KUALA LUMPUR (Nov 28): Velesto Energy Bhd, whose share price has more than doubled year to date, posted a net profit of RM33.32 million in the third quarter ended Sept 30, 2019 (3QFY19) compared to a net loss of RM13.6 million a year ago.

Quarterly revenue expanded 38% to RM208.5 million in 3QFY19 from RM150.32 million a year ago.

The group, which has been in rough waters for the past three years, attributed the improved performance to higher utilisation of rigs and average charter rates.

Velesto is confident of continued demand for both jack-up drilling rigs and hydraulic workover units which will benefit the group moving forward.

“Improvements in time charter rates and contract durations are also seen based on recently awarded contracts,” said the rig operator in the filing with Bursa Malaysia.

According to Velesto, the group’s average jack-up rig utilisation increased to 92% in the quarter under review from 75% a year ago.

In addition, the Hydraulic Workover Unit (HWU) also recorded higher revenue arising from higher utilisation and day rates in the current quarter of 2019, said Velesto.

“Drilling activities have continued to increase with more contracts being tendered out and awarded, both locally and globally. The group’s seven jack-up drilling rigs are under contracts. However, Naga 3 and Naga 7 are currently undergoing the mandatory five-yearly Special Periodic Survey (SPS).

“After completion of the SPS which is expected towards the end of the year, both are scheduled to resume work under their existing respective contracts. With the continuation of the long-term contracts awarded in 2019, the rigs utilisation is expected to continue to be high in 2020,” said Velesto on the group's prospects.

The demand for hydraulic workover units is also improving with two of the four units owned by the group contracted in 2019, while a number of tenders are presently in progress, it added.

The group’s drilling services segment recorded a profit before taxation of RM42 million in 3QFY19 compared with a loss of RM4.1 million a year ago.

Velesto was also profitable for the nine months ended Sept 30 (9MFY19).

Cumulative net profit came in at RM22.8 million compared to a net loss of RM33.5 million a year ago. Revenue for the nine-month period grew 28.3% to RM492.65 million from RM383.9 million a year ago.

Velesto's share price was unchanged at 38 sen today giving it a market capitalisation of RM3.12 billion.