6-K
Indonesia Energy Corp Ltd (INDO)
UNITED STATES
SECURITIES ANDEXCHANGE COMMISSION
Washington,D.C. 20549
FORM 6-K
REPORT OF FOREIGNPRIVATE ISSUER PURSUANT TO RULE 13A-16 OR 15D-16OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of September 2020
Commission File Number 001-39164
| Indonesia Energy Corporation Limited | |
|---|---|
| (Translation of registrant's name into English) | |
| Dea Tower I, 11th Floor, Suite 1103<br><br> <br>Jl. Mega Kuningan Barat Kav. E4.3 No.1-2<br><br> <br>Jakarta, Indonesia 12950 | |
| --- | --- |
| (Address of principal executive offices) |
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨.
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨.
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant's “home country”), or under the rules of the home country exchange on which the registrant's securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant's security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
INFORMATIONCONTAINED IN THIS FORM 6-K REPORT
Attached as Exhibit 99.1 to this report are the unaudited condensed consolidated financial statements of the Indonesia Energy Corporation Limited (the “Company”) as of June 30, 2020 and for the six-month periods ended June 30, 2020 and 2019.
Attached as Exhibit 99.2 to this report is an Operating and Financial Review for the Company’s six-month periods ended June 30, 2020 and 2019.
Attached as Exhibit 99.3 to this report is a press release of the Company, dated September 29, 2020, regarding the results of the Company’s operations for the six months ended June 30, 2020.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKINGSTATEMENTS
This Form 6-K Report and the exhibits hereto contain certain forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding our or our management’s expectations, hopes, beliefs, intentions or strategies regarding the future and other statements that are other than statements of historical fact. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate”, “believe”, “continue”, “could”, “estimate”, “expect”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “should”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements in this Form 6-K Report and the exhibits hereto are based upon various assumptions, many of which are based, in turn, upon further assumptions, including without limitation, management’s examination of historical operating trends, data contained in our records and other data available from third parties. Although we believe that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control, we cannot assure you that we will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements.
Many of these statements are based on our assumptions about factors that are beyond our ability to control or predict and are subject to significant risks and uncertainties that are described more fully in “Item 3. Key Information—D. Risk Factors” in our Form 20-F filed with the SEC on June 15, 2020. Any of these factors or a combination of these factors could materially affect our future results of operations and the ultimate accuracy of the forward-looking statements. Fluctuations in our future financial results may negatively impact the value of our ordinary shares. In addition to these important factors, important factors that, in our view, could cause actual results to differ materially from those discussed in the forward-looking statements include among other things:
| • | our overall ability to meet our goals and strategies, including our plans to drill additional wells at Kruh Block, to develop Citarum Block or acquire rights in additional oil and gas assets in the future; |
|---|---|
| • | the economic, capital markets and social impact of the worldwide novel coronavirus (COVID-19) pandemic on the demand for, and price of, our oil and gas products in Indonesia and the price of our oil and gas products; |
| • | our ability to estimate our oil reserves; |
| --- | --- |
| • | our ability to anticipate our financial condition and results of operations; |
| • | the anticipated prices for oil and gas products and the growth of the oil and gas market in Indonesia and worldwide; |
| • | our expectations regarding our relationships with the Indonesian government and its oil and gas regulatory agencies; |
| • | relevant Indonesian government policies and regulations relating to our industry; and |
| • | our corporate structure and related laws, rules and regulations. |
Should one or more of the foregoing risks or uncertainties materialize, should any of our assumptions prove incorrect, or should we be unable to address any of the foregoing factors, our actual results may vary in material and adverse respects from those projected in these forward-looking statements. Consequently, there can be no assurance that actual results or developments anticipated by us will be realized or, even if substantially realized, that they will have the expected consequences to, or effects, on us. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward-looking statements.
