Indonesia Energy Corp. Ltd. (INDO), has filed proposed terms for a US$15 million of its common stock in United States' Securities and Exchange Commission, said the company yesterday (11/13) - Photo by the Company

JAKARTA (TheInsiderStories) – Indonesia Energy Corp. Ltd., (INDO) has filed a US$15 million of its common stock in United States’ Securities and Exchange Commission (SEC), said the company yesterday (11/13). The producer offered 1.5 million shares at a price range of $9 to $11 a unit. 

Aegis Capital Corp. is the sole book-runner for the deal, replacing Maxim Group in the most recent filing. As reported, in July, the Jakarta-based company has filed an initial public offering (IPO) planned and aimed to raise up to US$23 million from the shares sale to SEC.

Indonesia Energy was founded in 2014 and booked $6 million in sales at the end of 2018. The company is an integrated energy resources development company engaged in exploring of oil and gas sector potential.

Assuming a successful IPO at the midpoint of the proposed price range, the company’s enterprise value at IPO would approximate $70.8 million. Excluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 20.0 percent.

The firm is an oil exploration & production company with assets in Indonesia. INDO has produced unpredictable and high variable financial results. As of June 30, 2019, the company had $6.2 million in cash and $8.5 million in total liabilities. Free cash flow during the twelve months ended June 30, 2019, was $1.2 million.

The company was founded in 2014 and booked $6 million in sales for the 12 months ended December 31, 2018. It plans to list on the NYSE American under the symbol INDO. Aegis Capital Corp. is the sole book-runner on the deal, replacing Maxim Group in the most recent filing.

Currently, the company holds two oil and gas assets through its operating subsidiaries in Indonesia, namely the Kruh Block, a producing block, and the Citarum Block – an exploration block. The firm has also identified a potential third block located in the Rangkas Area.

Management is headed by Co-Founder, Director and CEO Dr. Wirawan Jusuf, who previously co-founded and served as a Commissioner of PT Asiabeef Biofarm Indonesia.

INDO acquired rights to the Kruh Block in 2014 and started its operations in Nov 2014 through its local subsidiary Green World Nusantara, under a Technical Assistance Contract  with PT Pertamina, a state-owned oil and natural gas producer, until May 2020, after which operatorship of the block will continue as a Joint Operation Partnership for 10 years until May 2030.

The Kruh Block, located 25 km northwest of Pendopo, Pali, South Sumatra and covering an area of 258 square km (or 63,753 acres), is capable of producing an average of approximately 9,000 barrels gross of oil per month.

Since 2014, the company has increased its Kruh Block gross production from 250 barrels of oil per day (bopd) in 2014 to 400 bopd gross in early 2018, which management believes the company achieved by the drilling of three new wells and upgrade of the production facilities.

The Citarum Block covers an area of 3,924.67 square km (or 969,807 acres) and is located onshore in West Java, only 16 miles away from Jakarta, Indonesia’s capital.

INDO is focused on the acquisition of medium-sized blocks as they are mostly overlooked by major oil and gas exploration companies that compete with larger oil assets.

According to a 2018 market research report by The Asean Post, the Indonesian oil and gas industry accounted for nearly 25 percent of the country’s economy in 2006 and had decreased to 3 percent in 2016.

The main factors driving market decline were falling demand for oil as well as an oversupply of the commodity, which resulted in a decline of prices per barrel from $115 in June 2014 to under $35 by the end of February 2016.

Moreover, investments for oil and gas exploration in Indonesia had fallen from $1.3 billion in 2012 to $100 million in 2016.

The country has launched initiatives to revitalize the sector, while the report cites its Energy and Mineral Resources Ministry, which forecasts $200 billion in investments over the next 10 years through incentives, including tax-free imports of drilling equipment and cost recovery.

Despite that, a PwC report titled Oil and Gas in Indonesia 2017 put a highlight on Indonesia’s challenge of depletion in oil resources and the availability of new reserves.

According to the International Energy Agency (EIA), Indonesia is the third-largest geothermal power producer in the world while the country’s Energy Ministry plans to increase the nation’s geothermal production capacity to 5,000 MW by the end of 2025.

Major competitors for the acquisition of new oil blocks include Pertamina, Indonesia’s state oil corporation, and other major oil and gas companies that operate in the country.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com