Cue Energy Resources Limited (ASX:CUE) shares have accelerated upwards today. This comes after the company announced it has started oil production from Mahato PSC in Indonesia.

At the time of writing, the oil and gas company's shares are up 9.21% to close at 8.3 cents.

What did Cue announce?

Cue Energy advised that it has now begun extracting oil from its PB field in the Mahato PSC.

Located in Indonesia, Mahato PSC is a 5,600sq km basin that is close to several producing oil fields. Multiple surveys and exploration results have mapped the area to contain a highly lucrative resource opportunity.

According to Cue's release, the start of operations follows the settled dispute between the company and its joint venture partners. The disagreement arose from Texcal Mahato EP, which operates the Mahato PSC.

Cue previously stated that Texcal and other joint venture partners attempted to exclude the company from two wells, named PB-1 and PB-2. Cue's subsidiary, Cue Mahato holds a 12.5% interest in Mahato PSC.

As part of the settlement, Texcal will issue a cash call for roughly US$300,000 from Cue to conduct exportation activities in PB-2.

Furthermore, Cue will pay US$380,000 to the joint venture partners, which it will tap into its existing cash reserves of US$111,000. The remaining amount will be paid from the company's share of the PSC performance bond.

Both payments are due to be finalised at the end of this month.

What is the status of both wells?

Since the resolved dispute, Cue revealed that the PB-1 well is producing around 600 barrels of oil per day. The oil is refined and exported through existing third-party facilities.

In regards to PB-2, Cue noted that is it working to bring the well into production with 3 further drills planned. Its anticipated that the drilling program will start sometime in the current quarter.

What did the CEO say?

Commenting on the production launch, Cue Energy CEO Matthew Boyall said:

Cue is excited to see oil production from the PB field after exploration success in late 2019. This is a rapid progression from exploration to production. The PB field will be a third revenue stream for Cue and will further strengthen our business.

The differences between the joint venture partners and Cue have now been resolved and we look forward to a fruitful partnership as production from the PB field increases and further exploration is undertaken in the Mahato PSC.

About the Cue Energy share price

The Cue share price was gaining ground through the course of last year before it lost more than 60% in December. This is when it advised the market it was abandoning the Ironbark-1 exploration well.

Its shares hit a low of 6 cents in March and reached a multi-year high of 24 cents prior to the December announcement.

The post Why the Cue Energy (ASX:CUE) share price is soaring 9% today appeared first on The Motley Fool Australia.

The Beach Energy Ltd (ASX: BPT) share price has come under pressure on Tuesday after the release of an announcement.

In afternoon trade the energy producer's shares are down 5% to $1.77.

Why is the Beach Energy share price sinking lower?

Investors have been selling the company's shares this afternoon following the release of an update on its drilling activities at the Ironbark 1 exploration well.

The Ironbark 1 well in WA-359-P is located in the North Carnarvon Basin, off the North West coast of Australia. The well was testing the Triassic Mungaroo Formation with multiple sand objectives. The reservoir has previously been explored nearby at comparably shallower depths and includes discoveries at the Gorgon, Goodwyn, and North Rankin gas condensate fields.

However, unfortunately for Beach and its joint venture partners BP Developments Australia, Cue Energy Resources Limited (ASX: CUE), and New Zealand Oil & Gas Limited (ASX: NZO), drilling at the Ironbark 1 exploration well has been unsuccessful.

According to the release, the well was drilled to a total depth of 5,618 metres measured depth, intersecting the primary target of the Mungaroo Formation at 5,275 metres. But no significant hydrocarbon shows were encountered in the target sandstones.

As a result of this, the exploration well will be plugged and abandoned, in-line with pre-drill planning.

While this is certainly a disappointment for Beach, it still has plenty of other exploration activities to cushion the blow.

The same cannot necessarily be said for Cue Energy Resources. Unsurprisingly, the Cue Energy share price has crashed 60% lower on the news.

The company's Chief Executive, Andrew Jefferies, commented on the news: "Bugger…. a very disappointing result for us all. Ironbark was a world scale prospect in a highly prospective address, and it needed drilling. We got an answer, but it was not the one we wanted."

"While the operations are not over yet, I'd like to acknowledge the Operator BP for their safe and professional operations throughout the drilling of the well, as well as our JV partners and our shareholders for their continuing support," he concluded.

The post Why Beach (ASX:BPT) and Cue Energy (ASX:CUE) shares are sinking lower appeared first on The Motley Fool Australia.