On May 28, 2006, PT Lapindo Brantas targeted gas in the Kujung Formation carbonates in the Brantas PSC area by drilling a borehole named the 'Banjar-Panji 1 exploration well'. In the first stage of drilling the drill string first went through a thick clay seam (500–1,300 m deep), then through sands, shales, volcanic debris and finally into permeable carbonate rocks.[1] At this stage steel casing was installed in the borehole to help stabilize it. At 5:00 a.m. local time (UTC+7) a second stage of drilling began and the drill string went deeper to about 2,834 m (9,298 ft), this time without a protective casing, after which water, steam and a small amount of gas erupted at a location about 200 m southwest of the well.[10] Two further eruptions occurred on the second and the third of June about 800–1000 m northwest of the well, but these stopped on June 5, 2006.[10] During these eruptions, hydrogen sulphide gas was released and local villagers observed hot mud, thought to be at a temperature of around 60 °C (140 °F). [11]

A magnitude 6.3 earthquake occurred in Yogyakarta [12] at ~06:00 local time 27 May 2006, approximately 250 kilometres Southwest of Sidoarjo. Seven minutes after the earthquake a mud loss problem in the well was noted. After two major aftershocks, the well suffered a complete loss of circulation.[13][14] A loss of circulation happens when drilling mud - necessary for maintenance of wellbore stability - that is pumped down a shaft does not return to the surface but is lost into some opening or a fault system. This mud loss problem was finally stopped when loss circulation material was pumped into the well, a standard practice in drilling an oil and gas well. A day later the well suffered a ‘kick’, an influx of formation fluid into the well bore. The kick appears to have been killed within three hours. The next day, on 29 May 2006, steam, water and mud began erupting up to 200 meters above the well, a phenomenon that is now known as the Lusi mud volcano