We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable laws. If one or more forward-looking statements are updated, no inference should be drawn that additional updates will be made with respect to those or other forward-looking statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| INDONESIA ENERGY CORPORATION LIMITED | ||
|---|---|---|
| Dated: September 29, 2020 | By: | /s/ Wirawan Jusuf |
| Name: Wirawan Jusuf | ||
| Title: Chief Executive Officer |
EXHIBIT INDEX
EXHIBIT 99.1
INDONESIA ENERGY CORPORATION LIMITED
CONDENSED CONSOLIDATED BALANCE SHEETS
| December 31, | |||||
|---|---|---|---|---|---|
| 2019 | |||||
| (Unaudited) | |||||
| Current assets | |||||
| Cash and cash equivalents | 9,486,757 | $ | 12,241,339 | ||
| Restricted cash –current | 1,000,000 | 2,064,130 | |||
| Accounts receivable, net | 172,879 | 350,672 | |||
| Other assets –current | 719,033 | 418,584 | |||
| Total current assets | 11,378,669 | 15,074,725 | |||
| Non-current assets | |||||
| Restricted cash -non-current | 2,250,000 | 1,766,700 | |||
| Property and equipment, net | 153,302 | 175,437 | |||
| Oil and gas property – subject to amortization, net | 1,264,013 | 1,427,486 | |||
| Oil and gas property – not subject to amortization, net | 1,064,994 | 958,133 | |||
| Deferred charges | 1,210,812 | 1,240,751 | |||
| Other assets –non-current | 504,798 | 512,105 | |||
| Total non-current assets | 6,447,919 | 6,080,612 | |||
| Total assets | 17,826,588 | $ | 21,155,337 | ||
| Liabilities and Equity | |||||
| Current liabilities | |||||
| Accounts payable | 191,592 | $ | 917,241 | ||
| Bank loan | 980,452 | 1,105,741 | |||
| Other current liabilities | 21,798 | 34,250 | |||
| Accrued expenses | 250,036 | 576,386 | |||
| Taxes payable | 93,466 | 105,450 | |||
| Total current liabilities | 1,537,344 | 2,739,068 | |||
| Non-current liabilities | |||||
| Asset retirement obligations | - | 222,344 | |||
| Long term liabilities | 2,000,000 | 2,000,000 | |||
| Total non-current liabilities | 2,000,000 | 2,222,344 | |||
| Total liabilities | 3,537,344 | 4,961,412 | |||
| Equity | |||||
| Preferred shares (par value 0.00267; 3,750,000 shares authorized, nil shares issued and outstanding as of June 30, 2020 and December 31, 2019) | - | - | |||
| Ordinary shares (par value 0.00267; 37,500,000 shares authorized, 7,407,955 and 7,363,637 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively) | 19,754 | 19,636 | |||
| Additional paid-in capital | 38,615,712 | 36,910,568 | |||
| Accumulated deficit | (24,346,222 | ) | (20,783,084 | ) | |
| Accumulated other comprehensive income | - | 46,805 | |||
| Total equity | 14,289,244 | 16,193,925 | |||
| Total liabilities and equity | 17,826,588 | $ | 21,155,337 |
All values are in US Dollars.
1
INDONESIA ENERGY CORPORATION LIMITED
CONDENSED CONSOLIDATED STATEMENTS OFOPERATIONS AND COMPREHENSIVE LOSS
| Six months ended June 30, | Six months ended June 30, | |||||
|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||
| (Unaudited) | (Unaudited) | |||||
| Revenue | $ | 1,021,698 | $ | 2,197,833 | ||
| Operating costs and expenses: | ||||||
| Lease operating expenses | 1,059,269 | 1,313,196 | ||||
| Depreciation, depletion and amortization | 287,760 | 449,074 | ||||
| General and administrative expenses | 3,512,887 | 937,313 | ||||
| Total operating costs and expenses | 4,859,916 | 2,699,583 | ||||
| Loss from operations | (3,838,218 | ) | (501,750 | ) | ||
| Other income (expense): | ||||||
| Exchange gain | 99,441 | 67,036 | ||||
| Other income (expense), net | 175,639 | (21,469 | ) | |||
| Total other income | 275,080 | 45,567 | ||||
| Loss before income tax | (3,563,138 | ) | (456,183 | ) | ||
| Income tax provision | - | - | ||||
| Net loss | $ | (3,563,138 | ) | $ | (456,183 | ) |
| Comprehensive loss: | ||||||
| Net loss | $ | (3,563,138 | ) | $ | (456,183 | ) |
| Total comprehensive loss | $ | (3,563,138 | ) | $ | (456,183 | ) |
| Loss per ordinary share attributable to the Company | ||||||
| Basic and diluted | $ | (0.48 | ) | $ | (0.08 | ) |
| Weighted average ordinary shares outstanding | ||||||
| Basic and diluted | 7,382,246 | 6,000,000 |
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EXHIBIT 99.2
OPERATING AND FINANCIAL REVIEW
The following discussion of the resultsof our operations and our financial condition should be read in conjunction with the unaudited condensed consolidated financialstatements included as Exhibit 99.1 to this report. This discussion contains forward-looking statements that involve risks,uncertainties, and assumptions. Actual results may differ materially from those anticipated in these forward-looking statementsas a result of many factors, including those set forth in “Item 3. Key Information–D. Risk Factors” set forthin our Form 20-F filed with the SEC on June 15, 2020.
