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.

Drilling Operations and Well Details

The company spudded the onshore Karim-1 exploration well in the Arar block, approximately 23 kilometers east of its existing Arar production cluster. Using its own rig, the vertical well will be drilled to a proposed depth of about 4300 feet, 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 kilometers to the northwest. The Miocene Kais formation is a carbonate sequence forming a broad shallow marine platform with localized reefal complexes and is the main producing reservoir in the PSC.

Exploration Commitment and Logistics

Following the completion of Karim-1, the drilling rig will be deployed to drill the Northwest Klagagi-1 exploration well, situated approximately 15 kilometers northeast of the Arar production cluster and about 12 kilometers from the Karim-1 site. These two wells are part of the operator's exploration commitment workscope for the Kepala Burung PSC, which began in 2020. Drilling them back-to-back is expected 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. 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.

Company Portfolio and Financial Performance

After a portfolio revamp, RH Petrogas now holds only two producing assets in Indonesia: the Kepala Burung and Salawati PSCs, with the national energy company as its sole partner. The company aspires to be a leading independent in the Asean region. Financially, the company reported a third-quarter net loss of US$3.786 million, compared to a net profit of US$3.912 million for the same period in 2024. Revenues for Q3 2025 were US$19.469 million, down 13.8% from the previous year, primarily due to a 14.1% decrease in the average realized oil price (from US$78 per barrel in Q3 2024 to US$67 per barrel in Q3 2025) and lower crude oil lifting volumes in the Kepala Burung and Salawati PSCs.

Production and Other Expenses

Gross production for the third quarter of 2025 was 6486 barrels of oil equivalent per day, a 6.6% decrease from 6945 boepd in the same quarter of 2024. This decline was mainly due to the shutdown of several high-productivity wells caused by 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.

Regional Context

Southwest Papua became Indonesia's 38th province in December 2022 after being separated from the larger West Papua province.