KUALA LUMPUR (May 21): Velesto Energy Bhd slipped into the red in the first quarter ended March 31, 2019 with a net loss of RM22.22 million from a net profit of RM5.02 million a year earlier.

The offshore drilling rig operator said this was because it only booked other operating income of RM494,000 during the quarter, compared with RM22.95 million previously.

The higher figure in the year-ago first quarter, said Velesto in a filing today, was mainly due to a net foreign exchange gain of RM18.2 million arising from an early settlement of a revolving credit.

The group booked 0.27 sen losses per share in the quarter from earnings per share of 0.06 sen last year.

The switch to losses was despite Velesto achieving a 4.32% increase in quarterly revenue to RM127.03 million from RM121.76 million last year, thanks to higher utilisation rate of its rigs and higher average charter rate on-year.

At core operating income level, Velesto was still operating at a loss with operating expenses of RM128.08 million.

On prospects, Velesto said four of its seven jack-up drilling rigs are currently being chartered. The rest are being prepared to be mobilized for the recently awarded long-term contracts, expected to commence within the month of May 2019.

“With the commencement of the new contracts, utilization of the rigs are expected to increase significantly in the second half of the year, with a number of them expected to continue working into 2020 and beyond.

“The demand for hydraulic workover units is also improving with one of the group’s unit already working and a number of tenders presently being issued out,” said Velesto.

“At present, the group is aggressively bidding for additional new contracts to replace the three contracts expected to expire late this year and next year,” it added.

Shares of Velesto rose 3.64% or one sen to close at 28.5 sen today, giving it a market capitalisation of RM2.3 billion.