KUALA LUMPUR (Dec 16): Oil and gas services provider Velesto Energy Bhd (KL:VELESTO) is selling its jack-up drilling rig, Naga 3, for a total cash consideration of US$63.0 million (RM258.4 million) as part of a fleet optimisation exercise.
Velesto said the proposed disposal is expected to result in a pro forma gain of RM17.1 million, after accounting for estimated expenses, contingencies and tax.
The disposal will be undertaken by Velesto Drilling 3 (L) Ltd, an indirect wholly owned subsidiary of Velesto, to PT Indonesia Drilling Energy, according to a bourse filing on Tuesday (Dec 16).
The consideration will be satisfied entirely in cash, with a 10% deposit payable upon signing of the sale and purchase agreement and the remaining 90% due on completion.
As at Dec 31, 2024, Naga3 had a net book value of US$57.0 million (RM233.9 million), inclusive of inventories. The original cost of investment was US$179.0 million when it was built in 2010, with a further US$21.1 million spent on the rig between 2011 and 2024.
Velesto added that it intends to use RM251.1 million of the disposal proceeds for distribution to shareholders as well as for general corporate purposes and the group’s working capital requirements, with utilisation targeted by December 2026.
Meanwhile, the remaining RM7.3 million will be set aside to cover estimated expenses related to the disposal, expected to be incurred by June 2026.
Built in 2010, the rig is currently undergoing its special periodic survey, a detailed inspection conducted every five years to assess asset condition, along with repair works that are expected to be completed in the first quarter of 2026, according to the group's latest financial disclosure for the third quarter ended Sept 30, 2025 (3QFY2025).
Subject to the required approvals, the disposal is targeted to be completed by the end of the first half of 2026.
In a separate press statement, Velesto president Megat Zariman Abdul Rahim said the divestment reflects the group’s decision to concentrate its resources on higher-specification rigs that underpin its core strengths in the drilling market.
“Moving toward a more asset-light model enhances our operational agility, strengthens our balance sheet, and ensures we deploy capital where it creates the greatest value,” he said.
Shares of Velesto were down one sen or 3.51% to close at 27.5 sen on Tuesday, with a market capitalisation of RM2.26 billion.