A potential natural gas reservoir is pushing Indonesia Energy (NYSEAMERICAN:INDO) (IEC) into the green this morning. The oil and natural gas mining company has announced that it may have happened upon a natural gas bearing reservoir. Indonesia Energy reports that the evidence of this discovery is “supported by both wireline logging and geologic logging data.” INDO stock shot up in pre-market trading and has been rising steadily all morning.
What’s Happening With INDO Stock
News of the potential breakthrough sent INDO stock shooting up today. It rose steadily in pre-market trading. And while the stock may have lost some of its early market momentum, it is still up about 20% for the day. INDO’s current trajectory hints at an oncoming rally. Despite spending most of the past month slowly declining, INDO stock has still risen more than 120% since 2022 began.
Let’s take a closer look at what today’s news means for the company.
Has Indonesia Energy (Figuratively) Struck Oil?
As of now, IEC has not directly confirmed the discovery. What we do know is that it happened in the Kruh 28 well on the company’s Kruh block. This 63,000 acre reserve is located offshore of Indonesia’s Sumatra Island. According to a statement released by IEC, the potential reservoir is located at an interval of 976 and 1,006 feet with net thickness of 25 feet. The company also notes that:
If this zone turns out to be a natural gas discovery, it could add significant value to the expected oil discoveries anticipated at Kruh 28. IEC is continuing to drill the well towards the expected oil zone at 2,836 to 2,964 feet (subsea TVD depth) and expects to report final results when the well is anticipated to be completed in the coming weeks.
If INDO stock continues rising, it could lead to the biggest spike the company has seen in months. Shares spiked in early 2022 as the oil boom pushed the microcap oil and natural gas producer onto Wall Street’s radar. While the stock’s gains of almost 500% would eventually come down, the company’s potential remained intact. InvestorPlace‘s Louis Navellier noted that IEC had the potential to become a prominent oil producer, warning investors not to interfere with its bull charge.
For all the favorable coverage it received, INDO stock hasn’t seen a positive growth catalyst in over a month. Despite what some experts predicted, the end of a drilling project in late May did not push shares higher. However, the recent reservoir discovery may be exactly what the company needs to pull back into the green.
What It Means
IEC President Frank Ingriselli says that the reservoir “if fully confirmed, could provide significant upside to our plans to develop the Kruh Block”. The company already had big plans for that particular drilling site before it produced an unexpected, highly valuable asset. Ingriselli also notes that the block’s new wells are expected to generate net revenues of “more than 150% of the cost to drill” within their first year. The discovery of a gas bearing reservoir would only increase this.
At less than $7 per share, INDO stock is a tempting play for investors looking for bullish plays on the oil and gas market. And IEC’s potential reservoir should provide all the incentive that they need to double down on shares.
On the date of publication, Samuel O’Brient 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.