Business Overview
Indonesia Energy Corporation Limited (“IEC” or “we,” “us” and similar terminology) is an oil and gas exploration and production company focused on the Indonesian market. Alongside operational excellence, we believe we have set the highest standards for ethics, safety and corporate social responsibility practices to ensure that we add value to society. Led by a professional management team with extensive oil and gas experience, we seek to bring forth at all times the best of our expertise to ensure the sustainable development of a profitable and integrated energy exploration and production business model.
We currently have rights through contracts with the Indonesian government to one oil and gas producing block (Kruh Block) and one oil and gas exploration block (Citarum Block).
We produce oil through a subsidiary which operates the Kruh Block under an agreement with PT Pertamina (Persero), the Indonesian state owned oil and gas company (“Pertamina”). Our operatorship Kruh Block runs until May 2030 under a Joint Operation Partnership with Pertamina. Kruh Block covers an area of 258 km^2^ (63,753 acres) and is located onshore 16 miles northwest of Pendopo, Pali, South Sumatra.
Citarum Block is an exploration block covering an area of 3,924.67 km2 (969,807 acres). This block is located onshore in West Java and only 16 miles south of the capital city of Indonesia, Jakarta. Our rights to Citarum Block run until July 2048 under an agreement with Pertamina.
Overview of Results of Operations
IEC’s key financial and operating highlights for the six months ended June 30, 2020 are:
| · | Total oil production by IEC for the six months ended June 30, 2020<br>was 36,608 Bbl, a decline of 10,642 Bbl for the same period in 2019, which resulted in lower revenue and cost recovery entitlements<br>for the six months ended June 30, 2020 than for the same period in 2019. This decrease was due to the decrease of the reservoir<br>pressure which comes naturally in the primary production phase for our four existing wells. |
|---|---|
| · | The Indonesian Crude Price (or ICP) decreased approximately 40%<br>from an average price of $62.70 per Bbl. for the six months ended June 30, 2019 to $37.41 per Bbl for the same period in 2020,<br>decreasing our revenues and cost recovery entitlements. |
| --- | --- |
| · | Revenues decreased $1.18 million, or approximately 54%, to $1.02 million<br>for the six months ended June 30, 2020 when compared with the same period in 2019. The decrease was due to decline in production<br>and a decrease in ICP. |
| --- | --- |
1
| · | General and administrative expenses increased by $2.58 million to<br>$3.51 million for the six months ended June 30, 2020 when compared to the same period in 2019. Major expenses for the six months<br>ended June 30, 2020 were $0.78 million in salaries and employee benefits, $1.55 million in amortization of share-based compensation,<br>and $0.72 million in fees and expenses arising from IEC’s first six-month period operating as a U.S. publicly-listed and<br>reporting company. |
|---|---|
| · | The amount of lease operating expenses decreased by approximately<br>$0.25 million, or approximately 19%, for the six months ended June 30, 2020 when compared to the same period in 2019 primarily<br>as a result of the extensive expenditures that we incurred in previous periods that provided us with the reduced amount on well<br>maintenances, fracturing activities, and other excessive input of operational costs in 2020. |
| --- | --- |
| · | Net loss for the period was $3.56 million, an increase of $3.11 million<br>when compared to the same period in 2019 as a result of decrease in revenue and increase in general and administrative expenses. |
| --- | --- |
| · | The average production cost per barrel of oil for the six months ended<br>June 30, 2020 was $28.94 compared to $27.79 for same period in 2019. The higher production cost per barrel in 2020 was due to the<br>decrease in production. |
| --- | --- |
