KUALA LUMPUR: Velesto Energy Bhd
swung into the red with net losses of RM22.22mil in the first quarter ended March 31, 2019 compared with a year ago due to weaker drilling services.
Its announcement on Tuesday the financial results were a contrast with a net profit of RM5.01mil a year ago.
Its revenue increased by 4.3% to RM127.03mil from RM121.76mil a year ago. The drilling services segment reported a higher revenue in the first quarter of 2019 as a result of higher utilisation of rigs and average charter rate.
However, Velesto posted a pre-tax loss of RM19.61mil versus a profit of RM4.94mil a year ago mainly due to net foreign exchange gain of RM18.2mil a year ago which resulted from early settlement of revolving credit.
It said the drilling services segment contributed revenue of RM124.7mil or 98.2% of the total revenue for the group. This was an increase of RM6.7mil or 5.7% from the RM118.0mil a year ago due to higher average asset utilisation of 66% versus 65% a year afo.
However, when compared with the fourth quarter ended Dec 31, 2018, revenue fell by 33.1% from the RM189.90mil due to lower asset utilisation of 66% as compared to 91% in the previous year quarter.
Velesto posted pre-tax loss of RM19.60mil compared with a profit before taxation of RM15.50mil.
On the outlook, it said drilling activities continued to increase with more contracts being tendered out and awarded, both locally and globally.
“At present, four out of the seven jack-up drilling rigs owned by the group are working while 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, utilisation 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. The increased demand in both jack-up drilling rigs and hydraulic workover units is expected to benefit the group, being the main player with strong domestic and regional track records. Gradual improvement in time charter rate is also seen based on recently awarded contracts.
“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 said.