KUALA LUMPUR (June 5): Velesto Energy Bhd’s (KL:VELESTO) latest job win in Thailand may yield more moderate income for the oil-and-gas services firm amid soft market rates, analysts said.
While the contract value was not disclosed, prevailing market rates for the jack-up rigs in Southeast Asia suggest a daily charter rate of around US$100,000 (RM403,129.90) compared to the previous assumption of US$120,000, according to TA Securities’ estimates.
“Nevertheless, the award reduces idle time risk for Naga 6 and reinforces demand for premium jack-up rigs in Southeast Asia,” the research house said. “We expect near-term contracts to be secured around current market levels, which supports a more conservative outlook.”
TA Securities raised Velesto's target price by three sen to 35 sen and maintained its ‘buy’ call on the stock. The consensus, meanwhile, is divided on prospects of further upside with four ‘buy’, four ‘hold’, and no ‘sell’ calls, according to analysts tracked by Bloomberg. The average target price is 33 sen.
Offshore rig owners and operators in Asia are grappling with a softer-than-expected market amid an abundance of assets. However, supply may be tightening as oil prices stay elevated and oil majors pursue more exploration and production amid geopolitical tensions in the Middle East.
Shares of Velesto were unchanged at 30 sen on Friday after the award announcement. The stock, however, has risen 17% year to date. Brent, the global benchmark for crude oil, remains elevated at around US$95 per barrel.
“We believe that Velesto is possibly at the cusp of a charter rate upcycle, as soon as in 2027,” said Maybank Investment Bank. “Velesto will gradually benefit from this upcycle as they renew their existing contracts from 2028 onwards.”
Maybank Investment, which also has a ‘buy’ call on Velesto, is keeping its target price at 35 sen. The house noted that it has factored in a “conservative” daily charter rate of US$90,000 for Velesto’s latest Thai job, which contributes to about 8.5% of the total 2026 revenue estimates.