Velesto profit drops in Q2, but says outlook brightens

KUALA LUMPUR: Velesto Energy Bhd reported a staggering 98.9 percent decrease in net profit for the second quarter, yet the oil and gas services company remains optimistic about its future performance. The net profit for the quarter, ending June 30, 2026, plummeted to RM531,000, compared to RM50.44 million a year ago. This decline was primarily attributed to reduced rig utilization and daily charter rates.

Velesto's president, Megat Zariman Abdul Rahim, expressed confidence in the company's performance for upcoming quarters. He cited contracted activity and a substantial pipeline of prospects as key contributors to the anticipated improvement. He elaborated that five of the company's six rigs remain contracted until the end of 2026, and the company holds a robust RM1.3 billion order book and RM3.7 billion in prospects as of July 2026.

The drilling services segment, under the current quarter's analysis, experienced a decline in revenue to RM149.5 million from RM195.8 million in the same period last year. This drop was mainly due to lower average daily charter rates, which decreased from US$123,000 to US$103,000 per day. Over a six-month period, the company's earnings dropped by 72.5 percent year-over-year to RM28.39 million from RM103.04 million, while revenue decreased to RM337.38 million from RM424.56 million.

On a positive note, Velesto highlighted a 99.9 percent uptime rate for its rigs. The company is also advancing its asset-light growth strategy by securing the Hibiscus contract via a third-party rig and the Chevron i-RDC 2.0 contract for Naga 8. They continue to actively pursue opportunities for Naga 3, demonstrating a sustained focus on energy security.

Rahim emphasized that Malaysia and Southeast Asia will continue to require jack-up drilling services, signaling Velesto's commitment to the region's energy needs. The company declared a second interim dividend of 0.25 sen per share, raising its year-to-date dividend to 1.0 sen per share.