The second of the company's two back-to-back producing wells is where drilling activities have started, according to Indonesia Energy Corporation Limited (INDO) (IEC). The K-28 well is the name of this well. The K-27 well, the first of these two subsequent wells, was finished as a discovery well in May 2022. K-27 is the name of the first well. On the company's 63,000-acre Kruh Block on Sumatra Island, these wells are being dug.
Drilling at K-28 commenced on Wednesday, June 22, 2022. K-28 has a target total depth of 3,400 feet, and it is expected to take approximately 45 days to complete all drilling operations.
As an update to the drilling plan timing for 2022, IEC plans to drill a third new well at Kruh Block which is anticipated to commence drilling in the in September 2022 timeframe, and likely a fourth new well sometime before the end of 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, in the K-28 well, is expected to average production of over 100 barrels of oil per day over the first year of production and 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 $90.00/barrel (which is approximately 20% below the most recent closing price for Brent), the well is expected to generate $2.4 million in net revenue in its first twelve months, which would be enough to recover more than the cost of drilling the well in the first year of production.
The Kruh Block is located on Sumatra Island where IEC is already producing oil from 5 existing wells.
Mr. Frank Ingriselli, IEC’s President, commented “We are excited to have commenced drilling our second of two back-to-back wells 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."