Veletso Energy Bhd posted a net profit of RM5.43 million in the fourth quarter ended 31 December 2021 (4Q21) against a net loss of RM493.29 million in the corresponding quarter a year prior, when the group booked a whopping impairment loss of RM461.8 million for its rig assets.
On the absence of the impairment loss, and with revenue increasing 60 percent to RM158.49 million from RM99.06 million a year before — thanks to higher activities seen in its drilling and oilfield segment during the quarter under review — Velesto achieved an earnings per share of 0.07 sen for 4Q21, versus a loss per share of 6 sen for 4Q20.
For the full FY21, its net loss narrowed to RM90.28 million from RM491.73 million in FY20, though revenue dropped 30.98 percent to RM377.5 million from RM546.94 million, on lower activities in the drilling segment.
On prospects, the group said two of the group’s six available jack-up drilling rigs are working, while another one is being prepared for mobilisation in early April. The remaining rigs are being readied, which includes upgrading the assets’ capabilities for potential contracts currently being tendered.
It also noted that upstream activities are continuing, with more exploration and development projects commencing globally.
“In Malaysia, a number of new contracts have been awarded with a few more being tendered out. The group is actively bidding for new tenders for contracts scheduled to be performed this year,” it noted.
Meanwhile, it said the oil and gas industry’s outlook continues to improve amid the global economic recovery, which is causing a strain on energy supply.
“With the constraints in production capacity of major oil producers due to prolonged lack of investment during the downturn period, the supply is insufficient to meet the increasing demand as more economies open up.
“OPEC+ are also struggling to deliver their allowable quotas due to limitation in production capacity. This has stabilised the benchmark Brent oil price at above US$80 per barrel since early this year, with the price recently breaching US$98 per barrel.
“In the longer term, the price of oil is expected to be stable at a high level despite occasional temporary disruptions due to production outages and geopolitical and trade conflicts,” it added.
Apart from oil price, it said the gas market is also on the high side with the Henry Hub natural gas price trading at around US$5 per million BTU, reflecting an increased demand due to recovering economies and more emphasis being put on clean energy.
As for its oilfield service segment, it said prospects are improving, with a number of tenders being issued in the Southeast Asia region for work this year, especially for the Plug & Abandonment (P&A) activities. The group is currently bidding for a number of available contracts, both locally and overseas.
“The gradual recovery in the global economy augurs well for the O&G industry and the group. While the recovery is expected to improve the outlook for the group, the impact will take some time to be realised. Barring any unforeseen circumstances, the board remains cautiously optimistic on the financial performance of the group in 2022,” it concluded.
Shares in Velesto closed down 0.5 sen or 4 percent to 12 sen on Monday (28 February), valuing it at RM986 million.
