Sunday 14 Jul 2024
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KUALA LUMPUR (April 5): Velesto Energy Bhd said on Friday it expects to weather Saudi Aramco’s broader suspension of jack-up rigs, as the oil-and-gas services firm remains “optimistic” of its financial performance until 2026.

Shares of Velesto declined after several companies had their rig contracts suspended by the state-owned Aramco in recent days. At least one analyst covering Velesto downgraded its rating on the company due to industry concerns.

“While we agree these events will have an effect on global jack-up demand and supply balance, overall utilisation is likely to remain high as global oil and gas capital expenditure remains strong,” a spokesperson from Velesto told The Edge.

Since the beginning of this month, Aramco has suspended four shelf drilling rigs operating in offshore waters, along with China Oilfield Services Ltd’s four rigs and five of ADES Holding's rigs. Three of Arabian Drilling's jack-up rigs could be affected.

Aramco may end up suspending over 20 to 25 of its rigs, or 5% to 6% of its global fleet of 400 jack-up rigs, RigLogix reported on Thursday.

CGS International flagged that those rigs may find their way to Southeast Asia where charter rates remain relatively high and potentially pressure rates in the region.

Velesto’s rigs are mostly busy, with five of its six jack-up rigs fully-contracted until the end of this year, the spokesperson said. Four of the rigs are on long-term contracts lasting more than 12 months, the spokesperson said.

Further, three of Velesto’s jack-up rigs — Naga 2, Naga 4, and Naga 6 — have received two-year contract extensions from Malaysia’s national oil-and-gas company Petronas on March 22 worth some RM1.26 billion, the spokesperson noted.

Only two of its jack-up rigs — Naga 3 and Naga 5 — will see their contracts expire this year, the spokesperson said, adding that the company is monitoring the situation for its future bidding strategy, especially for mid-2026 onward.

Shares of Velesto fell nearly 10% to 27.5 sen on Friday and closed at 28 sen, wiping out seven days’ worth of gains. Velesto was also the most active stock on Bursa Malaysia after more than 392 million shares changed hands. In contrast, the country’s benchmark index FBM KLCI was 0.1% higher.

Edited ByJason Ng
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