Indonesia Energy Corporation Limited EnerCom Denver – The Energy Investment Conference

Good morning. I'm Blanca Andrus with EnerCom, and at this time I'd like to introduce our next presenting company, which is Indonesia Energy Corporation. Presenting for the company is Frank Ingriselli, the CEO. Indonesia Energy Corporation is a publicly traded company, and it's engaged in high energy growth energy projects in Indonesia. Better to tell you about that is Frank himself, and please give him a warm welcome.

Thank you. Thank you, Blanca, and it's wonderful to be here.

Good morning to everyone, and I'll start the slide off with this beautiful picture of a morning in Indonesia. I'm going to tell you that Indonesia is not just Bali and a place to go to vacation, but it also contains a heck of a lot of oil. I'll show that historically and the great opportunity it offers here now. I do have to point out, I don't see many companies here presenting with foreign assets, but the previous company, Dune, has assets in Turkey. I remember back in my Texaco days visiting Turkey and looking at getting an exploration interest there. We didn't do it, but I'm glad to see it's successful now. Our cautionary statement. Now let me just tell you a little about Indonesia and our company.

We went public in December of 2019 on the New York Stock Exchange. Actually, which is interesting, Indonesia is the fourth largest country in the world. India, China, U.S., and then Indonesia. However, we were the first Indonesian company to ever do an IPO on the New York Stock Exchange, which is amazing to have a country, Indonesia, which is the biggest economy in Southeast Asia, the seventh largest economy in the world, and we were the first, this tiny little micro-cap company to be the first. That's why we had the ambassador to the United Nations ringing the opening bell with us, the ambassador to Washington, D.C., the Secretary General of the country for our tiny little micro-cap company. We like to think of ourselves, especially in Indonesia, with its rich history in oil and gas production, that we're in the right place at the right time.

We were hit right after going public, as everybody knows, with COVID, and so that kind of delayed operations for about a year and a half. Indonesia was hit pretty hard. Indonesia is made up of islands, and they didn't allow flights between island to island, and so we just couldn't do any work. But starting in 2022, we drilled four successful oil wells, but we were not that happy with the results, and I'll talk about that just a little more. We're striving to be, as everybody I'm sure at this conference, to be a low-cost producer. Right now, I think we're at about $28 a barrel in production cost. We think that with the next two wells we're drilling right now, we'll drive that number down to $20 a barrel.

We've got another block, another asset that we're not drilling on yet called our Citarum Block, and I'll talk about that a little more as we go on. Let me just go past this first page here. What we've got going on right now, and the marketplace has been waiting for this, it took a little bit of time, but we've got our K-29 well starting to drill right now. We're down at about 2,900 feet with a TD of about 3,500 feet, and we're drilling away. This is in the jungles of Sumatra. As you can see in the pictures here, the top left picture, you can kind of see the, I'll call it the countryside, but the jungle's nearby. Quite a challenge to get there. I was just there several weeks ago and a very difficult spot to get to.

We've got that well currently drilling, and that rig will then move to another location a couple of kilometers away, and we'll be drilling that next well. Those two wells, if they get the production rates we're expecting, and we have a slide on the production rates we do expect, should bring the company cash flow positive exiting this year. We're excited for that, excited to finally do that as a company. Here's a little snapshot. I won't go through the details on here, but it shows you some of the islands of Sumatra. The island with the green notation on it is the island of Sumatra. The one with the red notation on it is the island of Java, the biggest island where the city of Jakarta, the capital city, is located.

Let me tell you a little about with Sumatra and a little bit of history there on how I got involved in Indonesia Energy. I've been 45 years in this industry. I started at Texaco Inc., spent 23 years there. Rose up the corporate ladder pretty aggressively. I became president of Chevron Technology Ventures, and then president of Texaco International Operations. Fortunately, I'll say, Chevron took over Texaco in the year 2001. I exited, and I did four startup companies where I was the founder. This last one, Indonesia Energy, is one where I wasn't the founder, but I am the president. When I exited Texaco, and this is very interesting, in Indonesia, 2001, the biggest producing asset in the world for Texaco was Indonesia. Number one in the world. Chevron, which took over Texaco, the second biggest producing asset for Chevron in the world was Indonesia.

Together, we were producing 1 million barrels a day. If you look at Chevron's website today, they'll tell you they've produced that asset 13 billion barrels of oil, and almost all of that is on that island right there where you see the green spot on the island of Sumatra. It was kind of a no-brainer when the investment banks contacted me and said, "Hey, we're doing an IPO for an Indonesia company. Would you like to join them?" What a great way in my career, I'm 72 years old. What a great way to go back to what was the biggest producing asset in my portfolio when I left Texaco. I'm never looking back, and we're just looking forward on the development of this company and these assets. Indonesia, as I mentioned before, largest economy in Southeast Asia, growing by leaps and bounds.

Their GDP has been going at a clip, except for the year or 2 years during COVID, at over 6% a year. It is rich in its terms of its history in the oil and gas industry. It started about 100 years ago with Shell, and now they have got every major company in the world operating there. The demand for energy in Indonesia, of course, when you get a 6% GDP growth, everything is growing at about a 6% clip. The challenge for Indonesia, though, is that with that old Texaco Chevron asset, that production from 2001 declined to now only about 150,000 barrels a day. Chevron is no longer there after 50 years. The government now is running that contract. But Indonesia became an importer of oil.

What they did is look for entrepreneurial companies, and we are blessed with being an indigenous Indonesia Energy Corporation company, and provided some special terms for us to develop oil and gas assets in that country. So we are blessed with that, and the opportunity is there because when you have a demand for oil, the pricing is strong. We are getting paid in Brent, and the natural gas asset, which I will talk about, is twice the price of gas as in the U.S. Here is a cool little diagram that shows all the different companies around the world who are operating in Indonesia. Everybody is there. Our Kruh Block, and this is the block on Sumatra, where we are drilling our current well. We have drilled 4 successful wells. But I am going to just jump right to the next slide here, as we did. This is kind of interesting.

We had a lot of people in the marketplace saying, "When are you going to drill your next wells? When are you going to drill your next wells? You drilled those 4 wells." We were not very satisfied with the results from those first 4 wells. We were hoping for higher production rates and less of a decline in those production rates. So we said, "You know what? We are going to step back. We are going to do something smart," and we did some 3D seismic. 29 kilometers of 3D seismic, interpreted it, and we said, "You know what?

We are going to now drill at the most economically efficient, best locations to get that production rates where we expected it to be and to get that decline rate where we expected it to be." And so it took some time, and the marketplace was sending me nasty emails of, "When are you going to drill? When are you going to drill?" We are drilling now, but I think we are doing it smartly and in the right way. So we have got our well drilling. I encourage you, go into our website. You will get this presentation there. But this is a great slide for anybody who wants to do some economic analysis on the company, is we call this our single well economic slide. It is very detailed in here, but what is important takeaway here is the bottom left side corner tells you that at $70 and $80 a barrel at Brent.

Right now Brent is a little over 90, but at $80 a barrel in Brent, we drilling this well, K-29. This well will cost us $1.8 million to drill. That is it. The expectation is that we will get about 125 barrels of oil per day. At $80 a barrel, the net cash flow coming out of that will be north of $2 million. So $1.8 million to drill year one after every bit of cost, every bit of government take, every bit of tax, everything in our pocket, net cash flow will be $2 million. An over 100% rate of return on that one well. If you look at the company's burn rate, we are about $4 million a year all in.