Indonesia Energy Commences New 3D Seismic Operations at its Kruh Block and Expects to Drill New Production Wells By End of Year
Indonesia Energy (NYSE American: INDO) announced the commencement of new 3D seismic operations at its Kruh Block, covering 63,000 acres in South Sumatra. This seismic work will enable the drilling of new production wells by the end of 2024. Additionally, IEC received key environmental permits for its 650,000-acre Citarum Block, where reserves could potentially exceed a billion barrels of oil equivalent. This permits significant exploratory work to begin there for the first time. The seismic program at Kruh will cover 29 square km, focusing on the proven Talangakar and Lemat reservoirs and new zones discovered in 2022. IEC recently extended its joint operation contract with Pertamina by five years, significantly enhancing its profit split and expected net cash flow. Drilling at Kruh is set to start in the fourth quarter of 2024, post seismic data evaluation. IEC plans to commence seismic operations at Citarum later this year and drilling next year.
- Commencement of new 3D seismic operations at Kruh Block.
- Drilling of new production wells anticipated by end of 2024.
- Environmental permits received for Citarum Block allowing exploratory work.
- Extension of joint operation contract with Pertamina by 5 years until September 2035.
- Increased after-tax profit split from 15% to 35%.
- Expected increase in net cash flow by over 200%.
- Potential reserves at Citarum Block could exceed a billion barrels of oil equivalent.
- None.
Insights
Indonesia Energy Corporation (IEC) has provided significant updates on its Kruh and Citarum blocks. The news suggests a bullish outlook for the company's future financial performance, contingent on successful seismic operations and subsequent drilling.
The amended joint operation contract with Pertamina, which increases IEC's after-tax profit split from
The initiation of 3D seismic operations at Kruh Block and the acquisition of key environmental permits for the Citarum Block signal potential future production growth. The seismic data will enable IEC to prioritize drilling locations effectively, potentially leading to increased production volumes and revenue generation. However, investors should consider the risks associated with exploratory activities, such as the possibility of lower-than-expected resource yields or delays in project timelines.
Overall, the combination of improved contract terms, commencement of seismic operations and the strategic focus on maximizing production capabilities positions IEC for potentially robust financial performance in the coming years. Investors should monitor the progress of these operations and any subsequent updates on drilling outcomes.
IEC's recent announcements highlight key strategic moves that could solidify its position in the energy market. The commencement of 3D seismic operations at Kruh Block and the acquisition of environmental permits at Citarum Block are significant steps towards unlocking new production capabilities.
The seismic program at Kruh Block will cover 29 square kilometers, targeting proved reservoirs and promising shallow oil/gas zones. This detailed seismic data is important for identifying additional locations of undeveloped reserves, which can be prioritized for drilling. This strategic focus on high-potential areas is likely to enhance IEC's production efficiency and output.
The environmental permits granted for the Citarum Block, which potentially harbors over one billion barrels of oil equivalent, open up avenues for extensive exploratory work. This could lead to significant resource discoveries, further strengthening IEC's asset base. Market participants should note that environmental permits are a critical regulatory hurdle and obtaining them signifies IEC's compliance with local regulations, reducing the risk of future legal and operational challenges.
Despite the positive developments, the market may remain cautious until tangible results from the seismic operations and drilling efforts are observed. The energy sector is highly competitive and any delays or suboptimal outcomes could impact investor sentiment. However, if IEC's exploratory activities yield positive results, it could lead to a substantial re-rating of the stock, driven by improved resource estimates and production forecasts.
The updates from IEC underline significant strides in their operational strategies within the Indonesian energy sector. The expansion of the seismic program at Kruh Block and securing environmental permits at Citarum Block are critical milestones in advancing their exploration and production goals.
The 3D seismic technology employed at Kruh Block will provide high-resolution subsurface images, essential for accurate identification of hydrocarbon-bearing formations. This technological approach minimizes drilling risks and enhances the likelihood of successful wells, thereby optimizing resource extraction. Furthermore, the focus on existing proved reservoirs and promising new zones demonstrates a methodical approach to maximizing resource exploitation.
At Citarum Block, the receipt of environmental permits is pivotal for commencing seismic and drilling activities. This block's potential resources exceeding one billion barrels of oil equivalent position it as a significant future revenue driver. However, relinquishing 35% of the acreage is a regulatory requirement that investors should factor in, although IEC has retained 97% of the prospective resources, which is strategically beneficial.
In summary, IEC's proactive steps in seismic operations and regulatory compliance underscore its readiness to capitalize on Indonesia's hydrocarbon potential. Investors should view these developments as foundational for long-term value creation, contingent on successful execution and favorable exploratory outcomes.
