CGSI Research said Velesto’s rig schedule suggests that it could hit over 90% utilisation in FY25.
PETALING JAYA: Velesto Energy Bhd
is building strong earnings visibility for its financial year ending Dec 31, 2025 (FY25) and FY26, says CGS International (CGSI) Research.
The research house said Velesto’s latest rig schedule suggests an 82% rig utilisation rate for FY24, given all six of its jack-up rigs have already locked-up their contracts, with potential to rise above 90% in FY25, and at least 85% in FY26.
As Velesto is bidding for FY26 work in today’s high daily charter rate (DCR) environment, there is potential to sustain high profitability for the next three years, it noted.
“The key uncertainty is for second half of this year (2H24), where Velesto will send three of its rigs (Naga 2, Naga 5 and Naga 6) for a special periodic survey (SPS).
“This could take longer than expected if certain equipment need to be replaced, and if so, could delay the commencement of the subsequent drilling jobs,” the research house pointed out.
However, CGSI Research said Velesto has allocated three months for each rig SPS, when usually only two months is required.
“Hopefully, this will be sufficient to account for any unforeseen surprises,” it added.
Looking ahead, CGSI Research said Velesto’s rig schedule suggests that it could hit over 90% utilisation in FY25, far ahead of its current 80% assumption.
“Naga 2 is contracted to drill for PETRONAS Carigali Sdn Bhd (PCSB) from Oct 2024 to Feb 2026; Naga 4 will drill for PCSB from Sept 2023 to Feb 2026; Naga 6 is contracted by PCSB from Dec 2024 to Feb 2026; while Naga 8 has been drilling for Carigali Hess since July 2023 and will continue until Oct 2025,” it said.The research outfit, however, pointed out that big gaps in the FY25 schedule are for Naga 3 and Naga 5.
But, citing data provider Riglogix, CGSI Research said Naga 3 may work for Indonesia’s national oil company PT Pertamina for two years commencing April 2025, while Naga 5 may drill for PTT Exploration and Production in Malaysia for two years commencing Dec 2024.
It said both rig contracts are still subject to negotiations with their respective charterers, but once they are locked in, Velesto will essentially have a full schedule for FY25.
“For FY26, Velesto is still very much bidding for work, but will achieve 85% if it secures all of its bids, in our estimate. Since Velesto is already bidding for FY26 work now while the rig market remains strong, there is potential for Velesto to extend high DCR into FY26,” the research firm noted.
