Board dramas upstage oil strike

By PAULA OLIVER

In a bizarre twist, embattled oil and gas explorer Cue Energy Resources has struck oil in Java - just as its retired chairman, involved in legal action against the board, eyes a return to the helm.

Cue Energy is based in Melbourne but has its main listing in New Zealand. Its shareholders include Todd Petroleum, a holding company for Wellington's wealthy Todd family.

The company said yesterday that drilling at its Oyong-2 well in Java had found gas and oil. Cue is a 15 per cent partner in the well, while Santos and Coastal Indonesia Sampang hold larger stakes.

Cue chief executive Bob Coppin said the plan was to continue drilling, and test at least two other zones that held potential.

Drilling would finish in about two weeks.

"It's a welcome change here," Mr Coppin told the Business Herald. "We're in an interesting situation at the moment."

Cue hit turbulence this year when three of its shareholders objected to a board bid to issue more shares. After they had voted down the motion, Cue tried a rights issue - which does not need shareholder approval.

That was blocked in the High Court by Browse Petroleum, a shareholder, and a company associated with Cue founder and former chairman Geoffrey Albers.

Mr Albers resigned from the board in March last year, just weeks before shareholders were to vote on a proposal to remove him.

At the time, a company now known as Cable and Telecoms had bought a 30 per cent controlling stake in Cue.

While news of yesterday's promising oil find drew broker interest in Cue - and spiked its share price - manoeuvring among shareholders hogged the spotlight.

The biggest move came from Mr Albers, who revealed he had bought stock to take his holding, through beneficial interests, to 13.4 per cent.

Cable and Telecoms had reduced its holding to just 6.6 per cent over recent weeks.

Mr Albers' buying could result in a return to the board - the same board he has been involved in legal action against.

Mr Coppin said there was likely to be changes in the board eventually, because the "dynamic of the ownership had changed" with Cable and Telecom's selldown.

He expected ongoing talks with Mr Albers about the legal situation.

Cue is one of New Zealand's smallest listed companies, with a market capitalisation of about $39 million.