PETALING JAYA: Velesto Energy Bhd
has tendered for a deepwater drillship project and plans to be more asset light this year, according to TA Research.
Following a recent briefing for analysts, the research house said Velesto’s management revealed that the company has tendered for a deepwater drillship project in the country and is in discussions for a collaboration on the tender by providing onshore support.
“Velesto will not be involved in the technical aspects of deepwater drilling and will unlikely participate with heavy involvement. The reason for the tender is because it has Petrolium Nasional Bhd’s licence for the drillship category.
“The company also has no intention to add more drilling assets but plans to be more asset light and to move into production services that are more resilient to the cyclical nature of the industry,” the brokerage noted.
The company at the same time is exploring opportunities, either through mergers and acquisitions, partnerships or joint ventures, but has not determined any target, the research house noted.
TA Research said the company’s management believes that by going asset light and by venturing into the production-services space, the company can achieve its aspiration of ensuring a future-ready and sustainable business with a mission to achieve RM2bil in revenue and a return on capital employed of above 10% by 2030.
Velesto is a Malaysia-based multinational provider of services for the upstream sector of the oil and gas industry.
The research house said the company also expects temporary downward pressure on daily charter rates (DCR) in 2025 and 2026.
However, management believes that the global demand for jack-up rig remains strong with the ongoing tenders sufficient to absorb rigs.
In April, Saudi Aramco surprised the market by sending out suspension notices to several drilling contractors, with as many as 22 jack-up contracts reportedly suspended.
There were concerns of an excess of rigs from the Middle East relocating to South-East Asia, hence lowering the region’s DCR in the process.
Separately, Kenanga Research said the recent suspension of rigs by Saudi Aramco has no impact on the jack-up rig market in South-East Asia.
The research house projects global rig utilisation will remain elevated at 88% in 2025, even after taking into consideration the rigs diverted from Saudi Aramco.
The research house is maintaining its forecasts, target price of RM0.34, and its “outperform” call on Velesto.
For its first quarter ended March 31, 2024, Velesto’s net profit rose to RM46.81mil from RM14.22mil in the previous corresponding period, while revenue grew to RM338.58mil from RM287.25mil a year earlier.
In a filing with Bursa Malaysia following its latest financial results announced last month, Velesto said it expects the overall global utilisation of jack-up rigs to remain strong for 2024 and 2025.
“However, the jack-up drilling rig market may experience uncertainty. The company is monitoring the current situation in the Middle East for its future bidding strategy, especially for mid-2026 onwards,” it said.
