PETALING JAYA: Velesto Energy Bhd
stands to gain from the prevailing uptrend in charter rates as well as future improvements.
That said, Hong Leong Investment Bank (HLIB) Research remains cautious about potential cost hikes in the oil and gas services and equipment sector.
“This concern arises from the combination of cost inflation challenges, intensified by increased demand for oil and gas, and disruptions in the global supply chain, which have impacted the availability of oilfield equipment and spares,” the research house said in a report.
Based on its assessments, oil majors would proactively allocate upstream capital expenditure as long as oil prices stay above the US$65 (RM302) per barrel level for a sustained period.
Last week, the company announced that its subsidiaries had secured two contracts for the provision of a jack-up drilling rig and hydraulic workover unit (HWU).
One of them was awarded to Velesto Drilling Sdn Bhd, garnering a US$6.1mil contract from Jadestone Energy (M) Pte Ltd for a jack-up drilling rig.
Velesto Workover Sdn Bhd had secured a project from ExxonMobil Exploration and Production Malaysia Inc for Gait 6 HWU and services.
HLIB Research has a “positive” outlook on the contract wins.
“We highlight the developments were expected and we have imputed the utilisation rate assumptions into our forecasts,” it said.
It estimated the daily charter rates (DCR) for the drilling and HWU jobs to be at US$105,000 and US$22,000 respectively.
Kenanga Research said the DCR for the drilling job was aligned with recent market rates of between US$90,000 and US$131,000 in Malaysia.
It pointed out that Velesto’s average DCR in the first quarter of its financial year 2023 was lower at US$86,000.
