INDO - Indonesia Energy Corp (INDO) - INDO Begins Drilling

INDO begins drilling in the Kruh Block. Well Kruh-25 is the first of three back-to-back wells. Management expects to drill 5 wells in 2021, 6 in 2022, and 7 in 2023. Other details regarding drilling depth, time to drill, and expected initial production were unchanged. The announcement has been long awaited, with the estimated start date being pushed back several times.Drilling had been delayed by COVID and regulatory approval. INDO initially planned to drill 6 Kruh wells in 2020 with the first well beginning shortly after renewing an operating agreement in May 2020. In July 2020, management pushed back first well expectations to September 2020. In September, it pushed back expectations to "one well in 2020". In December, management cited a January 2021 start date. Delays with COVID and the receipt of a forestry permit were the primary causes for the delays.The delays have not hurt INDO given the rise in oil prices. With oil prices significantly higher than last year at this time, the delay in drilling has worked in INDO's favor. However, further delays would have begun to have an adverse affect on production and cash flow generation and ultimately our valuation of the company. With equipment and permitting now in hand and drilling underway, we feel confident that future wells will be drilled as scheduled.Rating remains OUTPERFORM with a $8 price objective. Management reiterated its expectation that new wells will grow cash flow by 200%. With cash flow increasing, we believe the company's stock price will follow. Read More >>