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 Velesto dips into the red in 4Q with RM493m net loss on impairment

KUALA LUMPUR (March 24): Oil rig operator Velesto Energy Bhd sank into the red in the fourth quarter ended Dec 31, 2020 (4QFY20), reporting a net loss of RM493.29 million from a net profit of RM10.2 million a year earlier.

This was largely impacted by an impairment loss of RM460.6 million for the rig assets, which were impacted by the volatility in oil prices and global economy compounded by the Covid-19 pandemic, said Velesto in a filing with Bursa Malaysia today.

Earnings per share stood at six sen versus earnings per share of 0.12 sen a year ago.

Velesto's revenue shrank 44.38% to RM99.06 million from RM178.1 million in 4QFY19 mainly due to lower activities in both drilling and oilfield services segments.

On a quarterly basis, the group sank into the red from a net profit of RM479,000 in the immediate preceding quarter, while revenue fell 24.2% from RM130.66 million in 3QFY20.

For the full financial year ended Dec 31, 2020 (FY20), Velesto reported a net loss of RM491.73 million from a net profit of RM33.22 million. Its annual revenue fell 18.5% to RM546.94 million from RM670.76 million a year ago.

The group said there has been an increase in global oil and gas activities including in the drilling sector where a number of contracts have been awarded in the last three months.

"In Malaysia, a number of new drilling contracts have been awarded and more tenders are currently under evaluation. The group is participating in most of these tenders, in addition to a number of tenders in ASEAN countries.

"Currently, two of the group's seven jack-up drilling rigs are working. Another rig is scheduled to commence a three-year contract in Malaysia-Thai Joint Development Area by early April 2021. Two more rigs are being mobilised to start contracts in offshore Malaysia in April and May respectively.

"At present, the group is continuing to tender and negotiate for new contracts for 2021 and beyond," the group commented on the outlook of its drilling services segment.

As for the oil services segment, it said the demand for workover and plug and abandonment activities is improving in line with PETRONAS Activity Outlook 2021-2023.

"The group is currently bidding for a number of available contracts being floated. A gradual recovery in demand is also seen for the group's oilfield services operation in China.

"Due to the slow pace of recovery in [the] global economy and the oil and gas industry, the board is of the opinion that the financial performance for 2021 will continue to be challenging," it added.

At the closing bell, Velesto was unchanged at 17.5 sen, giving it a market capitalisation of RM1.44 billion. It saw some 71.8 million shares traded.

Velesto dips into the red in 4Q with RM493m net loss on impairment

KUALA LUMPUR (March 24): Oil rig operator Velesto Energy Bhd sank into the red in the fourth quarter ended Dec 31, 2020 (4QFY20), reporting a net loss of RM493.29 million from a net profit of RM10.2 million a year earlier.

This was largely impacted by an impairment loss of RM460.6 million for the rig assets, which were impacted by the volatility in oil prices and global economy compounded by the Covid-19 pandemic, said Velesto in a filing with Bursa Malaysia today.

Earnings per share stood at six sen versus earnings per share of 0.12 sen a year ago.

Velesto's revenue shrank 44.38% to RM99.06 million from RM178.1 million in 4QFY19 mainly due to lower activities in both drilling and oilfield services segments.

On a quarterly basis, the group sank into the red from a net profit of RM479,000 in the immediate preceding quarter, while revenue fell 24.2% from RM130.66 million in 3QFY20.

For the full financial year ended Dec 31, 2020 (FY20), Velesto reported a net loss of RM491.73 million from a net profit of RM33.22 million. Its annual revenue fell 18.5% to RM546.94 million from RM670.76 million a year ago.

The group said there has been an increase in global oil and gas activities including in the drilling sector where a number of contracts have been awarded in the last three months.

"In Malaysia, a number of new drilling contracts have been awarded and more tenders are currently under evaluation. The group is participating in most of these tenders, in addition to a number of tenders in ASEAN countries.

"Currently, two of the group's seven jack-up drilling rigs are working. Another rig is scheduled to commence a three-year contract in Malaysia-Thai Joint Development Area by early April 2021. Two more rigs are being mobilised to start contracts in offshore Malaysia in April and May respectively.

"At present, the group is continuing to tender and negotiate for new contracts for 2021 and beyond," the group commented on the outlook of its drilling services segment.

As for the oil services segment, it said the demand for workover and plug and abandonment activities is improving in line with PETRONAS Activity Outlook 2021-2023.

"The group is currently bidding for a number of available contracts being floated. A gradual recovery in demand is also seen for the group's oilfield services operation in China.

"Due to the slow pace of recovery in [the] global economy and the oil and gas industry, the board is of the opinion that the financial performance for 2021 will continue to be challenging," it added.

At the closing bell, Velesto was unchanged at 17.5 sen, giving it a market capitalisation of RM1.44 billion. It saw some 71.8 million shares traded.

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