This article first appeared in The Edge Financial Daily on November 1, 2019

KUALA LUMPUR: Having returned to the black in the second quarter ended June 30, 2019 (2QFY19) with a net profit of RM11.91 million, Velesto Energy Bhd believes it is on track to post a stronger second half (2H) backed by higher charter rates and full utilisation of its jack-up rigs.

“Based on the current plan, we should be on track [to achieve stronger earnings in the second half], supported by the new contracts that have been awarded at a higher price than before, and also three contracts that have been carried forward from last year … so we are looking at full utilisation [for jack-up rigs] at the third and fourth quarters of this year,” said its president Rohaizad Darus, after an extraordinary general meeting (EGM) here yesterday.

He said the group will continue to tender for jobs to increase Velesto’s order book — currently at RM1.5 billion — to maintain its revenue stream going forward.

“At present we are bidding everywhere. Right now we are strong in Malaysia and we have six rigs working in Malaysia. Two of the rigs are expected to expire at the end of next year and one will expire by the middle of next year.”

He said only those three rigs are capable of being utilised outside of Malaysia, which is why they are split between Southeast Asia, Malaysia as well as the Middle East, but stressed the focus is on Southeast Asia because logistics and costs would be easier to manage.

Velesto’s 2QFY19 profit of RM11.91 million was achieved on the back of a 40% year-on-year jump in revenue to RM157 million as the drilling service segment improved, the result of higher rig utilisation and average charter rate. Velesto’s net loss in the first six months to end-June narrowed to RM10.31 million from RM19.07 million, as revenue grew by 21.61% to RM284.08 million.

At the EGM, two resolutions on an employee share option scheme and proposed allocation of options to Rohaizad were carried as 92.8% of shares voted in favour.

Shares in Velesto closed half a sen or 1.39% down to 35.5 sen yesterday, valuing the company at RM2.92 billion. Year-to-date, its share price has nearly doubled from 18 sen. The counter was the second most actively traded counter, with 100.76 million shares transacted.