination of reserves. In early November, a significant adverse event for the Company was a gas blow out and subsequent fire in the Anggur-1 well in the Sampang PSC, offshore eastern Indonesia. Cue holds a 15% interest in the PSC. The blow out, fire, consequential necessary remedial works and plugging and abandoning of the well, have resulted in the Company incurring unexpected very substantial costs of US$1.6m in late 2000 and early 2001. The costs incurred are recoverable pursuant to Joint Venture insurance coverage but have resulted in significant diminution of Cue's cash position and have placed considerable strain on Cue's finances. On 23/02/01 the first insurance reimbursement was received by the Sampang Joint Venture. Other insurance payments are expected by the end of July 2001. In addition, as a result of the blow out, negotiations to sell Cue's Sampang interest collapsed and as a consequence Cue had to pay the Anggur-1 drilling costs and will be required to contribute to 3 planned wells to be drilled sequentially beginning around 01/04/01. The Company's AGM of Shareholders was held on 27/11/00 in Wellington, NZ. The meeting was to consider a number of resolutions, some of which were withdrawn prior to the meeting due to lack of shareholder support. A new Company Constitution was adopted but resolutions concerning a 1 for 10 consolidation of the Company's capital and re-election of Peter Jermyn as a director did not pass. In December 2000, a Notice of Requisition of Shareholders' Meeting was received. The requisitioners asked that the meeting consider the removal of current directors Leon Musca and Michael Tilley and any other person appointed as a director after the date of the Annual Meeting and that the meeting consider the appointment of John Bay, Richard Tweedie, Robert Viner Q.C. and Christopher Hart as directors of Cue. The Cue board has taken steps to hold the requisitioned meeting and it is anticipated that the meeting will be held toward the end of March 2001. Subsequent to the end of the half year, the Company was censured by the Market Surveillance Panel of the NZSE for not having 2 NZ resident directors. The company and its existing and former board of directors received NZ legal advice a considerable time ago, that having alternate directors who were NZ residents satisfied the requirements that the Company must have at least 2 NZ resident directors. The directors view this matter seriously and are of the view that the censure was unjustified. In February 2001, the Company announced that it intended to make a renounceable pro-rata rights offer of 1 new share for every 4 existing shares together with 1 new option for every 1 new share subscribed for. It was intended that the rights issue would augment working capital. The need for new working capital was driven, in part, by expenses incurred as a result of the Sampang gas blow out. In February, proceedings were instituted in the High Court of NZ by Browse Petroleum to restrain the Company from proceeding with the rights issue and from taking any action other than action strictly necessary in the ordinary course of business. The Plaintiff in the abovementioned Court proceedings is a private company associated with a former director of the Company. Its Application is supported by an affidavit of another former director of the Company. As a result of the above legal proceedings the Company was restrained from proceeding with the intended rights issue and the directors are restrained from taking any other action on behalf of the Company other than actions strictly necessary in the ordinary course of business. The Company has appealed this decision and the appeal will be heard on Thursday 15/03/01. Subsequent to the end of the half year, the Company obtained a A$500,000 loan from Cable and Telecoms at commercial rates and on commercial terms and sold its holding of St Barbara Mines NL shares. During the half year the Company bought Bambuu shares, bringing its total holding to 5,455,659 shares being 19.04% of the issued ordinary shares of Bambuu. The Company also subscribed for and was allotted 3.825m shares in Data and Commerce at a total cost of A$1.530m. Data and Commerce is involved in innovative digital datacasting and broad casting technology. Cue currently holds shares in listed companies, Australian Worldwide Exploration (6.515m shares), Bambuu (5.456m shares), Data and Commerce (3.825m shares), Natural Gas Australia (939,531 shares) and in currently unlisted Escape 3d NL (1,174,413 shares).
PRODUCTION: Cue's oil production revenue received during the half year from the SE Gobe oil field in PNG was US$2,459,986 and equated to 75,624 barrels. During the half year 15,000 barrels of oil were sold forward at US$26.10 per barrel, 15,000 barrels of oil were sold forward at US$24.55 and 30,000 barrels of oil were sold forward at US$28.15 per barrel. Production revenue received after making hedging payments in the half year was US$2,149,876. Cue's hedging arrangements expired at the end of the half year.