RH Petrogas has commenced exploration drilling on the Kepala Burung production sharing contract (PSC) in Southwest Papua, Indonesia, spudding the first of two commitment wells.

Karim-1 Exploration Well Details

The onshore Karim-1 exploration well was spudded in the Arar block, approximately 23 kilometres east of the existing Arar production cluster. The well is being drilled vertically to a proposed depth of about 4300 feet using the company's own rig, with an estimated drilling and completion time of 43 days. This wildcat well is designed to evaluate the oil potential of the Miocene Kais reservoir within a structural closure located updip of the previous Klaifi-1 oil discovery, which is about seven kilometres to the northwest. The Miocene Kais formation is a carbonate sequence that forms a broad shallow marine platform with localized reefal complexes and serves as the main producing reservoir in the PSC.

Drilling Program and Strategic Rationale

Following the completion of Karim-1, the drilling rig will be deployed to drill the Northwest Klagagi-1 exploration well, situated approximately 15 kilometres northeast of the Arar production cluster and about 12 kilometres from the Karim-1 site. These two wells constitute the operator's exploration commitment workscope for the Kepala Burung PSC, which began in 2020. Preparations for this drilling campaign have been underway since 2024, including securing environmental and forestry permits, procurement, site preparation, and upgrading the drilling rig to enhance its capacity and reliability. Drilling the wells back-to-back is a strategic move to significantly reduce rig mobilization and ancillary logistics costs, as they are located in a remote but prospective area in the eastern part of the Arar block.

Corporate Context and Recent Financial Performance

After a portfolio revamp, RH Petrogas now holds only two producing assets in Indonesia: the Kepala Burung and Salawati PSCs, where the national energy company is its sole partner. The company aspires to become a leading independent in the ASEAN region. However, recent financial results show a third-quarter net loss of US$3.786 million, a significant reversal from a net profit of US$3.912 million in the same period of 2024. Revenues for Q3 2025 were US$19.469 million, down 13.8% year-on-year, primarily due to a 14.1% decrease in the average realized oil price (from US$78 to US$67 per barrel) and lower volumes of crude oil lifted from the Kepala Burung and Salawati PSCs.

Production and Operational Challenges

Gross production for the third quarter of 2025 was 6486 barrels of oil equivalent per day, a 6.6% decrease compared to 6945 boepd in the same quarter of 2024. This decline was mainly due to the shutdown of several high-productivity wells resulting from power outages. Additionally, other expenses increased significantly in the third quarter, largely because of a US$7.512 million write-off of exploration and evaluation assets related to costs incurred for the acquisition and processing of a 3D seismic survey conducted in the offshore work area of the Salawati PSC.