UMW-OG sinks deeper into the red in first quarter

Results were weighed down by the drilling services and oilfield services segments that reported lower revenues mainly due to softer time charter rates from drilling contracts and weaker demand for oilfield services

PETALING JAYA: UMW Oil & Gas Corp Bhd (UMW-OG) has sunk deeper into the red in its first quarter ended March 31.

The company posted a net loss of RM104.12mil in the quarter from a net loss of RM65.08mil a year ago on the back of revenue too falling by 15.28% year-on-year to RM74.28mil.

Results were weighed down by the drilling services and oilfield services segments that reported lower revenues mainly due to softer time charter rates from drilling contracts and weaker demand for oilfield services.

The company said in the notes accompanying its financial statements that lower time charter rates and reduced foreign exchange gains on translation resulted in a higher loss for the latest quarter.

UMW-OG said the drilling services segment contributed a revenue of RM71mil or 95.6% of the total revenue of RM74.28mil, which was a decrease of RM10.3mil or 12.7% from the RM81.3mil recorded in the same quarter a year ago.

“The first quarter saw the jack-up utilisation rate improving slightly when UMW NAGA 7 was income-generating again at the end of March 2017. Both quarters had two of the seven jack-up rigs operating at a 100% utilisation rate,” the company said.

The oilfield services segment contributed a revenue of RM3.3mil or 4.4% of the total revenue in the first quarter of 2017, a reduction of RM3.1mil or 48.4% over the RM6.4mil registered in the same quarter of 2016.

“This segment of the value chain has yet to benefit from the increased activities in exploration and production. Thus, demand for oil pipes threading, inspection and repair services remained soft,” it said.

Commenting on its prospects, UMW-OG said all seven jack-up rigs are currently contracted, five of which are income-generating with the remaining two expected to start work by end-June.

“As such, the asset utilisation rate is expected to improve from the current 71% to 100% by the middle of 2017.