New York-listed Indonesia Energy Corporation (IEC) has made back-to-back discoveries on its Kruh block onshore Sumatra, Indonesia, and plans to start production from both next month.
The Kruh 25 and 26 discovery wells are expected to boost IEC’s production and revenues by more than 100%. The block produced an average of about 9900 barrels of oil per month in 2018. The operator plans to now perform stimulation work and bring them on stream in October.
IEC said the Kruh 26 well took only 18 days to drill to a total depth of 3376 feet, which is about half the time that was budgeted. Both Kruh 25 and Kruh 26 were drilled under the previously announced budget of US$1.5 million per well.
Additionally, about 111 feet of oil sands were encountered at Kruh 26 between depths of 3100 and 3228 feet. The oil-bearing interval in this onshore well was thicker and larger than had been anticipated meaning the total reserves potential could be larger than pre-drill estimates.
“The Kruh 26 well is a significant achievement for our company, which has now completed two discovery wells in less than 60 days,” IEC president Frank Ingriselli said.
“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 programme, Kruh 27, in the fourth quarter. We look forward to continuing to deliver on our development plans and maximise returns on our investments to grow shareholder value."
IEC plans to drill 18 wells on the Kruh block over three years with three of those wells now being drilled this year. The initial plan envisaged five of the 18 wells being spudded in 2021.
This slight delay was primarily caused by the permitting process in Indonesia as well as coronavirus-related delays, IEC confirmed on Wednesday.
Of the total eight proved and potentially oil-bearing structures on the block, three structures — North Kruh, Kruh and West Kruh — have combined proven developed and undeveloped gross crude oil reserves of 4.99 million barrels and probable undeveloped gross crude oil reserves of 2.59 million barrels as of 1 January 2019.
IEC’s short to medium-term objective is to ramp up production by drilling the 18 new wells, to optimise the block’s upside potential and increase reserve values with seismic surveys.
The company holds a 100% participating interest in the Kruh block under a Joint Operation Partnership (KSO) from May 2020 until May 2030.
The Jakarta-headquartered operator’s main assets are the 63,000-acre Kruh block and the Citarum block, which covers almost 1 million acres onshore Java.
IEC operates the Citarum block under a gross split production sharing contract, which is due to expire in July 2048. Four wells have been drilled at different locations on this Indonesian block over the past decade. All four discovered gas and two of them flowed gas during testing.