Indonesia Energy, an oil and gas exploration and production company focused on Indonesia, today announced that the company has mobilized the drilling rig to drill 2 back-to-back producing wells (named the K-27 and K-28 well) at its 63,000-acre Kruh Block.

The mobilization of the rig represents a milestone in IEC’s previously announced plan to drill two new wells at Kruh Block during the first quarter of 2022. IEC also plans to commence drilling of a third new well at Kruh Block before the end of the second quarter, and likely a fourth new well sometime during 2022. These wells are the continuation of IEC’s previously announced drilling campaign to complete a total of 18 new production wells in Kruh Block by the end of 2024.

If drilling is successful, each of the 2 wells are expected to average production of over 100 barrels of oil per day over the first year of production, and each well will cost approximately $1.5 million to drill and complete. Based on the terms of IEC’s contract with the Indonesian government and an oil price of $95.00/barrel (which is 15% below yesterday’s closing price for Brent), each well is expected to generate $2.6 million in net revenue in its first twelve months, which is enough to recover the cost of drilling the wells in the first year of production.

The Kruh Block is located on Sumatra Island where IEC is already producing oil from 5 existing wells.

In addition, IEC recently completed and provided to the Government of Indonesia two Geological & Geophysical studies each covering both the Kruh Block and the 1,000,000-acre Citarum Block, which IEC also has the right to explore. Additional prospects have been identified from the new study in Citarum Block which is located on the island of Java only 16 miles from the capital city of Jakarta where natural gas prices are at a 200% premium to the prices in the United States.

Mr. Frank Ingriselli, IEC’s President, commented,
“We are excited to have mobilized the drilling rig and are ready to commence drilling this month and to aggressively take advantage of the current high prices for oil and move our company towards a potential cash flow positive position this year, setting the stage for further drilling and growth for our company in 2022 and beyond. We believe Kruh Block is a world class asset that should significantly grow our cash flow as we drill additional wells and seek to maximize returns on our investments and grow shareholder value. Additionally, our company is moving forward to aggressively set the stage to develop our potential billion-barrel equivalent natural gas Citarum Block, where the previous operator drilled a few gas discoveries."

Kruh Block (Production)

Kruh Block covers an area of 258 square kilometers (63,753 acres) in Sumatra, Indonesia. This block produced an average of about 9,900 barrels of oil per month (gross) in 2018. Out of the total eight proved and potentially oil bearing structures in the block, three structures (North Kruh, Kruh and West Kruh fields) have combined proved developed and undeveloped gross crude oil reserves of 4.99 million barrels (net crude oil proved reserves of 2.13 million barrels) and probable undeveloped gross crude oil reserves of 2.59 million barrels (net probable crude oil reserves of 1.12 million barrels) as of January 1, 2019.

Indonesia Energy hold 100% participating interest in Kruh Block. The block operates under a Technical Assistance Contract (TAC) with Pertamina, Indonesia’s state-owned oil and natural gas corporation, until May 2020 and the operatorship of Kruh Block will continue as a Joint Operation Partnership (KSO) from May 2020 until May 2030.

KeyFacts Energy: Indonesia Energy Indonesia country profile