Environmental permits granted at Citarum Block, where natural gas reserves could potentially exceed a billion barrels of oil equivalent
JAKARTA, INDONESIA AND DANVILLE, CA, June 24, 2024 (GLOBE NEWSWIRE) -- Indonesia Energy Corporation (NYSE American: INDO) ("IEC"), an oil and gas exploration and production company based in Indonesia, today provided an operational update and announced that new 3D seismic exploratory operations at its 63,000 acre Kruh Block have commenced. Importantly, IEC anticipates that the results of this seismic work will allow IEC to drill new production wells at Kruh Block the by the end of 2024.
Additionally, IEC announced that key environmental permits have been granted at IEC’s 650,000 acre Citarum Block where reserves could potentially exceed a billion barrels of oil equivalent. IEC’s receipt of these permits represents an important milestone for IEC as the permits will allow for meaningful exploratory work by IEC at Citarum for the first time.
As the operator of the Kruh block, IEC’s 3-D seismic program will cover the Kruh, North Kruh and West Kruh Fields. This 29 square km high-quality seismic program is strategically focused on existing proved reservoirs of the Talangakar and Lemat formations, as well as the very large and promising shallow oil/gas zones in the K-28 well discovered by IEC’s work in 2022.
The new, high quality three-dimensional seismic data will enable the identification of additional locations of proved undeveloped reserves and resources. This in turn will pave the way to prioritize the sequence of upcoming drilling locations as IEC recommences drilling operations at Kruh Block. Preparations for the new drilling operation are underway, with plans to drill the first well in the fourth quarter of 2024 after the evaluation of the new three-dimensional seismic data is completed.
IEC announced in September 2023 that its joint operation contract with Pertamina, the Indonesian state-owned oil and gas company, covering the Kruh Block was extended by 5 years from May 2030 to September 2035. Kruh Block covers approximately 63,000 acres and is located onshore on the Island of South Sumatra in Indonesia.
The amended joint operation contract has the following key terms:
- The amended contract increases IEC’s after-tax profit split from the current
15% to35% , for an increase of more than100% . - In addition, given the 5-year extended term of the contract, the amended contract is expected to increase IEC’s proved reserves at Kruh Block by over
40% . - Furthermore, given the increased profit split, IEC’s anticipated net cash flow calculations based on its Kruh Block development plan are expected to increase by over
200% versus IEC’s anticipations under the prior contract.
At Citarum Block, IEC’s receipt of government environmental permits to commence seismic operations which are planned for late this year or early next year, with plans to also commence drilling next year. As required by government regulations, IEC relinquished approximately
Mr. Frank Ingriselli, IEC's President, commented "We are very excited about the commencement of new seismic operations on our Kruh Block enhanced by the significant improvements in our economics from the 2023 contract extension with the Indonesian government. All of this bodes well for our company as we look to recommence drilling at Kruh Block in late 2024. We continue to believe that Kruh Block is a world class asset and, in order to maximize future production capability, the seismic operations planned across the entire Kruh Block should positively leverage what we have learned from our previous discoveries, including our 2022 gas discovery, and determine the best locations to re-start our continuous drilling campaign.”
“Additionally, we have now also moved forward with activities at our potential billion-barrel equivalent natural gas 650,000-acre Citarum Block, where the previous operator drilled several gas discoveries. In short, we’ve never been more excited about IEC’s potential, and we look forward to continuing our efforts as we seek to drive positive shareholder value," concluded Mr. Ingriselli
About Indonesia Energy Corporation Limited
Indonesia Energy Corporation Limited (NYSE American: INDO) is a publicly traded energy company engaged in the acquisition and development of strategic, high growth energy projects in Indonesia. IEC’s principal assets are its Kruh Block (63,000 acres) located onshore on the Island of Sumatra in Indonesia and its Citarum Block (650,000 acres) located onshore on the Island of Java in Indonesia. IEC is headquartered in Jakarta, Indonesia and has a representative office in Danville, California. For more information on IEC, please visit www.indo-energy.com.
Cautionary Statement Regarding Forward-Looking Statements
All statements in this press release and related statements of of Indonesia Energy Corporation Limited (“IEC”) and its representatives and partners that are not based on historical fact are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Acts”). In particular, when used in the preceding discussion, the words “could,” "estimates," "believes," "hopes," "expects," "intends," “on-track”, "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Acts and are subject to the safe harbor created by the Acts. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of the IEC's control, that could cause actual results (including, without limitation, the anticipated benefits of the amended Kruh Block contract as well as the results of IEC’s exploration, drilling and production activities and the impact of such contract and activities on IEC’s results of operations) to materially and adversely differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth in the Risk Factors section of the Company’s annual report on Form 20-F for the fiscal year ended December 31, 2023, filed on April 26, 2024 and other SEC filings, with the Securities and Exchange Commission (SEC). Copies are of such documents are available on the SEC's website, www.sec.gov. IEC undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
Company Contact:
Frank C. Ingriselli
President, Indonesia Energy Corporation Limited
Frank.Ingriselli@Indo-Energy.com
FAQ
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