Cue Energy Resources Limited Notes to the financial statements 30 June 2026 Note 11. Non-current assets - production properties (continued) 45 Development assets Consolidated 30 June 2026 30 June 2025 $'000 $'000 Expenditure on development assets 1,791 4,468 During the year, the Paus Biru development assets of $4.2 million were written off and recorded in the profit and loss due to withdrawal from the Sampang PSC Extension and Paus Biru Development. Another $0.10 million expense was recognised for other evaluation and exploration activities. Accounting policy for production properties Production properties are carried at the reporting date at cost less accumulated amortisation and accumulated impairment losses. Production properties represent the accumulation of all exploration, evaluation, development and acquisition costs in relation to areas of interest in which production licences have been granted. Amortisation of costs is performed on the basis which best reflects the consumption of future economic benefits. In the Onshore Australia assets, physical assets are amortised on the straight-line basis whilst all other production properties are amortised on the unit-of-production basis, separate calculations being made for each resource. The unit-of-production basis results in an amortisation charge proportional to the depletion of economically recoverable reserves (comprising both proved and probable reserves) and is expensed through the statement of profit or loss and other comprehensive income. Amounts received during the exploration, evaluation, development or construction phases which are in the nature of reimbursement or recoupment of previously incurred costs are offset against such capitalised costs. Accounting policy for impairment The carrying amounts of the Consolidated Entity’s assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash generating unit exceeds the recoverable amount. Impairment losses are recognised in profit or loss, unless an asset has previously been revalued, in which case the impairment loss is recognised as a reversal to the extent of that previous revaluation with any excess recognised through profit or loss. Impairment losses and reversals recognised in respect of cash-generating units are allocated to reduce the carrying amount of the assets in the unit (group of units) on a pro rata basis. Accounting policy for calculation of recoverable amount For oil and gas assets the estimated future cash flows are based on either the fair value less costs to sell or the value-in-use calculations, which use estimates of hydrocarbon reserves, future production profiles, commodity prices, operating costs and any future development costs necessary to produce the reserves. Estimates of future commodity prices are based on contracted prices where applicable or based on estimates of forward market prices. The recoverable amount of cash generating units is the greater of their fair value less cost to dispose and value-in-use. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate based on assumptions that reflect current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. Impairment testing Following the change in Cue’s majority ownership and Board composition, the 2026 reserves assessment was prepared by Horizon. The revised estimates reflect an updated technical assessment rather than any material change in the fields. As a result of reserves revision, management performed impairment testing and recognised an impairment expense of $3.4 58 Cue Energy Resources Limited Annual Report 2026
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