PETALING JAYA: Local oil and gas (O&G) players may be in for contrasting fortunes this year in spite of the steady rise in oil prices and outflow of contracts by Petroliam Nasional Bhd (Petronas).
Two companies that kicked off 2019 on opposite ends of the spectrum are Velesto Energy Bhd and Dayang Enterprise Holdings Bhd .
Velesto posted a net loss of RM22.22mil in its first quarter ended March 31, compared with a net profit of RM5.02mil in the previous corresponding period, mainly due to a net foreign-exchange gain of RM18.2mil a year earlier that had resulted from the early settlement of revolving credit.
Nevertheless, an analyst is optimistic that the company’s fortunes could turn around in the second quarter.
“Velesto has secured new jack-up (JU) rigs that are expected to be fully utilised by May. This should be reflected in the company’s earnings by June,” he said.
Operating seven JU rigs in Malaysian waters, UOB Kay Hian in a recent report said Velesto is in a sweet spot, benefitting from a surge in Petronas’ yearly JU rig requirement from six to 10 and 16 to 19 for 2019 to 2021.
The only other local competitor is troubled entity Perisai Petroleum Teknologi Bhd , which owns one JU rig, the research house said, adding that many new contracts have been awarded to foreign rigs and Velesto has secured six to seven year-to-date, including four long-term ones.
Dayang, meanwhile, returned to the black in its financial year ended Dec 31, 2018, after its final quarter of the year raked in a net profit of RM97.72mil compared with a net loss of RM55.21mil in the previous corresponding quarter.
This is mainly due to higher work orders received and performed under its topside maintenance contracts.
Its quarterly revenue jumped 64.9% to a record high of RM285.65mil from RM173.26mil in the previous year, despite the fourth quarter being a typically weak quarter due to the monsoon weather.
Despite the stellar performance, an analyst cautioned that Dayang was “still not out of the woods yet”.
“Its subsidiary, Perdana Petroleum Bhd , is deep in debt and until that is sorted out, it would be a while before Dayang is back to its glory days,” he said.
Earlier this week, Perdana Petroleum proposed to undertake a rights issue of redeemable convertible preference shares (RCPS) that could raise up to RM506mil.
Dayang has provided a written unconditional and irrevocable undertaking to Perdana Petroleum to subscribe up to RM455mil of the RCPS.
Dayang owns some 470.79 million shares or a 60.48% stake in Perdana Petroleum.
Petronas, in its Activity Outlook 2019-21 report, said it would spend slightly more than RM50bil on capital expenditure (capex) in 2019, up from RM47bil last year.
The higher capex is expected to boost the earnings of local O&G companies, in line with the steady rise in crude oil prices, which have risen 34% year-to-date to US$62 per barrel currently.
At last look, Velesto shares were trading at 28.5 sen apiece, while Dayang shares were at RM1.13 each.