# Criterium Energy’s Matthew Klukas on oil cash flow, gas development and reserve growth in Indonesia - Link: https://www.directorstalkinterviews.com/criterium-energys-matthew-klukas-on-oil-cash-flow-gas-development-and-reserve-growth-in-indonesia/4121249786 - Published: 2026-04-22T14:04:20+01:00 - Author: Amilia Stone **Criterium Energy Limited **(TSX:CEQ) Chief Executive Officer Matthew Klukas caught up with DirectorsTalk to discuss how the company’s oil assets are supporting cash flow while gas developments and reserve growth build the next phase of momentum in Indonesia. **Q1: On the oil side of the business, what should investors focus on when thinking about cash flow, production, and long-term value?** **A1:** The oil side of Criterium Energy has really been our engine to date, and this has generated the cash needed to bring on Southeast Mengoepeh. We talked about that transformation during our last interview around what that means for our cash flow, it’s really a step change. While we talk a lot about the growth from the gas within our portfolio, we’re equally excited about the oil potential as well. Now, we had some initial success with low-cost workovers, generating a substantial amount of free cash flow for us, about $3 million of incremental cash flow in 2024. That was from an investment of just under $600,000. So these fields, our oil fields, have really responded well to investment. The next step here is waterflood. This is increasing the pressure in the reservoir to increase the recovery factor or, said another way, just produce more oil. So, putting some numbers to the size of this opportunity, with primary recovery, we anticipate about 3.5 million barrels remaining in this. These numbers that I’m quoting are all from our recently released reserve report that we released in mid- March. This number, 3.5 million barrels, when we apply waterflood, can increase to up to 11.7, so close to 12 million barrels. That’s only for one of our two fields, the largest one, that’s only for the larger Mengoepeh field. We still have the PLT field, but we’re doing some studies on that. So it’s a very sizeable opportunity when we look at what waterflood can do. This is a proven technology, and we anticipate conducting a pilot programme here in 2026, with implementation commencing in 2027. Potential also exists for oil in the formation underlying our main producing formation. It’s called the TAF; it’s our main producing formation and right beneath it is called the Lemat. Now, this is more akin to what you would call an unconventional play. Although, if I were to say that to people here in North America, they’d look at me and say my rocks are too good to be unconventional. The Lemat formation, has been previously tested, it’s been intersected by many of the wells within our field, it’s flowed oil, but requires stimulation. Now, again, this is a proven technology, and combined with horizontal drilling, could unlock another sizeable resource. This is currently estimated at just under 5 million barrels in our contingent resource category as well. So, you see a key theme here again. When we talk about the gas, we talk about using infrastructure that’s in place to lower the cost of bringing on incremental gas production. Now we’re doing the same thing with the oil. We’re going to use existing wells, existing processing facilities that we have and we own. We will use that to bring on both waterflood as well as the Lemat formation. So, 2026 here in the near term is really about progressing that through some feasibility studies and in 2027, we’ll look to implement that. Finally, on the oil side, we also have the West Salawati PSC. This is more on the development and exploration side of it, but still some very exciting opportunities there. Here, ideally, we’ll bring in a partner to be able to progress that. The geology is very intriguing. We’ve got a series of pinnacle reefs, one has been drilled, produced, discovered, and now it’s stepping out and drilling the next series of these. The fiscal terms are fantastic there; it’s a cost recovery PSC. We have about 55 million barrels or $55 million in a cost recovery pool so very attractive fiscally to invest and produce in West Salawati. **Q2: Since the Iran conflict, have you seen any meaningful change in the backdrop for oil and gas?** **A2:** We have, and I’ll answer this question in two parts. The first will be more on the macro side of things in Indonesia and then I’ll zoom in on what that means really for Criterium. Really in Indonesia, what this means is it’s really just increased the need for domestic production. Indonesia has about 23 days’ worth of fuel supply or oil supply in storage. Now before the Iran conflict, there was a lot of focus on domestic production and now the spotlight is even brighter. This just results in support for us as an operator to increase our production, accelerate developments. I would say this is most meaningful in sizeable projects like Lengo, that’s our offshore gas development project within the Bulu PSC. We’ve seen an increased pressure from the government, both to us and our JV partners who we’re working with, to really push this project forward and get it online. From a Criterium Energy perspective, this obviously is a boost to our cash flow. The increase in oil production, the oil price boosts our cash flow, it allows us to bring Southeast Mengoepeh online. It also allows us now to give us optionality between both our oil and gas projects as well. As I mentioned, with oil at about $55/$60 a barrel, it was very difficult for some of the waterfloods, the Lemat play that we just talked about, to compete with some of the low-cost gas opportunities that we had. Now they’re very much on a level playing field. So, we have the opportunity now, we’re generating more cash flow, and we have the ability of more competition within our portfolio to allocate that capital to the highest return projects or the quickest payback project as well. So, it really has provided us with that optionality. Ideally, we do both oil and gas in parallel, but it’s been definitely a boost to our cash flow and allows us to go out and capture and accelerate some of these projects. Share on: