Indonesia Energy Corporation (NYSE American: INDO) is an energy company engaged in the acquisition and development of strategic, high growth projects in Indonesia. The company has two world class assets, one on the island of Sumatra and the other on the Island of Java. It has several hundred barrels of oil in daily production which puts the company near cash flow positive.
Indonesia may not be familiar to all investors, but it is the 4th largest country in the world and it is the largest economy in Southeast Asia. The county’s GDP has been growing at a rate of over 5% per year over the last decade. Its demand for energy likewise continues to grow across the board at a rate of over 6% per year in conjunction with the country’s economic growth.
The two assets owned by the company are its Kruh Block consisting of approximately 65,000 acres located on the Island of Sumatra. The Citarum Block is a 1-million-acre block on the Island of Java. For perspective, 1 million acres is approximately 27 times the size of Manhattan.
The company completed its IPO on the New York Stock Exchange in December 2019 and was the first Indonesian company to launch an IPO on the NYSE.
Indonesia Energy is one of the many featured companies slated to present at The Microcap Conference 2024, set for Jan. 30-Feb. 1 at Caesars Atlantic City Hotel and Casino. This three-day conference presented by DealFlow Events features technical programming designed for microcap investors and a presenting company track for pitching and socializing.
The management team is comprised of experienced executives, including President Frank Ingriselli, who previously was the president of Texaco International Operations, running a key division of one of the largest energy companies in the world. At the time Ingriselli left Texaco, Indonesia was the largest producing asset in the world for Texaco. Chevron, which took over Texaco has produced over 13 billion barrels of oil from Indonesia. After leaving Texaco at the time of its merger with Chevron, Ingriselli founded other successful NYSE energy companies, begore joining Indonesia Energy.
Since its IPO, Indonesia Energy has drilled four successive oil discoveries and one natural gas discovery on its Kruh Block on Sumatra Island. The company has recently announced that it is continuing on its development plan to drill 14 more wells over the next couple of years on the Kruh Block. What makes this asset so attractive is the cost to produce a barrel of oil which is about only $20 a barrel. At today’s oil prices of $80 a barrel, that provides for an enormous margin. In fact, at that price, the company expects each of these wells to recover the cost to drill such a well in less than a year. That is a rate of return in excess of 100%.
Looking to the Future
The company plans to move forward with the development of its “crown jewel,” a 1-million acre block on the Island of Java. The company has the rights to develop and produce from this block for more than 25 years. The previous operator of this block drilled four natural gas discoveries, and now it is Indonesia Energy’s opportunity to turn this into a major world-class producing asset. As Ingriselli notes, the potential of this asset is gigantic: estimated to potentially contain over 1 billion barrels of oil-equivalent producible reserves.
Indonesia Energy is in the right place at the right time.
One of the most significant recent developments is the Government of Indonesia, acting through its national oil company Pertamina, granted the Company significant improvements to its existing contract on the Kruh Block. These include:
- Increasing Indonesia Energy’s after-tax profit split (meaning the percentage of oil produced at the Kruh Block wells) to 35% from the current 15%, for an increase of more than 100%.
- Granting a 5-year extended term of the contract which is expected to increase Indonesia Energy’s proven reserves at Kruh Block by over 40%.
- Furthermore, given the increased profit split, Indonesia Energy’s anticipated net cash flow calculations based on its Kruh Block development plan are expected to increase by over 200% versus Indonesia Energy’s anticipation under the prior contract.
As Ingriselli points out, “In short, we’ve never been more excited about Indonesia Energy’s potential, and we look forward to continuing our efforts as we seek to drive positive shareholder value.” Learn more.
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