KUALA LUMPUR (Aug 30): Oil and gas services provider Velesto Energy Bhd (KL:VELESTO) reported a more than threefold year-on-year surge in its second quarter net profit, thanks to higher utilisation rates and an increase in average daily charter rates.

Its net profit jumped to RM62.81 million or 0.76 sen per share in the second quarter ended June 30, 2024 (2QFY2024), from RM17.40 million or 0.21 sen per share in 2QFY2023. Revenue climbed 40.86% to RM393.43 million from RM279.32 million.

The group declared an interim dividend of 0.25 sen per share, amounting to RM20.5 million, payable on Nov 28, 2024.

Higher progress for Velesto’s integrated rig drilling completion (i-RDC) project under its integrated project management business during the quarter under review also contributed to the stronger quarterly performance.

Velesto achieved a utilisation rate of 98% for its six rigs during the quarter, up from 88% in 2QFY2023, with an average daily charter rate of US$115,000 (RM497,059) versus US$94 previously. Operating efficiency reached 99.8%, the group said, up from 96.1% in 2QFY2023.

For the first half of FY2024 (1HFY2024), Velesto recorded a net profit of RM109.62 million, more than triple the RM31.63 million it made in 1HFY2023, as revenue grew 29.2% to RM732.01 million from RM566.57 million.

Looking ahead, Velesto cautioned that its utilisation rate may slip in the second half of FY2024 (2HFY2024) as three of its rigs — Naga 2, Naga 5 and Naga 6 — are scheduled to undergo a five-year Mandatory Special Periodical Survey.

Still, the group remains optimistic about maintaining high utilisation levels in 2025, with Naga 2, Naga 4 and Naga 6 contracted until 1QFY2026, while Naga 8 is contracted till 4QFY2025.

The company is also actively bidding for new tenders both locally and internationally, particularly for its Naga 3 and Naga 5 rigs.

“We anticipate global utilisation of jack-up rigs to remain robust through 2025-2026, with marketed utilisation expected to stay at 89%,” Velesto said.

"Despite uncertainties in the jack-up drilling rig market, the supply-demand dynamics for jack-up rigs remain strong. The group is closely monitoring the current landscape in both domestic and Middle Eastern markets to inform its future bidding strategies, especially for mid-2026 onwards," it added.

As of the end of July 2024, Velesto's order book stood at RM1.3 billion.

Shares in Velesto slipped half a sen or 2.33% to close at 21 sen on Thursday, giving the company a market capitalisation of RM1.73 billion. The stock has fallen seven sen over the last six months.