Oil prices have rebounded sharply from the level assumed when we launched coverage in April. Brent oil prices, which were down near $20 at the time of our initiation, have rebounded to a level in the mid forties. We had modeled a rebound of $5 per quarter, a much slower rebound than we are witnessing. We are maintaining our long-term oil price assumption of $50 but now believe pricing will reach that level several years earlier than previously modeled. Higher oil prices mean higher earnings and cash flow. We are significantly raising our earnings and cash flow projections for the upcoming quarters to reflect higher prices. In addition, we have increased confidence that the company will meet our estimates. Importantly, higher cash flow will mean less external financing will be needed to build out the Citarum Block over the next few years. We have now lowered our debt financing assumption in 2021 to $10 million from $25 million. We described INDO as a company poised to weather the storm, and the storm is clearing. The company remains on track to drill six wells in the Kroh Block beginning in the third quarter. On June 10th, the company announced commencement of a ten-year contract for production in the Kroh Block. While this was largely expected, the agreement was an important step towards beginning drilling. Higher cash flow means higher valuation. Although we are not changing our long-term energy price assumptions, increased near-term cash flow has a positive affect on our company valuation. When we initiated coverage during a period of low oil pricing, we estimated a fair value for INDO to be $6 per share which we used to set our price objective. We now value the stock closer to $8 per share and reiterate our Outperform rating at prices below that level. We are also raising our fundamental analysis rating to 3.0 from 2.5 to reflect less financing risk. Read More >>