Indonesia Energy extends Kruh Block government contract for 5 years

Indonesia Energy’s 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, the amended contract is expected to increase IEC’s proved reserves at Kruh Block by over 40%. 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. 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. IEC unexpectedly found evidence of a potential natural gas bearing reservoir with 30 feet net thickness. 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. 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 by the end of 2026.