KUALA LUMPUR: Velesto Energy Bhd returned to the black in the first quarter ended March 31 with a net profit of RM16.32 mil from a net loss of RM22.21 mil in the previous corresponding period.
Revenue increased to RM176.26 mil from RM127.02 mil previously mainly due to improved performance in the drilling services segment.
The company is involved in upstream activities of the oil and gas industry through two main activities – drilling services and oilfield services.
“The company posted a higher profit before taxation of RM17.7 mil compared to RM14.6 mil in the preceding quarter mainly due to higher contribution and invoicing efficiency from the drilling services segment,” it said in a filing with Bursa Malaysia today.
On prospects, Velesto said the company’s financial performance for the year is expected to be adversely impacted and weaker than 2019 in view of the grave uncertainty in the global economy and the demand for oil and gas.
“Many oil companies globally have started to reduce both capital and operational expenses to conserve funds and to prepare for the challenges in the near future, resulting in reduced activities including in the drilling sector,” it said.
However, it said the impact of reduced activities in the industry has yet to be fully felt in Malaysia as a number of existing drilling contracts are still ongoing.
Nevertheless, the company continues to bid for new contracts to partially mitigate the potential softening of the market which might affect contract renewals.
Velesto Energy said demand for workover and plug and abandonment activities in the oilfield services sector are also expected to soften due to the present market environment.
“The company’s oilfield services operation in China is also impacted by the softening market but to a lesser degree. The company will continuously monitor and evaluate the viability of this subsidiary,” it added. – May 20, 2020, Bernama
