Velesto Energy back in the red in 3Q on low rig utilisation, higher costs

Velesto Energy back in the red in 3Q on low rig utilisation, higher costs
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KUALA LUMPUR (Nov 29): Velesto Energy Bhd returned to the red in the third quarter ended Sept 30, 2021 (3QFY21) with a net loss of RM52.04 million, on low rig utilisation rates and reactivation costs for its oilfield services.

Quarterly revenue fell 29.94% to RM91.54 million, from RM130.66 million.

The group, which operates six jack-up rigs, saw utilisation of 51% compared with 60% in 3QFY20, when the group made a net profit of RM479,000.

It also booked reactivation and start-up costs for its contract in Vietnam, resulting in its oilfield services segment posting losses, despite a higher revenue from a year ago.

Velesto was back in the black with a net profit of RM16.3 million in 2QFY21 — but that was only after including insurance claims of over RM550 million for the total loss of its Naga 7 rig.

Rig utilisation in the latest quarter of 51% was an improvement from the 38% seen in 2QFY21.

With the net loss in the latest quarter, Velesto’s net loss in the nine-month period ended Sept 30, 2021 (9MFY21) widened to RM96.25 million, from a RM1.56 million net profit in 9MFY20.

This as nine-month revenue fell 51.1% to RM219.02 million, from RM447.88 million, with rig utilisation down to 39%, from 68%.

On prospects, Velesto said five of its six rigs are being utilised, while the last rig is being tendered out for a number of contracts.

“At present, the upstream activities are continuing globally with more contracts being awarded. In Malaysia, a number of new contracts have been awarded with a few more being tendered out.

“The group is actively bidding for new tenders for contracts scheduled to commence next year,” Velesto said.

Shares of Velesto closed unchanged at 13 sen on Monday (Nov 29), giving the group a market capitalisation of RM1.07 billion.

S Kanagaraju