Indonesia Energy Corporation (IEC) has started drilling the first of two consecutive development wells on its onshore Kruh block in Indonesia.
The K27 well, which was sunk on April 7, has a planned total depth of 3,400 feet and is expected to take 45 days to complete all drilling operations.
IEC plans to immediately begin drilling the K28 well on the 63,000 acre Kruh Block upon completion of this well. Each of these wells is expected to cost around $1.5 million to drill and complete and – if successful – each is expected to produce north of 100 barrels of oil per day in the first year after commissioning.
Based on IEC’s contract with the Indonesian government and assuming an oil price of $90 per barrel, each well is expected to generate $2.4 million in the first 12 months of production.
“We are delighted to have delivered on our commitment to begin drilling these two back-to-back wells and to aggressively take advantage of the current high oil prices and move our company into a potential positive cash flow position this year, opening the path for new drilling and the growth of our business in 2022 and beyond. We believe that Kruh Block is a world-class asset that should significantly increase our cash flow as we drill additional wells and seek to maximize returns on our investments and increase shareholder value,” said IEC President Frank Ingriselli.
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“Additionally, we are moving forward to aggressively set the stage to develop our potential one billion barrel Citarum natural gas block, where the previous operator drilled some gas finds.”
A third development well in 2022 on Kruh’s production sharing contract on the island of Sumatra is expected to be drilled in June or July while IEC is expected to drill a fourth before the end of the year.
IEC is already producing from five wells on its Kruh PSC.
The company earlier announced that it plans to drill and complete 18 additional production wells on the block before the end of 2024.