INDO - Indonesia Energy Corp (INDO) - Well Performance Update Has Both Good And Bad News
Indo released production updates following the completion of Kruh Well 26. On the positive side, the company reports that production has increased 50% with the completion of the well and an earlier well. Production is expected to increase further as the well de-waters. The well came in on budget, and management expects the well to pay for itself within twelve months at current oil prices.But there is also bad news. Unfortunately, management also announced that its Kruh 25 well is currently shut-in as a result of significant damage due to flooding during monsoon rains. The well will be reworked, and we have full expectations it will return to a production level similar to Kruh 26. However, the delay is yet another in a series of issues facing operations. The initial two wells faced drilling delays due to COVID.What's next for the company? The company plans on drilling two wells in the next 60 days and two more in the third quarter of 2022. This is slightly different wording from previous estimates for a well in 2021 and 18 wells by 2024. Management expects production of 450 BOE/day with the completion of the next two wells. This is in line with previous management comments regarding doubling production in 2021 but is coming slightly later than expected. Value is still there, and stock is looking even more attractive with recent share price weakness. The Indo story is still intact even as there have been delays in drilling and production. These delays have largely been offset by the rise in oil prices earlier in the year, and we feel comfortable reiterating our price target of $8 per share. With the shares of INDO having fallen 64% from a peak price of $8.71 last March to a level near $3, we believe their is exceptional value at current prices. Read More >>