Cue Energy Delivers 40% Shareholder Return Amid Oil Volatility

About Cue Energy Resources Ltd

Cue Energy Resources Ltd (ASX: CUE) is an Australian oil and gas exploration and production company with a geographically diverse portfolio of energy assets. Headquartered in Melbourne, Cue operates across Australia, Indonesia, and New Zealand, focusing on conventional energy projects that include both onshore and offshore fields. The company engages in the full value chain of hydrocarbon development from exploration and appraisal to production and sales serving domestic and regional energy markets. Cue holds interests in multiple joint ventures and production sharing contracts, leveraging strategic partnerships to optimise field performance and capital efficiency. Through a disciplined operational approach and a focus on commercially viable projects, Cue aims to deliver long-term value to shareholders while supporting regional energy supply stability.

Strong Capital Returns and Stability

Amid heightened oil market volatility and broad sector declines, Cue Energy has emerged as an outlier rewarding shareholders while preserving capital discipline. Despite a modest market capitalisation of ~$70 million, Cue has returned over 40% of its value to investors in the past 13 months, maintaining a stable share price and robust balance sheet. This combination of capital returns, low operational leverage, and asset diversification has positioned Cue as a resilient, high-yield option in a sector marked by uncertainty.

Since February 2024, Cue has distributed $28 million in dividends, representing roughly 40% of its market cap. This includes an initial special dividend of 2 cents per share in February 2024, followed by two additional 1 cent per share dividends in September 2024 and March 2025, each equating to $7 million. The February announcement alone caused the stock to surge 50% in a single day, hitting 10 cents per share, and boosting liquidity with average daily volumes rising from 100,000 to over 2 million shares immediately after.

Cue’s current share price has remained stable around 10 cents delivering an implied trailing dividend yield of approximately 20% for the 13-month period ending March 2025. This contrasts starkly with major ASX-listed energy peers, such as Woodside Energy and Beach Energy, which saw stock prices fall up to 20% following President Trump’s April 2025 “Liberation Day” announcement and the ensuing 20% drop in Brent crude prices.

Despite oil trading below US$60 per barrel, its lowest point since April 2021, Cue’s share price has proven remarkably stable. Over the past 12 months, Cue is down only 4.7%, while Brent crude, Karoon Energy, Woodside, and Beach have declined by 22%, 16%, 23.5%, and 24% respectively.

Low Volatility Revenue and Capital Strength

Cue’s resilience is underpinned by a conservative financial structure and a well-diversified production portfolio. As of March 2025, the company reported zero debt and a cash balance of $11.1 million. Earlier, in December 2023, its cash reserves stood at $23.2 million indicating a measured but proactive capital return strategy that leaves room for reinvestment and growth.

Critically, 32% of Cue’s revenue in 1H FY25 came from gas sales under fixed-price contracts, providing a buffer against oil market swings. These contracts stem from its domestic assets in the Mereenie, Palm Valley, and Dingo gas fields in the Northern Territory, as well as from its Sampang PSC in Indonesia. Recent price resets effective January 2025 have locked in higher gas prices, improving forward revenue visibility.

The company’s fixed-price gas strategy distinguishes it from peers whose revenues are more directly tied to oil spot prices, offering a measure of downside protection during downturns. This revenue mix, combined with the cost recovery mechanism under Indonesia’s Production Sharing Contracts (PSC), supports ongoing and future developments like Paus Biru with reduced capital risk.

Investor Outlook and Growth Plans

CEO Matthew Boyall has emphasised a disciplined approach to both capital returns and growth. Cue’s dividend policy does not specify a fixed payout ratio but includes a semi-annual review of the company’s financial position to determine future distributions. This approach has not only supported investor confidence but also enabled the company to retain enough cash to pursue selective growth initiatives.

Cue’s development pipeline remains active, with drilling underway in the Mahato PSC and the Mereenie field, where two recent wells have exceeded production expectations. Three additional wells are planned. The Paus Biru gas project in Indonesia is progressing toward a Final Investment Decision (FID), with first production targeted for 2027. Importantly, management expects to fund this internally, given Cue’s strong cash flows and the capital efficiency of the PSC model.

Beyond its current assets, Cue is also exploring additional opportunities in familiar operating jurisdictions like Australia, Indonesia, and New Zealand. Management has stated that new investments will be evaluated using strict criteria to ensure they are accretive to the company’s portfolio.

Cue Energy’s 40% shareholder payout over a 13-month period, combined with a stable share price, debt-free balance sheet, and defensive revenue profile, underscores the company’s unique position in Australia’s energy sector. In a market where larger players have faltered under commodity pressure, Cue has leveraged its lean structure and strategic discipline to deliver tangible investor value. With further dividends likely and new projects on the horizon, Cue presents a compelling case for income-focused investors seeking resilient energy exposure.