Cue Energy Targets Mid-2026 Drilling Start with Gas Supply Through 2034
Cue Energy Resources and partners have signed a Letter of Intent with the Northern Territory’s Power and Water Corporation to kickstart a four-well drilling program at Mereenie and Palm Valley, aiming for gas supply contracts through 2034.
- Binding LOI signed for early works on four-well drilling program
- Drilling planned at Mereenie and Palm Valley fields starting mid-2026
- Conditional long-term gas supply agreements targeted through 2034
- Provision for cost reimbursement if binding agreements not finalized by February 2026
- Cue Energy anticipates production growth and contract stability
Cue Energy and Joint Ventures Secure LOI for Drilling and Gas Supply
Cue Energy Resources Limited (ASX, CUE), alongside its joint venture partners, has taken a significant step forward in the Northern Territory’s energy landscape by signing a binding Letter of Intent (LOI) with the Power and Water Corporation (PWC). This agreement sets the stage for early works on a four-well drilling program at the established Mereenie and Palm Valley gas fields, with a targeted drilling commencement in mid-2026.
The LOI not only accelerates the initiation of drilling activities but also outlines conditional terms for long-term gas supply agreements. These Gas Sales Agreements (GSAs) aim to secure firm gas supply to the Northern Territory market through to 2034, reinforcing the region’s energy security with locally sourced gas.
Early Works and Strategic Planning Underway
To meet the ambitious timeline, the joint ventures have already begun early works, including ordering long-lead equipment, progressing civil infrastructure, and selecting a drilling rig. The program will see two wells drilled at each of the Mereenie and Palm Valley fields, both of which have been longstanding contributors to the Territory’s energy supply.
Importantly, the LOI includes a safeguard for the joint ventures, should binding GSAs not be executed by 20 February 2026, PWC will reimburse costs associated with the early works. This provision mitigates financial risk and underscores the commitment from both parties to advance the project.
Implications for Cue Energy and the Northern Territory
Matthew Boyall, CEO of Cue Energy, highlighted the significance of the agreement, describing it as an exciting opportunity that combines short-term production growth with long-term contract stability. For Cue, this development promises to enhance revenue streams and solidify its position in the Australian onshore gas market.
From a broader perspective, the project supports the Northern Territory’s goal of ensuring reliable and locally sourced energy supplies. The Mereenie and Palm Valley fields, operated by a consortium including Central Petroleum, Echelon, Horizon Australia Energy, and Cue Energy, remain vital assets in the region’s energy infrastructure.
As the joint ventures work towards finalizing binding GSAs by early 2026, the market will be watching closely for updates on drilling progress and contract execution. The success of this initiative could set a precedent for further development and investment in the Territory’s gas sector.
Bottom Line?
Cue Energy’s LOI marks a pivotal step toward boosting Northern Territory gas supply, with drilling and contracts poised to reshape the region’s energy future.
Questions in the middle?
- Will binding Gas Sales Agreements be finalized by the February 2026 deadline?
- How will the new drilling program impact Cue Energy’s production volumes and revenue?
- What are the potential risks if drilling or contract negotiations face delays?
