April 14 proved to be another bright day for crude oil and gas stocks. Like most oil and gas stocks, the Jakarta-based Indonesia Energy Corp. Ltd. (INDO) also witnessed an upswing on Friday. But the stock soon succumbed to corrections after registering gains of 65.93% during the regular session. Thus, following its shot up to $26.40 in regular trading, the stock went down to $24.82 in the after-hours with a loss of 5.98%.
No official news or SEC filing from the company was responsible for the uptick in the stock on Friday.
What Happened?
In early 2022, INDO stock skyrocketed to reach as high as $86 per share from a mere $4.50 a share in just a matter of days. This sudden jump came from the rally in oil prices due to the Russian invasion of Ukraine. The invasion had many sanctions being slapped on the country causing a supply chain constraint to spike oil and gas prices. Since the upsurge in oil prices has calmed down so has that in the stock. INDO has considerably cooled down since the peak to now trade near the $24 price level.
Oil and gas prices are expected to be further weighed down in the coming weeks. The supply chain disruptions and a further decline in Russian oil supply are anticipated to hit the prices in the week ending April 22. Thus, with an expected decline in oil prices, it seems investors had oil and gas stocks rally on Friday to garner some more profits before the stocks go further down in the week ahead.
Social media discussions, stock sentiment, etc. are the most likely drivers in the uptrend.
INDO’s Current Position & Outlook
Despite not being a large business, INDO comes with a distinctive competitive advantage. The Indonesia-based oil and gas explorer produces oil at a significantly low price. Certain factors including its strategy to accumulate medium-sized matured oil fields with proven undeveloped reserves help it generate much profit with lower costs. Such reserves are usually overlooked by larger companies or are not a part of their asset selection criteria.
While this in itself gives the company a huge advantage for growth in the future as oil prices are still near $100 a barrel, other factors are also contributors. The increasing sanctions on Russian oil and energy imports are opening doors to finding alternatives. Thus, there is a significant opportunity for growth here.
Conclusion
Having commenced drilling in 2 two productions wells in April, INDO is looking forward to initiating operations in two more wells in H2 2022. Furthermore, with plans of enhancing production and cash flow by over 200%, the company is set for a bullish future.
