KUALA LUMPUR (May 23): Velesto Energy Bhd's (KL:VELESTO) first quarter net profit more than tripled year-on-year, driven by higher utilisation and average daily charter rates for jack-up rigs.

Net profit for the quarter ended March 31, 2024 (1QFY2024) rose to RM46.81 million or 0.57 sen per share, from RM14.22 million or 0.17 sen per share a year ago, according to the offshore drilling rigs and oilfield services provider.

The group, which is 41.7%-controlled by Permodalan Nasional Bhd, said revenue grew 18% to RM338.58 million from RM287.25 million in 1QFY2023.

“We expect overall global utilisation of jack-up rigs to remain strong for 2024/2025. However, the jack-up drilling rig market may experience uncertainty. The group is monitoring the current situation in the Middle East for its future bidding strategy, especially for mid-2026 onwards,” Velesto said in a stock exchange filing.

The group said its utilisation is expected to remain high in 2024, with all six of its jack-up drilling rigs contracted.

Three of Velesto’s jack-up rigs — NAGA 2, NAGA 4, and NAGA 6 — have been contracted until 1QFY2026, and NAGA 8 up to 4QFY2025. Meanwhile, NAGA 3 is contracted up to 4QFY2024 (inclusive of options) and NAGA 5 up to 3QFY2024.

“The group is actively bidding for new tenders for local and international contracts for activities to be performed in 2024, and up to 2026 and beyond,” it said.

“At least three of our rigs, namely NAGA 2, NAGA 5 and NAGA 6, are expected to commence their five-yearly Special Periodical Survey in 2QFY2024, 3QFY2024 and 4QFY2024 respectively,” it added.

Velesto said global and regional upstream oil and gas activities including in Southeast Asia continue its upward trend, with more exploration and development projects being evaluated, re-visited and sanctioned.

“Major oil producers continue to increase their capex (capital expenditure) in response to prolonged lack of investment in the past. In Southeast Asia, particularly Malaysia, a number of new contracts have been awarded with more being tendered out,” it said.

Shares of Velesto closed half a sen or 1.7% to 29.5 sen on Thursday, giving the group a market capitalisation of RM2.42 billion. The stock has climbed 29% year-to-date.