Company’s Profit Share Increases by More Than 100%
Proved Reserves Also Anticipated to Increase Given Extended Contract Term
Company Also Provides Update on Development Plans for 2023 and 2024
JAKARTA, INDONESIA AND DANVILLE, CA, Sept. 07, 2023 (GLOBE NEWSWIRE) -- Indonesia Energy Corporation (NYSE American: INDO) ("IEC"), an oil and gas exploration and production company focused on Indonesia, today announced that its joint operation contract with Pertamina, the Indonesian state-owned oil and gas company, covering the Kruh Block has been amended to extend the contract term 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% to 35%, for an increase of more than 100%.
- 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.
IEC also provided an update on its Kruh Block development plan. As previously announced, in order to maximize the production at Kruh Block, IEC is in the process of conducting a workover of the existing Kruh-21 well which was drilled in 2015. Regarding the Kruh-28 well, as previously announced, IEC unexpectedly found evidence of a potential natural gas bearing reservoir between the 976 and 1,006 feet interval with 30 feet net thickness. This initial evidence was supported by both wireline logging and geologic logging data, and subsequent gas flaring. At present, IEC is in the process of sourcing a suitable rig for the workover of K-21 and K-28 wells which is planned to be conducted in the later part this year. The production from these two wells is anticipated to begin in 2024.
Additionally, a 3D seismic program at Kruh Block, including data acquisition, processing and interpretation will be conducted in early 2024. The result of this seismic program is expected to help IEC estimate the size and potential of new oil and gas reservoirs and upgrade some of the unproved reserves to the proved category.
IEC believes that this new work at Kruh Block, together with what has been learned from the 2022 oil and gas discoveries, is greatly assisting IEC in ascertaining the best locations to conduct its continuous drilling campaign at Kruh Block that will look to develop not only the one formation currently being targeted, but also look to develop what appears to be at least three additional oil formations that could contain significant commercial quantities of oil and natural gas. After completion and full interpretation of this seismic operations, IEC plans to re-start its continuous drilling campaign at Kruh Block in 2024. IEC still plans on drilling a total of 18 new wells at Kruh Block (4 of which have already been completed), by the end of 2026.
At the same time, on IEC’s million-acre Citarum Block, IEC expects to receive the environmental permit for two-dimensional seismic data acquisition in the fourth quarter of 2023, which would allow IEC to begin the data acquisition work in the first quarter of 2024.
Mr. Frank Ingriselli, IEC's President, commented "We are very excited about our Kruh Block contract extension and the significantly improved terms, where we get a significantly larger piece of all the oil produced which, in turn, drives improved reserves and potential future cash flows. All of this bodes well for our company as we look to recommence drilling at Kruh Block in 2024 with the benefit of information from our 2023 exploration activities. 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 1,000,000-acre Citarum Block, where the previous operator drilled a few 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."
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 (1,000,000 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 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 "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 as described herein) 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, 2021, filed on May 2, 2022, 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