| · | Kruh block: with respect to IEC’s 258 km^2^ (63,753<br>acres) production block Kruh, our new 10 year Joint Operation Partnership (or KSO) contract for Kruh commenced in May 2020 for<br>a period ending in May 2030, and we received government approval on our drilling and seismic program for Kruh. |
| --- | --- |
| · | Citarum block: with respect to IEC’s 3,924.67 km^2^ (969,807<br>acres) exploration block Citarum, we are currently designing the 2D seismic program, and we plan to start conducting such program<br>during 2021. |
| --- | --- |
Discussion of June 30, 2020 FinancialResults
Revenue
Total revenue for the six months ended June 30, 2020 were $1,021,698 compared to $2,197,833 for the six months ended June 30, 2019, a decrease of $1,176,135 due to decline in production and decrease in ICP.
Lease operating expenses
Lease operating expenses decreased by $253,927, or 19% for the six months ended June 30, 2020 compared to the same period in 2019 mainly because of the extensive expenditures that we incurred in previous periods that provided us with the reduced amount on well maintenances, fracturing activities, and other excessive input of operational costs in 2020. Furthermore, as the productions of the existing wells at Kruh Block have moved into a more stable level, less incidental or unexpected maintenance has been required, which also contributed to the decrease in lease operating expenses.
2
Depreciation, depletion and amortization (DD&A)
DD&A decreased by $161,314, or 36% for the six months ended June 30, 2020 compared to the same period in 2019 due to the reduced depletion amount charged to expense from the reduced production for the six months ended June 30, 2020.
General and Administrative Expenses
General and administrative expenses increased by $2,575,574 to $3,512,887 for the six months ended June 30, 2020 when compared to the same period in 2019 due to (i) amortization for the share-based compensation; (ii) an increase in salaries and employee benefits; and (iii) fees incurred for professional parties and fees and expenses associated with IEC’s status as a U.S. listed public company.
Exchange gain
We had exchange gain of $99,441 for the six months ended June 30, 2020, an increase of $32,405 when compared to exchange gain of $67,036 for the same period ended in 2019.
Other income (expense)
We had other income of $175,639 for the six months ended June 30, 2020 as compared with other expense of $21,469 for the same period in 2019, due to the income from the write off of long-aged payable.
Net Loss
We had net loss for the six months ended June 30, 2020 in the amount of $3,563,138 compared to net loss of $456,183 for the same periods in 2019, which was due to the combination of the above factors discussed, notably a decrease in revenue and increase in expenses.
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EXHIBIT 99.3
Indonesia Energy Corporation ReportsFinancial Resultsfor the First Half of Fiscal Year 2020
IEC continues its implementation ofdrilling and exploration strategies notwithstanding global challenges, including plans to drill an anticipated 18 new wells atKruh Block over the next few years
JAKARTA, INDONESIA AND DANVILLE, CA,Tuesday, September 29, 2020 - Indonesia Energy Corporation (NYSE American: INDO) ("IEC" or the "Company"), an oil and gas exploration and production company focused on Indonesia, today announced its financial results for the six months ended June 30, 2020.
The COVID-19 pandemic has caused global social and economic disruption, including significantly affecting oil and gas companies worldwide. IEC’s financial and operational results for the six months ended June 30, 2020 reflects the effect of the COVID-19 pandemic and significant reductions in oil and gas prices. While IEC’s previously announced planned new drilling in IEC’s production asset (called Kruh Block) has been delayed, IEC still expects to commence the first new well drilling in Kruh before the end of this calendar year, and to continue new drilling over the next few years, with a total of 18 new wells anticipated. This activity is expected to significantly increase oil production and cash flow for IEC.
