CUE ENERGY has officially exited Papua New Guinea after completing the sale of its wholly-owned local subsidiary Cue PNG Oil Company to the National Petroleum Company of PNG for US$7 million.

Cue struck the cash deal in November and the sale was completed on 24 December, with Cue noting that the proceeds from the sale “substantially” exceeded the book value of the assets.

The sale followed a strategic review of Cue’s PNG assets, with the company citing the declining oil and gas reserves at their PNG plays and the obligation to spend significant money on well upgrades as reasons for divesting the assets.

The assets include a 15% stake in PRL 9, an 11% interest in PRL 14, a 6% interest in PDL 3, a 3% share of SE Gobe Unit.

“The sale…allows Cue to realise value from its share of the declining reserves and contingent gas resources and releases Cue from a potential substantial well commitment of up to US$10 million, delivering a material saving over the short to medium term,” the company said in a statement.

Cue said the sale was a ref lection of their strategy to operate in lower-cost environments with near-term development options, with freed-up capital to be re-directed to the recently increased 100% participating interest in Mahakam Hilir PSC and farm-in to the Mahato PSC, both in Indonesia.

“The sale of our interests in PNG, together with the recent announcements of our increased participating interest in Mahakam Hilir PSC and farm-in to Mahato PSC demonstrates Cue’s focus on delivering its strategy of effective capital allocation to core areas in support of Cue’s future growth,” Cue chief executive David Biggs said.

“We are very excited about our increased position in Indonesia and the proceeds from the sale of the PNG assets allows Cue to add value for shareholders in a more meaningful and immediate way.

The deal followed news that New Zealand Oil & Gas has bought 20% of Cue in a $14 million, off-market deal with Todd Petroleum Mining, with the company snapping up the assets at 10 cents per share.

New Zealand Oil & Gas chief executive Andrew Knight said exposure to Cue’s 5% stake in the “quality asset” Maari field at PMP38160 fitted the company’s portfolio well.