KUALA LUMPUR (May 31): Velesto Energy Bhd sank into the red in the first quarter ended March 31, 2021 (1QFY21) with a net loss of RM60.47 million from a net profit of RM16.33 million in the corresponding quarter of 1QFY20 a year ago, as its drilling rig utilisation slumped.
Quarterly revenue fell 75.08% to RM43.93 million from RM176.27 million, as the drilling segment dragged, mainly due to lower average jack-up rig utilisation of 28% under its drilling services segment, as compared with 84% in 1QFY20 and 50% in 4QFY20, its stock exchange filing today showed.
Its performance was also dragged by forex losses, though this was slightly offset by narrowed losses in its oilfield services segment. The group recorded a quarterly loss per share of 0.74 sen for 1QFY21, versus an earnings per share of 0.2 sen for 1QFY20.
On its Naga 7 drilling rig, which submerged offshore Sarawak on May 3 following an incident, Velesto said it is working with the insurance underwriters and Protection & Indemnity (P&I) Club on the way forward. “The rig and other related liabilities are adequately covered under the Hull & Machinery insurance and the P&I Club, respectively.
“Progressing on the insurance claims, Velesto Drilling Sdn Bhd, as the insured under the H&M policy has on May 31, 2021 issued a notice of abandonment of the submerged rig, Naga 7 to the H&M insurers, pursuant to the H&M policy and currently await their response,” Velesto said.
Naga 7 was scheduled to undertake a contract worth US$8 million with ConocoPhilips for three wells. The group has six other jack-up rigs, and four hydraulic workover units.
On its drilling services segment, Velesto said there are still a small number of new drilling contracts in Malaysia to be awarded within this year.
As for its oilfield services segment, Velesto noted slower-than-anticipated progress for plugging and abandonment (P&A) activities in Malaysia, although it is currently bidding for a number of jobs. It also noted that there is gradual demand recovery in China for oilfield services, with its subsidiary there securing a number of new contracts.
Nevertheless, the slower than anticipated pace of recovery in the global economy, as well as in the oil and gas industry, necessitates the board to remain cautious, Velesto said. “The board is of the view that the financial performance for 2021 will continue to be challenging,” it added.
Shares of Velesto Energy traded unchanged at 13.5 sen today, valuing the group at RM1.07 billion.
