Indonesia Energy Corp.’s (IEC) joint operation contract term with state-owned Pertamina, covering the Kruh block in Indonesia, has been extended by 5 years to September 2035 from May 2030.
The company believes 2023 exploration work on the block, which covers about 63,000 acres onshore South Sumatra, coupled with planned seismic operations and learnings from the 2022 oil and gas discoveries, will help locate the best drilling sites as it looks to develop the current formation target plus what IEC believes may be at least three additional oil formations that could contain significant commercial quantities of oil and natural gas (OGJ Online July 13, 2022, Apr. 8, 2022).
The amended joint operation contract increases IEC’s after-tax profit split to 35% from the current 15%, and, given the 5-year extended term, is expected to increase IEC’s proved reserves at the block by over 40%.
Kruh block development plan
IEC is currently conducting a workover of the existing Kruh-21 well which was drilled in 2015. At the Kruh-28 well, IEC unexpectedly found evidence of a potential natural gas bearing reservoir between the 976 and 1,006 ft interval with 30 ft net thickness. The initial evidence was supported by both wireline logging and geologic logging data, and subsequent gas flaring. IEC is sourcing a suitable rig for workover of the two wells, which is expected later this year, with production anticipated to begin in 2024.
A 3D seismic program at the block, including data acquisition, processing, and interpretation, will be conducted in early 2024, after which, IEC plans to re-start its continuous drilling campaign. The company plans to drill 18 new wells on the block (4 of which have already been completed), by end-2026.