KUALA LUMPUR: Velesto Energy Bhd is actively expanding its presence in Southeast Asia, with two rigs currently bidding for opportunities in Thailand, Vietnam, and Indonesia – key growth markets where the company has previously operated.
“This aligns with our strategy to diversify and strengthen our regional footprint,“ president Megat Zariman Abdul Rahim told SunBiz.
“Currently, Velesto Energy’s three rigs continue to operate with Petronas Carigali Sdn Bhd, and one rig contract in Malaysia is under negotiation,“ he said.
According to reports, the Southeast Asian oil and gas market is projected to post a compound annual growth rate of more than 4% through 2030, driven by industrial demand for natural gas as part of the energy transition and economic expansion.
Megat Zariman said with the jack-up rig market in Malaysia and Southeast Asia remaining stable, Velesto Energy is strategically positioning itself to weather market shifts such as oil price fluctuations and regional competition.
On the domestic front, Megat Zariman said, the demand outlook for jack-up drilling remains stable, with steady activity in Malaysia’s upstream sector.
While exploration drilling may continue at a slower pace in 2025, he added, development drilling remains a priority as Petroliam Nasional Bhd (Petronas) and regional operators sustain production.
“Velesto Energy remains operationally active, with three rigs under Petronas Carigali and additional contracts under negotiation.”
Velesto Energy’s RM709 million order book provides financial visibility until early 2026, Megat Zariman said.
Elaborating, he said the order book provides a solid foundation for financial stability, ensuring earnings visibility through early 2026, driven by long-term contracts for its jack-up rigs Naga 2, Naga 4 and Naga 6.
To strengthen financial visibility and sustain growth, Velesto Energy is actively expanding its contract pipeline, with ongoing negotiations for Naga 5 expected to begin in June.
Velesto Energy is also optimising fleet efficiency by maintaining Naga 3 and Naga 8 in preparation for future contracts.
The company is also actively seeking contract extensions and bidding on new tenders across Southeast Asia to secure a robust pipeline while maintaining cost discipline and strict control over operating expenses to maximise margins.
This proactive approach enables the company to sustain strong cash flow, minimise idle time, and drive profitability through 2025 and beyond, capitalising on market opportunities while securing long-term agreements for stable revenue.
When asked how Velesto Energy plans to mitigate potential revenue gaps, with some rigs scheduled for maintenance, and optimise fleet utilisation in 2025, Megat Zariman said the company has two remaining scheduled special periodic surveys for Naga 3 and Naga 8 this year to keep them in optimal condition for future contracts while maintaining operational continuity.
“Our fleet utilisation remains healthy, and we are actively working to optimise fleet utilisation and secure new contracts.”
Megat Zariman said Velesto Energy strives to maintain stable revenue streams, with Naga 2, Naga 4 and Naga 6 contracted until early 2026.
On the earnings front, Velesto Energy recorded revenue of RM276.1 million for the fourth quarter ended Dec 31, 2024, bringing full-year (FY24) revenue to RM1.36 billion, an increase of 12% from RM1.21 billion in FY23.
Profit after tax for the quarter stood at RM55.2 million, contributing to a record high full-year profit after tax of RM207.7 million, exceeding the RM99.5 million recorded in FY23 by more than twofold.
The group’s impressive performance was driven by improved average daily charter rates of US$118,000 (RM523,200) per day from US$94,000 per day in FY23 and higher rig utilisation at 87% from 83% in FY23 under the drilling services segment, as well as the completion of the i-RDC project.
When asked about Velesto Energy’s strategic priorities for 2025 and plans to diversify revenue streams beyond drilling services, Megat Zariman said the company is committed to maximising shareholder returns through operational excellence, efficiency and financial discipline.
It targets 99% fleet uptime, leveraging the strong performance of Naga 4 and Naga 6, which achieved high utilisation in 2024.
“To secure long-term earnings, Velesto Energy is actively bidding for projects in Thailand, Vietnam and Indonesia while prioritising long-term contracts. Cost efficiency is driven by automation and predictive maintenance to protect margins.
“With long-term borrowings fully repaid, Velesto Energy is in a net-cash position, allowing for an increased dividend payout ratio of nearly 50%, with further opportunities being explored to enhance shareholder returns. The exceptional results achieved in 2024 and our optimism for another strong year in 2025 provide us with a platform to drive sustainable shareholder returns and long-term value while maintaining our industry leadership position,“ Megat Zariman said.
