PTTEP, which has a farm-in agreement with Petronas on this field offshore Sarawak, will award drilling contracts based on the higher rates. – Photo from velesto.com
KUCHING (July 12): Analysts are largely neutral on Velesto Energy Bhd (Velesto Energy) securing a US$13 million drilling contract from PTT Exploration and Production Plc (PTTEP) for its 2022 to 2023 exploration drilling programmes.
The group has assigned Naga 3 for this contract to drill two firm wells.
“We are largely neutral on this announcement as it has been well flagged and within our assumptions,” commented analysts at Kenanga Investment Bank Bhd (Kenanga Research).
“We estimate that Velesto will derive a daily charter rate (DCR) of circa US$100,000 for this contract. This falls within the company’s earlier guidance that DCRs at Malaysian waters currently range between US$90,000 to US$131,000.”
Kenanga Research understood that DCRs have been raised higher following successful negotiations between Velesto and Petronas for existing umbrella drilling contracts.
Therefore, PTTEP, which has a farm-in agreement with Petronas on this field offshore Sarawak, will award drilling contracts based on the higher rates.
Moving forward, Kenanga Research believed Naga 3 may potentially be awarded a two-month extension for this contract. This is before it starts its new contract for Petronas Carigali from end-August 2023 until end-Sept 2024.
“Based on our estimates, this job will result in earnings accretion amounting to 10 per cent of Velesto’s FY23 profit. Nevertheless, we have earlier incorporated the following assumptions to our FY23 earnings, 75 per cent utilisation for Naga 3, and average fleet DCR of US$95,000.”