Indonesia Energy, an oil and gas exploration and production company focused on Indonesia, has discovered oil in its "Kruh 26" well after having announced in July the discovery of oil in its Kruh 25 well. These are 2 back-to-back discoveries of oil for IEC from its previously announced new drilling plans. IEC now plans to conduct stimulation work and commence production from both wells in October 2021.

It is expected that when full production from these 2 new wells is achieved (which is anticipated to occur by the end of October) that such production is expected to increase IEC's overall daily revenues and oil production by over 100%.

IEC also announced that the Kruh 26 well took only 18 days to drill to a total depth of 3,376 feet, which is approximately half of the time that was budgeted. Both Kruh 25 and Kruh 26 were drilled under the previously announced budget of $1.5 million per well.

Additionally, approximately 111 feet of oil sands were encountered at Kruh 26 between the depths of 3,100 and 3,228 feet. This oil-bearing interval (meaning the top of the oil zone to the bottom of the oil zone) in the Kruh 26 well was thicker and therefore larger than anticipated, meaning that the total reserve potential could be larger than anticipated.

Mr. Frank Ingriselli, IEC's President, commented, 
"The Kruh 26 well is a significant achievement for our company, which has now completed 2 discovery wells in less that 60 days. The plan is to now stimulate and commence production next month from both wells, which is expected to double our company's daily revenue and production. This will set us up to drill the third well for the 2021 drilling program, known as "Kruh 27", in the fourth quarter. We look forward to continuing to deliver on our development plans and maximize returns on our investments to grow shareholder value."

IEC also announced an update for its overall drilling program at Kruh Block. Previously, IEC announced that its three-year plan was to drill a total of 18 wells over a three-year period, with 5 of those wells drilled in 2021. IEC still plans to drill a total of 18 wells over the three-year period with 3 of those wells in 2021 and the balance of 15 more wells over the balance of the remainder of the three-year period. This slight delay was primarily caused by the permitting process in Indonesia as well as COVID-19-related delays.

Indonesia operations

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.

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.

Our short-to-medium term objective is to ramp up production by drilling 18 new wells, to optimize the block’s upside potential and increase reserve values with seismic surveys.

We 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.

Citarum BLOCK (Delineation & Appraisal)

Citarum is a gas prone block covering an area of 3,925 square kilometers (969,807 acres) located just 16 miles south from Jakarta, Indonesia’s capital city. The geographic location of the block places it within a short distance of the major gas consumption area in Indonesia and, geologically, on the Northwest Java Basin. The region has been known to have a proven petroleum system due to its long history of exploration and production efforts since the 1960’s, where, currently, the combined oil fields produce a total of 45,000 BOPD and 450 MMSCFD.

In the past 10 years, 4 wells were drilled in different locations across the block and, providentially, all 4 wells discovered natural gas while gas flow was recorded in 2 of those wells. So far, more than US$ 40 million has already been invested in Citarum Block.

The results from the 4 wells drilled in Citarum and the amount of data available regarding the block are the key factors for us in selecting Citarum as the block’s risk profile was significantly reduced with the discovery of gas across the area. Likewise, the fact that gas zones exist at different depths between 1,000 feet and 6,000 feet contributes to the potential of commercially developing these gas discoveries.

Citarum Block is operated under a Production Sharing Contract (PSC) with the Government of Indonesia based on a “gross split” regime until July 2048.

Rangkas Area

IEC identified an onshore open area of 3,970 km² (or 981,008 acres) in the province of West Java, adjacent to the Citarum block. The Company believe that this area, also known as the Rangkas Area, holds large amounts of crude oil due to its proven petroleum system and location on the Northwest
Java basin.

To confirm the potential of Rangkas Area, Indonesia Energy entered into a Joint Study program with the Indonesian Government to identify the stratigraphy and structural geology of the area, perform a basin analysis and assess the petroleum system of the area with the objective of determining its oil and gas potential.

Reports, including data from four wells drilled pre-World War II and two wells drilled in 1991, have already indicated the presence of hydrocarbon in the area with the discovery of several oil seeps and one gas seep, showing that the petroleum system in the area is indeed proven with the occurrence of Eocene-Oligocene-Miocene source, reservoir and seal rocks similar to adjacent major producing hydrocarbon areas in West Java. Also, a dozen prospects with individual closure area up to 3,700 acres have been identified with typical stacked reservoirs between 985ft and 6,500ft depth.

If the Joint Study produces satisfying results, a PSC contract for the Rangkas Area would potentially be available to us through a direct tender process.

KeyFacts Energy: Indonesia Energy Indonesia country profile