Indonesia Energy Advances Sumatra Drilling, Aims to Boost Production

JAKARTA, INDONESIA – January 09, 2026

Indonesia Energy Corporation (NYSE American: INDO) has initiated key pre-drilling operations for two new oil wells at its 64,000-acre Kruh Block in Sumatra, signaling a significant step forward in its expansion strategy. The company confirmed it is on track to commence drilling the first well, designated "K-29," before the end of the first quarter of 2026, with the second well, "WK-5," to follow immediately after in a back-to-back sequence designed to optimize costs and timelines.

This development marks a pivotal moment for IEC, as it aims to substantially increase production from a historically stable asset and contribute to Indonesia's pressing domestic energy needs.

A Strategic Push for Production Growth

The move to drill the K-29 and WK-5 wells is the culmination of extensive preparation and strategic planning. Recent 3D seismic work completed in early 2025 provided crucial data that upgraded wellsite prospects, leading to a reported 60% increase in proved gross reserves at the Kruh Block. This new geological insight underpins the company's confidence in the current drilling program, which represents the first phase of a broader plan to develop up to 18 new production wells on the block in the coming years.

On-the-ground preparations are well advanced. According to the company, drilling pads for the K-29 well are fully constructed, and materials for the WK-5 pad have been delivered. Essential hardware, including drilling pipes, drill bits, and wellheads, are already secured at the site. A 750-horsepower drilling rig has been selected and is currently undergoing final inspections before mobilization.

This campaign is not just about adding wells; it's about fundamentally enhancing the block's efficiency and output. The Kruh Block, which averaged 160 barrels of oil per day (BOPD) in 2023, is currently producing from only one of seven identified geological structures, suggesting significant untapped potential. By drilling the new wells back-to-back, IEC aims to minimize costly mobilization and demobilization periods, a key part of its strategy to drive production costs below $20 per barrel.

"We are excitedly moving forward with our plans to commence drilling of the next 2 wells planned on our 64,000-acre Kruh Block," stated Mr. Frank Ingriselli, IEC's President, in a public announcement. "We believe we have world class assets in Indonesia that should contribute to our strategic plan to maximize returns on our investments and grow shareholder value.”

Navigating a Complex Operational Landscape

Bringing new oil wells online in Indonesia involves navigating a multifaceted operational and regulatory environment, and IEC's recent progress demonstrates a clearing of several critical hurdles. The company has successfully secured surface location and subsurface geology approvals for both new wells from key Indonesian government entities, including SKK Migas and the state-owned oil company, Pertamina.

Perhaps most significantly, IEC has obtained approval for the procurement and transport of drilling explosives. These materials are tightly controlled by the Indonesian government, and securing them represents a major logistical and administrative milestone, signaling that the project has the necessary government backing to proceed. The explosives have reportedly been moved to a designated secure warehouse near the drilling location.

These procedural victories are essential in a country where the government is actively trying to balance regulatory oversight with the need to attract investment. Operating in an ecologically diverse region like Sumatra also requires adherence to stringent environmental protection and management laws, adding another layer of complexity to the project execution.

Fueling Indonesia's Domestic Energy Needs

IEC's expansion at the Kruh Block is occurring within a critical national context. Indonesia, a former OPEC member, now faces a significant energy deficit. The nation consumes approximately 1.6 million barrels of oil per day but produces only around 600,000, creating a substantial supply gap that is filled by costly imports, which reached $36.3 billion in 2024.

In response, the Indonesian government has made boosting domestic oil and gas output a national priority. It has initiated policies aimed at streamlining the notoriously complex bureaucracy surrounding energy exploration. In a notable move, the government has slashed the number of required permits for oil and gas exploration from over 300 down to 140, an effort to accelerate investment and reactivate idle assets to combat a natural production decline rate of 7-15% annually.

While the output from IEC's new wells will be a modest contribution to the national total, it directly aligns with this overarching government strategy. Every barrel produced domestically helps reduce the country's reliance on foreign oil, strengthening its energy security and retaining capital within its economy. The project serves as a case study for how international operators can work within the evolving Indonesian framework to develop resources.

A High-Stakes Bet with Investor Backing

For Indonesia Energy Corporation, the drilling program is a high-stakes endeavor crucial to its financial future. Recent financial reports paint a picture of a company with a strong balance sheet—characterized by a low debt-to-equity ratio of 0.03 and a healthy current ratio of 6.36—but facing profitability challenges, with negative operating and net margins reported over the last year.

This drilling campaign represents a direct and strategic deployment of capital aimed at transforming the company’s revenue and cash flow profile. A successful drilling outcome could significantly increase reserves and daily production, providing the free cash flow needed to fund further development at both the Kruh Block and the company's larger Citarum Block asset on the island of Java.

Investors appear to be optimistic about the plan. In the week leading up to the announcement, IEC's stock price (NYSE American: INDO) saw an increase of over 20%, suggesting market confidence in the company's operational progress and strategic direction. The company plans to provide further updates on its operations at the upcoming DealFlow Discovery Conference on January 28, where President Frank Ingriselli is scheduled to present. An updated corporate presentation is expected to be released on the company's website ahead of the event, offering stakeholders a more detailed look at the path forward.