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urt by the global oil price plunge, oil and gas exploration company Sugih Energy (SUGI) has been forced to scale down its oil and gas production this year.

Sugih Energy, controlled by Singapore-based trust fund company Goldenhill Energy Fund and state oil and gas giant Pertamina’s pension fund, slashed its production target this year to 4,000 barrels of oil per day (bopd) from previous expectation of 5,000 bopd.

Gas production is only likely to amount to 3 million standard cubic feet of gas per day (mmscfd), a third of the previous forecast of 10 mmscfd.

“We are not the operator so we are just following the assumptions of the operator,” Sugih Energy director Indra Wijaya told reporters on Thursday, pointing out that the operators’ assumption might be somewhat conservative as global oil prices slumped from US$110 per barrel at the end of 2014 to around $50 recently.

Sugih Energy currently manages three oil and gas assets in Sumatra, namely the Lemang Block with a 34 percent participating interest as non-operator, Selat Panjang Block with a 55 percent stake as operator and Kalyani Block with a 85 percent share as operator.

Looking into the company’s financial performance, in 2015, its revenues nosedived to $1.99 million, compared with $5.36 million in 2014 on the back of declining oil prices.

With revenues under pressure, the firm booked a net loss of $39 million after being able to record a net profit of $4.37 million a year before. The huge loss was caused by Sugih Energy’s decision to impair its asset value of the Lemang and Selat Panjang blocks due to the fluctuation of oil prices.

As part of the company’s strategy to survive, it has planned to start oil production in Lemang Block this year, after securing approval last year from authorities to develop the block.

“We will start the oil production in Lemang Block in July, estimated to produce 4,000 barrels of oil per day,” Sugih Energy president director Riyanto Soewarno said.

Meanwhile, Selat Panjang Block, located in the eastern region of Riau province, Sumatra, will be used to produce oil and gas as usual. Currently, Selat Panjang Block is able to produce approximately 1 mmscfd of gas and about 80 to 90 bopd, he added.

Kalyani Block, the third asset managed by the company, is currently in the process of securing a field operation permit from the Environment and Forestry Ministry regarding a two-dimensional seismic survey. The seismic survey — a technique similar to ultrasound used to develop images of rock layers below the ground — plans to cover 112.6 kilometers in the Bentayan area, which is located amid conservation and productive forest.

To support the exploration activities in Kalyani Block, Sugih Energy also plans to buy subsurface and production data for $17,664 and $1.3 million to carry out the seismic survey.

This year, the company has allocated a total of $33 million in capital expenditure, which will be used for drilling, well servicing, as well as piping work, Indra said.

Shares in Sugih Energy, traded on the Indonesia Stock Exchange (IDX) under the code SUGI, traded at
Rp 312 (23 US cents) apiece during the mid-day trading session on Friday. The stocks have slumped 33.6 percent so far this year, badly underperforming the broader benchmark Jakarta Composite Index’s (JCI) 9 percent gain. (win)