Total oil production by IEC from its production asset Kruh Block for the six months ended June 30, 2020 was 36,608 barrels, a natural decline of 10,642 barrels for the same period in 2019 due to the decrease in reservoir pressure during the primary production phase for the four existing wells in the block. Revenues were $1.02 million for the six months ended June 30, 2020, a decrease of $1.18 million. This decline was due to a significant drop in the price for crude oil realized by IEC and to the decline in production. The crude oil price realized by IEC from its production decreased approximately 40% from an average price of $62.70 per barrel for the six months ended June 30, 2019 to $37.41 per barrel for the same period in 2020.
Commenting on IEC’s results of operations, Mr. Frank Ingriselli, IEC's President commented "Because of our company’s strong cash balance and our low cost of production, we have continued producing in our existing Kruh wells and believe we have thus been able weather the unprecedented global economic and health crisis. This paves the way for our planned drilling of new production wells at Kruh, which has the potential to significantly increase our production and cash flow. Also, our drilling operations are expected to decrease production costs to below $20.00 per barrel. All these factors should contribute to our near and long-term goal of maximizing production from the Kruh Block and augmenting shareholder value."
Commenting on IEC’s production, new drilling and exploration activities, Dr. Charlie Wu, IEC’s Chief Operating Officer, commented “The COVID-19 pandemic and prolonged Indonesian government slow down on work activity have delayed the preparation of our previously announced Kruh drilling program. We have updated our drilling schedule and we plan to drill 1 well before the end of 2020, 4 wells in 2021, 6 wells in 2022 and 7 wells in 2023, for a total of 18 new wells over four years. While we have been delayed somewhat in our Kruh drilling schedule due to circumstances for the most part beyond our control, overall, we do not expect this to have a significant impact on our project well economics in the future”.
Dr. Wu further commented: “In addition, our work and strategy for our large exploration block Citarum remains ongoing. We are currently processing environmental permits for conducting two-dimensional seismic data. We are also working with the Indonesian government in implementing a relatively new technology in Indonesia for collecting seismic data, the use vibroseis, which we plan to test in the eastern part of the Citarum block in the fourth quarter of 2020.”
For further information regarding IEC’s results of operations for the six months ended June 30, 2020, please see IEC’s Report on Form 6-K which will be filed with the U.S. Securities and Exchange Commission.
About Indonesia Energy Corporation Limited
Indonesia Energy Corporation Limited (NYSE American: INDO) is a publicly traded energy company engaged in the acquisition and development of strategic, high growth energy projects in Indonesia. IEC’s principal assets are its Kruh Block (63,000 acres) located onshore on the Island of Sumatra in Indonesia and its Citarum Block (1,000,000 acres) located onshore on the Island of Java in Indonesia. IEC is headquartered in Jakarta, Indonesia and has a representative office in Danville, California. For more information on IEC, please visit www.indo-energy.com.
Cautionary Statement Regarding Forward-LookingStatements
All statements in this press release of Indonesia Energy Corporation Limited (“IEC”) and its representatives and partners that are not based on historical fact are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Acts”). In particular, when used in the preceding discussion, the words "estimates," "believes," "hopes," "expects," "intends," "plans," "anticipates," or "may," and similar conditional expressions are intended to identify forward-looking statements within the meaning of the Acts, and are subject to the safe harbor created by the Acts. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of the IEC's control, that could cause actual results (including, without limitation, the anticipated results of IEC’s future exploration and production activities as described herein) to materially and adversely differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth in the Risk Factors section of the Company’s Form 20-F for the fiscal year ended December 31, 2019 filed with the Securities and Exchange Commission (SEC). Copies of the Company’s SEC reports are available on the SEC's website, www.sec.gov, as well as the Company’s website, www.indo-energy.com. IEC undertakes no obligation to update these statements for revisions or changes after the date of this release, except as required by law.
Company Contact:
Frank C. Ingriselli
President, Indonesia Energy Corporation Limited
Frank.Ingriselli@Indo-Energy.com