Cue Energy’s Palm Valley Well Tests Below Target as Water Risk Clouds Output
Key Takeaways
- PV14's rig test measured about 3.2 TJ/d (100% JV) over 90 minutes, below Central's target and below recent wells PV12 and PV13.
- Central extrapolates an initial online rate of 3 to 4 TJ/d, though that figure ignores further clean-up or any water ingress.
- Water appeared in flows to vacuum, leaving two outcomes open: residual water that cleans up as at PV12, or ingress that could force packers or, at worst, cessation of production.
- PV14 commissioning is targeted by the end of October, and PV15 on the southern flank spuds once completion work finishes.
- The two-well campaign targets 14 TJ/d of plant sales capacity and at least 10 PJ (100% JV), and a strong PV15 result would keep that target attainable.
PV14 drilled and heading to production at Palm Valley
Central Petroleum (ASX: CTP) has advised that the PV14 well at Palm Valley has been successfully drilled and is now being completed and tied into the Palm Valley production facility as a gas producer. The well is expected to be commissioned by the end of this month.
The rig flow test came in lower than the company wanted, and management says so plainly. Here is what was measured and what comes next.
A short-duration flow test through the rig measured gas flows of approximately 3.2 TJ/d (100% JV). TJ/d means terajoules per day, a standard measure of gas flow. The well was tested through a ¾-inch choke for 90 minutes, with no water or oil recovered.
The rate had not stabilised after 90 minutes. It was still increasing slowly at a flowing tubing head pressure of 210psi.
Key points:
- PV14 has been successfully drilled and is being completed as a gas producer
- Tie-in to the Palm Valley production facility and commissioning are expected by the end of October
- Drilling of PV15 will commence once completion activities are concluded at PV14
The investment is underpinned by the new Northern Territory Government Gas Supply Agreement announced by Central in April. A producing well would add to Palm Valley supply under that agreement.
Leon Devaney, Managing Director and CEO
“PV14’s initial test result was below our target and less than recent wells, such as PV12 and PV13. We expect a clearer indication of long-term production rates after the well comes online later this month…”
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What the flow test tells investors
A short rig test is a snapshot, not a forecast. The figures below show what the company measured and what it extrapolates.
Well details and expected rates
| Metric | Detail |
| Total depth | 2,942m MD / 2,096m TVD |
| Pacoota P1 gross / net pay | 200m / 45m |
| Test interval | 2,102m to 2,729m MD |
| Flow rate (rig test) | Approximately 3.2 TJ/d (100% JV) |
| Extrapolated initial online rate | Approximately 3 – 4 TJ/d |
The 3 – 4 TJ/d extrapolation assumes a typical gathering system backpressure. It does not account for any further clean-up or ingress of water.
Put simply, the company is indicating a similar range once the well is online, but with the water question still open.
Water question, stated plainly
Although the flow test returned no water to surface, subsequent flows to vacuum at surface showed evidence of water production. That leaves two possible readings, according to the announcement.
The water may be residual standing water in the well, which could continue to clean up and result in improving production rates over time. This would reflect PV12, where water was isolated using packers and the well has since produced dry gas.
Alternatively, it may indicate water ingress above the isolated hole section. That could require further isolation with packers or, in the worst case, cessation of production.
Why Palm Valley’s reservoir is hard to read
Palm Valley produces gas from natural fractures. No hydraulic stimulation (fracking) has been conducted.
The reservoir is tight and naturally fractured, which makes it difficult to distinguish perched, disconnected water from water drawn from depth through open fractures. That is why a short rig test cannot accurately determine online production rates, and why the commissioning data matters.
The gas composition has not been analysed. It is expected to be consistent with current P1 production, which contains around 98% hydrocarbons and minimal inert content.
PV15 next as Central targets 14 TJ/d
After PV14 is completed, the Ensign 974 rig will move to spud PV15, the second well in the two-well campaign.
PV15 key points:
- Located 2.3km from PV14 at surface and approximately 3km away at planned total depth
- Targets the southern flank of the Palm Valley anticline rather than the northern flank targeted by PV14
- Closer to the field crest and further up-dip from possible water sources
- Only the second well after the successful PV12 to directly access the southern flank
Together, the two wells are aiming to restore Palm Valley plant sales capacity to approximately 14 TJ/d (100% JV) and deliver at least 10 PJ of gas (100% JV) over their operating lives. Actual production rates will depend on well performance and existing field decline.
For investors, PV15 is the next catalyst. Management says a strong result would keep the target attainable, which is not the same as assured.
Leon Devaney, Managing Director and CEO
“…PV15 provides a fresh opportunity… A strong result at PV15 would keep our target sales capacity of 14 TJ/d attainable.”
An investor webinar covering the FY2026 Annual Report and the PV drilling program will be held on Thursday 15 October at 11am AEST. Login details will be advised separately.
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Joint venture and investment context
PV14 is located within OL3 in the Northern Territory’s Amadeus Basin, under a joint venture between Central (50%), Echelon Resources Limited (ASX: ECH) (35%) and Cue Energy Resources Limited (ASX: CUE) (15%).
Central describes itself as the largest onshore gas operator in the NT, supplying gas to customers through central and northern Australia. The Palm Valley investment is underpinned by the NT Government Gas Supply Agreement announced in April.
The near-term catalysts are clear: PV14 commissioning by the end of October, the PV15 spud, and the investor webinar on 15 October.
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