KUALA LUMPUR (May 21): Higher revenue helped drive oil and gas services provider Deleum Bhd’s net profit up 6.45% to RM1.4 million in the first quarter ended March 31, 2018 (1QFY18), from RM1.32 million previously.

Quarterly earnings per share rose to 0.35 sen from 0.33 sen in 1QFY17.

According to its filing, the group’s higher net profit was supported mainly by power and machinery, as well as oilfield services segments — but offset by the loss-making integrated corrosion solution segment.

This, it said, was due to “higher costs incurred to close out the Pan Malaysia Painting and Blasting contract and to support the fulfilment of the maintenance, construction and modification (MCM) contract” by Petronas.

“In addition, the current quarter’s results were dragged down by a higher tax charge and other operating losses following the completion of the tax review by the tax authorities for the years of assessment from 2010 to 2015,” it said, which totalled RM1.86 million.

Deleum’s 1QFY18 revenue was 20.61% higher at RM108.51 million, from RM89.96 million in the same quarter last year, as it enjoyed higher revenue contribution across all operating segments thanks to higher average oil prices.

On prospects, Deleum points to downside risks toards crude oil prices due to “ongoing geopolitical developments, a return to excess supplies from non-conventional producers and a potential weakening in the OPEC/non-OPEC production cuts”.

Capital and cost reduction measures taken by oil majors since the 2014 oil price crash are expected to roll into 2018, which will impact sales, maintenance, and retrofits of its turbines, said Deleum.

Its power and machinery segment will hence focus on supporting customers on existing installed turbine base. “Concurrently, the segment will continue its efforts to enhance operational efficiencies and strict costs discipline to optimise margins.”

Deleum also shared that the Pan Malaysian Slickline Contracts, which underpins its oilfield services segment — particularly slickline services and equipment — will expire in 3QCY18 and 1QCY19.

“Initiatives are underway to extend or re-secure the contracts with existing and new customers,” it said.

On the integrated corrosion solution segment, Deleum expects MCM contract revenue to pick up in the coming months, adding that its “painting and alternative blasting contract” with Petronas will be extended for another year from Nov 2017.

The group, it added, will continue its integration efforts across core businesses, enhance cash flow and improve operational efficiencies, particularly its international operations.

Shares of Deleum closed up 10 sen or 8.2% at RM1.32 — its highest in a year and a half — for a market capitalisation of RM546.87 million.