Cue reports $1.5m loss on eve of court battle

By DANIEL RIORDAN

Cue Energy Resources, which tomorrow squares off with minority shareholders in the High Court, has posted a $1.55 million loss for the six months to December.

The oil and gas prospector lost $4.25 million for the same period a year earlier. Sales revenue doubled over the later period to $6.40 million

The company, which is based in Melbourne but has its main listing in New Zealand, warned that costs of $US1.6 million ($3.7 million) associated with a gas blowout and subsequent fire in one of its offshore Indonesian wells had placed considerable strain on its finances. Some of the costs have been incurred after balance date.

Directors said insurance claims on the well, in which Cue has a 15 per cent interest, would not be fully paid until the end of July.

The company's accounts show cash on hand at December 31 of $968,000, compared with $13.73 million a year earlier.

Directors said they had also negotiated a loan for $A500,000 ($610,000) after balance date.

Tomorrow's court battle is part of a tug-of-war between Cue directors and small, but highly influential, shareholders that began last year.

In November, at Cue's annual meeting, directors put up motions calling for a share issue.

But shareholders, led by Todd Petroleum, Anzoil NZ and Browse Petroleum - holders of a combined 11.5 per cent stake - rejected the motions and also declined to re-elect one of the directors.

When Cue went ahead and organised a rights issue that did not need shareholders' approval, Browse objected and had the move blocked by the High Court at Wellington. Cue wants the court to overturn this.

Shareholders have also criticised plans to seek more money for Cue to invest in technology rather than focus on its key oil and gas interests.

After last year's annual meeting, minorities called a special meeting to remove two of Cue's three directors, appoint new directors and remove any other directors appointed since the annual meeting.

Two weeks ago, the High Court ordered Cue to proceed with the special meeting as soon as possible.

Cue said yesterday that it would hold the meeting near the end of this month.

The board's problems do not end with objecting shareholders. The company was censured by the Stock Exchange for not having at least two resident New Zealand directors.

Cue has until April to appoint New Zealanders to the board but yesterday gave no indication of progress, beyond saying it viewed the matter seriously and believed the censure was unjustified. It argues that having two alternate directors who are New Zealand residents meets the requirement.