On 8 October 2026, Cue Energy Resources Limited (ASX:CUE) released a Palm Valley drilling update on the PV14 well. The company reported that the well reached a total depth of 2,942 metres measured depth and that completion operations are under way, and it described flow test rates and uncertainty about water in the wellbore.

Flow test results

PV14 commenced drilling in late July 2026 and reached 2,942 metres measured depth, or 2,096 metres true vertical depth. Open hole packers were installed to isolate anticipated water entry points, with the shallowest set at 2,729 metres measured depth.

An initial 90-minute open hole flow test through a three-quarter-inch choke, from 2,102 to 2,729 metres in the Pacoota P1 Sandstone, reached an estimated gas rate of about 3.2 TJ/d (100% joint venture), with no water or oil recovered. The rate had not stabilised and was still rising at a flowing tubing head pressure of 210 psi.

A second 90-minute period through a half-inch choke reached 2.3 TJ/d. After a shut-in, the well was reopened through the three-quarter-inch choke, and the rate rose to about 3.6 TJ/d before declining to roughly 3.2 TJ/d.

Water evidence and its uncertainty

Cue said that although no water was recovered at surface during the flow periods, flow-back operations showed evidence of water in the wellbore. The source and likely production impact have not been determined.

The company set out two possibilities: that the water is standing or perched water that reduces as the well cleans up, as occurred at PV12, or that it is entering through connected fractures in the open reservoir interval and would need further isolation work. Cue said that if water remains and cannot be effectively isolated or managed, sustained gas production from PV14 may not be possible.

Gas quality, completion and PV15

Laboratory analysis of PV14 gas composition has not been completed. Current P1 production is approximately 98% Hydrocarbons with minimal inert content, but the PV14 composition may differ. The well has not been hydraulically stimulated.

PV14 is planned to be completed as a gas producer and connected to the Palm Valley gathering system, with commissioning targeted by the end of October 2026 subject to completion and tie-in. A period of sustained production is needed before reliable longer-term estimates can be made. The rig is then planned to move to PV15. The field’s processing infrastructure has gross joint venture sales capacity of about 14 TJ/d, which Cue stressed is infrastructure capacity and not a production forecast.

Sector backdrop

Palm Valley is described in the release as a tight, naturally fractured reservoir. In such reservoirs, distinguishing between water that will clean up and water entering through fractures can be difficult from short tests.

Cue holds a 15% participating interest in the Palm Valley permit OL3, with Central Petroleum (NT) Pty Ltd as operator (50%) and Echelon Palm Valley Pty Ltd (35%). Cue also has interests in Indonesian and New Zealand fields.

Risks shareholders should weigh

The central risk stated is water. If water cannot be isolated or managed, sustained gas production from PV14 may not be possible. The source of the water is unknown, and further isolation work may be needed.

Flow rates came from short rig tests, and one rate declined after reaching 3.6 TJ/d. Reliable production estimates require sustained production. Gas composition is yet to be confirmed.

The 14 TJ/d figure is infrastructure capacity, not a forecast, and actual production depends on individual well performance and decline from existing wells. PV15 has not been drilled, and commissioning is subject to completion and tie-in activities.

What’s next

Cue said PV14 is targeted for commissioning by the end of October 2026, subject to completion and tie-in, followed by a period of sustained production before production estimates can be made. The rig is planned to move to PV15 after PV14 activities. Shareholders may wish to watch for water behaviour, gas composition results and PV15 progress.