20-F: Indonesia Energy Corporation Limited Reports Annual Results for Fiscal Year 2024

Indonesia Energy Corporation Limited's annual report reveals a decrease in revenue and a net loss for the fiscal year ended December 31, 2024, amidst fluctuating oil prices and operational challenges.

Summary

• Indonesia Energy Corporation Limited (IEC) reported its annual results for the fiscal year ended December 31, 2024.
• The company experienced a decrease in total oil production, dropping by approximately 22.74% from 58,616 barrels in 2023 to 45,287 barrels in 2024.
• Revenue decreased by 24.34%, from $3,525,454 in 2023 to $2,667,508 in 2024, primarily due to lower oil production and slightly lower average Indonesian Crude Price (ICP).
• The average ICP slightly decreased by 1.46% from $77.61 per barrel in 2023 to $76.48 per barrel in 2024.
• General and administrative expenses increased by 53.51% to $5,170,103 in 2024, mainly due to higher share-based compensation, office expenses, and professional service fees.
• The company incurred a net loss of $6,343,541 for 2024, compared to a net loss of $2,642,684 in 2023.
• The average production cost per barrel increased by 18.18% to $61.05 in 2024.
• The company has identified material weaknesses in its internal control over financial reporting for the year ended December 31, 2024.
• The company plans to resume drilling in 2025 with the goal of drilling 18 additional wells over time and significantly increasing its production rate.

Sentiment

Score: 4

Explanation: The document presents a mixed picture, with some positive developments (e.g., plans to resume drilling) but also significant challenges (e.g., decreased revenue, increased net loss, material weaknesses in internal control). Overall, the sentiment is slightly negative.

Positives

• The company plans to resume drilling in 2025 with the goal of drilling 18 additional wells over time and significantly increasing its production rate.
• The company has identified material weaknesses in its internal control over financial reporting for the year ended December 31, 2024 and is taking steps to remediate those weaknesses.

Negatives

• Total oil production decreased by approximately 22.74% from 58,616 Bbl in 2023 to 45,287 Bbl in 2024.
• Revenue decreased by 24.34%, from $3,525,454 in 2023 to $2,667,508 in 2024.
• The average ICP slightly decreased by 1.46% from $77.61 per Bbl in 2023 to $76.48 per Bbl in 2024.
• General and administrative expenses increased by 53.51% to $5,170,103 in 2024.
• The company incurred a net loss of $6,343,541 in 2024, compared to a net loss of $2,642,684 in 2023.
• The average production cost per barrel of oil increased by 18.18% to $61.05 in 2024.
• The company has identified material weaknesses in its internal control over financial reporting for the year ended December 31, 2024.

Risks

• Fluctuations in oil prices can significantly impact revenue and profitability.
• Delays in drilling programs can affect production targets and financial performance.
• Material weaknesses in internal control over financial reporting could lead to inaccurate financial reporting and loss of investor confidence.
• The company's operations are concentrated in Indonesia, exposing it to regulatory and political risks specific to that region.
• The company's ability to continue as a going concern is dependent on its ability to generate sufficient cash flow and secure additional financing.

Future Outlook

The company plans to resume drilling in 2025 with the goal of drilling 18 additional wells over time and significantly increasing its production rate. The company expects that for 2025, the oil price will be around US74 per barrel.

Industry Context

The report highlights the challenges and volatility in the oil and gas industry, influenced by factors such as geopolitical tensions, economic conditions, and regulatory changes. The company's performance is viewed in the context of these broader industry trends.

Comparison to Industry Standards

• The report mentions that Indonesia's upstream oil and gas investment in 2023 increased by 13%, surpassing the global upstream oil and gas investment growth, which was estimated at around 6.5%.
• The report also mentions that the average gross initial production of the 29 oil wells drilled in Kruh Block is 191 BOPD, with an average gross production of 173 BOPD throughout the wells first year of production, considering an exponential decline rate per year of 21%.

Management Changes

Related Party Transactions

• The company leased office space from PT Wiranusa Karana Mardika, an entity owned by the CEO, Dr. Wirawan Jusuf, incurring rent expense of $64,730 for Giesmart Plaza Zone 2 and $90,929 for Zone 1, 3&4 in 2024.

Stakeholder Impact

• Shareholders: The decrease in revenue and net loss may negatively impact shareholder value.
• Employees: Potential cost reductions and operational changes could affect employees.
• Customers: The company's ability to meet energy demand may be affected by production levels.
• Creditors: The company's ability to repay debt may be affected by its financial performance.

Next Steps

• Complete the interpretation and modeling of the seismic data, expected in the second quarter of 2025.
• Commence the new drilling program in the second half of 2025.
• Continue to implement measures to remediate the identified material weaknesses in internal control over financial reporting.

Key Dates

Keywords

oil production, financial results, Indonesia Energy Corporation, Kruh Block, Citarum Block, oil and gas, reserves, drilling, ICP, production costs