This article first appeared in The Edge Financial Daily, on November 25, 2015.

KUALA LUMPUR: UMW Oil & Gas Corp Bhd (UMW-OG) saw its net profit plunge 99.7% to RM218,000 for the third quarter ended Sept 30, 2015 (3QFY15) from RM66.06 million a year ago on lower profit from its oilfield services segment (OSS), coupled with loss registered by its drilling services segment (DSS).

The profit shortfall was, however, partly mitigated by the foreign exchange gains from the favourable US dollar exchange rate on cash reserves denominated in US dollars held by the company, UMW-OG told Bursa Malaysia yesterday.

Revenue for 3QFY15 also fell by 16.4% to RM212.7 million from RM254.32 million in 3QFY14, as a result of lower revenue contributions from both the DSS and OSS. Overseas operations contributed about 51.5% of the group’s revenue in 3QFY15.

For the nine months ended Sept 30, 2015 (9MFY15), UMW-OG’s net profit was RM36.82 million,  down 79.6% from 9MFY14’s RM180.05 million. Revenue for 9MFY15, however, was up 2.9% to RM708.57 million from RM688.67 million a year ago, on additional revenue from new assets.

UMW-OG said the DSS is expected to see lower levels of asset utilisation in 4QFY15, while its OSS would continue to see the unfavourable impact of low oil prices. As such, OSS profitability is likely to stay flat in 4QFY15, while overall financial performance in FY15 is expected to be challenging.