UMW-OG optimistic of turning around this year

KUALA LUMPUR: UMW Oil and Gas Corporation Bhd (UMWOG) is “cautiously optimistic” of making a turnaround in the current fiscal year if last year’s positive momentum continues.

Chairman Datuk Abdul Rahman Ahmad said the drilling and oilfield services provider recorded positive results in its third and fourth quarters of last year – the first quarterly profits since 2015.

“We believe the company is on a strong trajectory to move forward, and we are pleased with the continuing strength of oil prices.

“We hope this will encourage greater capital expenditure by oil and gas companies, which would mean an increase in demand for our oil rigs,” he told reporters after the company’s annual general meeting yesterday.

The challenge this year, he said, was to replicate the performance achieved in the third and fourth quarters of 2017.

He noted that although the oil price outlook was improving, charter rates remained depressed.

Meanwhile, President Rohaizad Darus said UMW- OG was optimistic about its operations in the medium-term, as he saw more jobs in the pipeline.

For its seven jack-up drilling rigs, the company achieved about 95 per cent utilisation rate in the third and fourth quarters of last year.

“Currently, five of the seven rigs are under contract serving multiple oil and gas operators, representing 71 per cent utilisation rate, while we expect to secure contracts for the other two rigs by early July. Therefore, we believe we are going to do slightly better this year,” he said.

Rohaizad noted that charter rates were stabilising, with a slow gradual upward movement.

He said the company, which has an order book of RM725 million, was aggressively bidding for additional contracts valued at US$ 660 million to replace the contracts that would expire.

The President said about 90 per cent of the existing contracts were due to expire by the third quarter of this year while the balance would be carried over to the first quarter of next year.

The company had bid for 15 tenders internationally and another 15 locally, and it hoped to clinch at least six contracts this year, he said.

On its bidding success rate, Rohaizad said the rate was very high for local bids, but internationally, it was below 10 per cent at present.

Among the countries where it is bidding are Vietnam, Indonesia, Thailand and Myanmar.

He pointed out about 90 per cent of the current order book’s value would be accounted for in this year’s revenue.

At the annual general meeting yesterday, UMW- OG received shareholders’ approval for a proposed change in name to Velesto Energy Bhd following its demerger from UMW Holdings Bhd late last year. — Bernama