it probably wont fly but u can see from the report that the future looks good. they have 7 rigs and 5 is operational now and remaining 2 will operate in third quarter. meaning things are looking good.
KUALA LUMPUR: Velesto Energy Bhd, formerly known as UMW Oil & Gas Corporation Bhd, returned to the black in the first quarter ended March 31, 2018, with a net profit of RM4.87 million compared with a net loss of RM104.92 million recorded in the same period last year.
The improvement was mainly due to higher rigs utilisation and a net foreign exchange gain of RM18.2 million, the oil and gas services provider said in a filing with Bursa Malaysia today.
Revenue, meanwhile, rose to RM121.76 million from RM74.28 million previously.
The company said both the drilling services and oilfield services segments reported higher revenue as a result of higher rigs utilisation and an increase in threading activity in China.
“The group is presently focusing on securing more contracts and improving operational efficiency.
“The potential improvement in both utilisation and operating cost is expected to contribute positively to the financial performance of the group for the financial year 2018,” it added.
With Brent in usd70-80 range, things are looking better for next few years, compared to the last few years. Umwog back to profits territory.
Umwog price is still stagnating, maybe due to overall anxiety of foreign funds to Malaysian Govt's rm1 Trillion debts. But similar to companies - all new Management taking over, will quickly write off and make all bad provisions first upfront. So it's clear they've no part of that past problems. But most of the additional rm190 Bn of Govt guarantees, are just guarantees. New Govt is already cancelling ecrl, my hsr, pan borneo highways, TRX, maybe Mrt Line 3 too and even cancelling and reviewing some PFI projects. I suppose those are the likes that needed guarantess anyway.
reading from Velesto management report, 1Q2018 is 5 rigs bcoz they cannot moved the other 2 rigs into positions due to rough weather( monsoon). So 2Q18 should 6--7 rigs operating that would guarantee better results than 1Q2018......The Tsunami will 3Q2018----all Rigs(7) full load.
Management see Good result in Medium term-----so price rally is all the Way to Christmas
Already said many times, it will take some time for the market to mop up the rig over capacity. There is no rig overcapacity in Malaysia but this company still need to match the market day rate when dealing with Petronas. If the day rate doesn't go up, the income won't go up. Now the rate is just nice to breakeven but if any rigs out of contract or need to do dry dock, then it won't be in the black.
1. Depreciation is less going forward, Lower Interest rate paymts from less LTerm loan (1.8X to 0.5X)
2. Velesto expects Profitability from 2018. Total Contract RM 1.26B (RM 834M + RM424 as options) Petronas requirements 7 rigs (Velesto has 7 rigs, Perisai 1 rig) Utilisation of rigs less of a challenge compared to 2016-2017 Impairments not expected in 2018
3. Valesto is a good proxy to oil price increase Oil price expected to remain strong for a few years Chartered rates for oil rigs to improve when Brent oil >$85bbl
Umwog is Not a Oil Co. Petronas is a Oil Co.(selling and Distributing Oil & Oil products ) Umwog just a Oil Driller. Once they received Drill Contract and a Nego. Drilling price--you can count profit already----Oil price up or down does Not kill Contract......Anyway Petronas projected Oil price around $55 only so Drilling price is Not going UP aggressively.
Petronas need 7--10 Drill Rigs for 2018......Umwog got 7 rigs and Perisai got 1 rigs ( 2 players from Malaysia Only) Petronas belongs to Malaysia Gov....Umwog belongs to PNB......Abang, adik scenario
Umwog loans cut by 2.1B from Pnb cash injection and another 600m cash injected for Operating Expenses (no wonder umwog staff are offer New Cars )
When oil price is down, contract will be renegotiated. Don't ever forget why they have to sell off Naga 1 last time. That contract with Petronas was supposed to last until 2018.
Contract cannot be killed for sure ( it is a legal document )------but what we don't know are the "clauses" inserted to protect Petronas.....If the Lawyer of Umwog agreed to these "protection clauses "then there is nothing we can Do.
In HSR signed "agreement" bet. Najib and Singapore, Mahathir can said I didn't signed it why must we compensate Singapore----ask Najib to pay --lah........ Again the document is a Legal Document.......Mahathir said he has to find some way out of this shit (no outright burned the Doc.) ------
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
edison5351
236 posts
Posted by edison5351 > 2018-05-24 18:28 | Report Abuse
hahah dream on guys, UMWog wont fly la tmrw. haha