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Stonegate Capital Partners Updates Coverage On Indonesia Energy Corporation Limited (NYSE:INDO)

Wednesday, 02 June 2021 08:30 AM

DALLAS, TX / ACCESSWIRE / June 2, 2021 / Indonesia Energy Corporation Limited (NYSE:INDO): The full report can be accessed by clicking on the following link: http://stonegateinc.com/reports/INDO Q420 .pdf.

Company Description

Indonesia Energy Corporation Limited (IEC), through its subsidiaries, operates as an oil and gas exploration and production company in Indonesia. It holds 100% interests in the Kruh Block, a producing block covering an area of 63,753 acres with net crude oil proved reserves of 1.98 million barrels located to the northwest of Pendopo, Pali, South Sumatra. The Company's Citarum Block is an exploration block covering an area of 969,807 acres located onshore in West Java. The company was incorporated in 2018 and is headquartered in Jakarta, Indonesia and has a representative office in Danville, CA.

Summary

  • Stable cash flow generating property - The Company's Kruh Block is an onshore, producing block covering an area of 63,753 acres with net crude oil proved reserves of 1.98 million barrels. The block produced an average of 275 BOPD in 2019 with average production costs of $21.34 per barrel of oil.
  • Drilling program points to further growth - IEC's short-to-medium term objectives for the Kruh Block entails (1) optimizing the block's upside potential to increase reserve value, (2) increase production within the next 3 years with 18 new wells, and (3) generate free cash flow and increase IEC's value. To this end, IEC launched a reserve development plan that will see it drill 5 new well in 2021 followed by 6 in 2022 and 7 in 2023. Each well is expected to cost ~ $1.5M and once all 18 wells are completed, IEC is targeting $136M in future net revenue.
  • ‘Derisked' assets with proven presence of hydrocarbons -The Citarum Block is an exploration block covering an area of 969,807 acres located onshore in West Java. The block is located 16 miles from Jakarta, a major gas consumption area in Indonesia, which significantly derisks the asset. Additionally, the Citarum Block is in the Northwest Java basin, which has a long history of exploration and production since the 1960's. Importantly, the area has an existing pipeline network that will allow the gas produced from the Citarum Block to be directly distributed into the market. IEC's first priority with the asset is to confirm the value of the block by proving reserves and then monetize the asset through production and sale of natural gas.
  • Indonesia has positive macroeconomic drivers - Indonesia is the largest economy in Southeast Asia, the fourth most populous nation in the world, and the 16th largest global economy. Additionally, over the past 10 years, Indonesia average annual GDP growth rate has been more than 5% per year. Given these macroeconomic tailwinds, total Indonesian energy demand is projected to grow 5.3% per year through 2050.
  • Valuation - We are using a DCF model to generate a NPV for the Company's Kruh Block. We model production numbers and costs largely aligned with management's forecasts. We then use a 10% discount rate and incorporate a sensitivity analysis to crude prices to arrive at our valuation range of US$8.75 to US$17.50 with a mid-point of US$13.50. See page 6 for more details along with our discussion on potential upside for the Citarum block.

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high-quality investment opportunities.

CONTACT:

Stonegate Capital Partners
[email protected]
(214) 987-4121

SOURCE: Stonegate Capital Partners
Topic:
Company Update
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