Cue Energy Highlights New Gas Deal as Key Reason to Reject Horizon Offer

New Gas Sales Agreement Secures Long-Term Revenue

Cue Energy Resources Limited (ASX:CUE) has taken a significant step to strengthen its operational outlook by signing a binding multi-year Gas Sales Agreement (GSA) with the Northern Territory Government. This deal, announced on 13 April 2026, commits the Palm Valley Joint Venture; which includes Cue with a 15% interest; to supply up to 21 petajoules (PJ) of gas, with Cue’s share at 3.2 PJ, through to the end of 2034 under take-or-pay terms and fixed pricing indexed to inflation.

The agreement replaces a previous tentative supply plan with the Northern Territory’s Power and Water Corporation, where no final volume or pricing agreement was reached. Cue’s CEO Matthew Boyall described the GSA as a contract that "materially increases Cue’s contracted gas position" and "adds long-term contracted cashflow," underpinning investment in two new development wells at Palm Valley.

Final Investment Decision Drives New Well Drilling

Supporting the GSA, the Palm Valley Joint Venture has made a Final Investment Decision to drill two new wells, with drilling scheduled to commence mid-2026. Preparations are well advanced, including key approvals, contracted drilling rig, and ordered long lead items. Production from these wells is expected to ramp up progressively over the second half of 2026, potentially boosting Cue’s gas production, revenues, and operational cash flows.

This development is particularly notable given Horizon Oil Limited’s (ASX:HZN) absence from the Palm Valley Joint Venture. Unlike Cue, Horizon holds no participating interest in Palm Valley, meaning it will not benefit from the new gas sales contract or the associated production growth. This differentiation forms a core part of Cue’s Independent Board Committee’s continued recommendation that shareholders reject Horizon’s takeover offer.

Independent Board Committee Reaffirms Rejection Recommendation

The Independent Board Committee of Cue Energy has unanimously reiterated its advice for shareholders to reject Horizon’s off-market bid by taking no action. The committee highlighted the strategic value of the new gas sales agreement and the planned well drilling as fundamental reasons for this stance. They also referenced eight other reasons detailed in Cue’s Original Target’s Statement dated 7 April 2026.

Given Horizon’s lack of exposure to the Palm Valley gas field and the upside potential from Cue’s new contract and development plans, the Independent Directors see the offer as undervaluing Cue’s prospects. This position aligns with the board’s previous unanimous recommendation, which was also supported by the recent Cue Energy Board Unanimously Recommends Rejecting Horizon Oil Takeover Bid.

Resolution of Medco Dispute Removes Overhang

Adding to the positive backdrop, Cue confirmed that a prior potential dispute with Medco regarding the extension of the Sampang Production Sharing Contract has been fully resolved. This removes a layer of uncertainty that was disclosed in the Original Target’s Statement and clears the way for Cue to focus on its operational and strategic priorities.

With the offer scheduled to close on 5 June 2026, Cue shareholders face a critical decision amid these developments. The company’s new gas sales contract and well drilling plans materially enhance its forward revenue profile, contrasting with Horizon’s limited participation in key assets.