KUALA LUMPUR (Aug 25): Velesto Energy Bhd sank into losses again with a net loss of RM15.25 million for the second quarter ended June 30, 2020 (2QFY20) after it had been profitable for four consecutive quarters. In contrast, the group reported a net profit of RM11.91 million a year earlier.
The oil rig operator expects a tougher year. It warned in its quarterly result announcement that its performance this year would be weaker than that in 2019 amid continuing uncertainties on the global economy and the demand for oil and gas.
The group said only five of its seven jack-up drilling rigs are chartered while some contracts are expiring in the next few months.
"At present, there is a small number of new short-term contracts being awarded domestically and globally, and we will continue to tender and negotiate for new contracts," Velesto Energy said.
For its oilfield services segment, it said the entire hydraulic workover units of the group are currently idle. The demand for workover and plug and abandonment activities are soft due to the weak market environment.
Nonetheless, there might be a gleam of hope in China. Velesto Energy said its oilfield services operation there is seeing a gradual recovery in demand. The viability of this subsidiary will be continuously monitored and evaluated.
On its quarterly losses, Velesto Energy attributed them to an additional RM10.9 million expenses in relation to the Covid-19 pandemic and the lower contributions by both drilling and oilfield services segments.
Revenue fell 10.25% to RM140.95 million versus RM157.05 million a year ago, due to lower performances by both drilling and oilfield services segments.
For the cumulative six months ended June 30, 2020, the group remained profitable, posting a net profit of RM1.08 million against a net loss of RM10.31 million a year ago. Revenue grew 11.7% to RM317.22 million compared with RM284.08 million previously.
Velesto Energy's share price closed unchanged at 15 sen, valuing it at RM1.23 billion. Year-to-date, the stock has fallen 61% from 38 sen at end-2019.
Edited by Kathy Fong