In March, Indonesia Energy (NYSEAMERICAN:INDO) surged by more than 808% in less than a month. However, INDO stock has since declined by 69% from its peak as investors started losing interest in the company.
Nonetheless, the excitement could return again. Indonesia Energy (IEC) recently started its drilling operations at the first of its two back-to-back producing wells. Drilling commenced on April 7, and it is expected that operations will be completed around May 22.
The drilling of each well will cost IEC just $1.5 million. If the operations are successful, each well could generate an estimated net revenue of $2.4 million in the first year. The company has 18 of these wells planned by 2024.
Even more interestingly, the current drilling site at the 63,000-acre Kruh block pales in comparison to the Citarum block. The Citarum block is just 16 miles south of Indonesia’s capital, Jakarta, with area comparable to the state of Rhode Island. Additionally, the company holds operatorship of the block until 2048.
As for INDO stock itself, it also seems to be bottoming out. The stock found support at $15, and it has recovered by more than 25%. It will likely rise even higher in the coming weeks as oil prices surge and the company concludes the drilling.
Of course, the project can still fail. However, it is still likely INDO stock will continue to be a profitable long-term investment. On the other hand, a successful drill could deliver remarkable gains. It is also worth noting the company has a market capitalization of just $144 million. In my opinion, this is highly undervalued compared to its potential.
Thus, I believe INDO stock is undoubtedly a buy. Rising oil demand, IEC’s aggressive drilling projects and the operatorship of a significant block call for a value far higher.
Disclosure: On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.