Velesto Second-Quarter Profit Falls to RM531,000 as Rig Rates Slide 16%
Only two-thirds of the jack-up fleet was drilling, but five of six rigs are contracted through the end of 2026.
Velesto Energy reported net profit of RM531,000 for the three months to 30 June, down from RM50.44 million in the same quarter of 2025, as lower utilisation and softer day rates worked through the Malaysian drilling contractor's results.
Two forces did the damage. Only two-thirds of the jack-up fleet was drilling during the quarter, and average daily charter rates fell 16 percent. Revenue dropped 23 percent year on year to RM154.03 million, and expenses absorbed almost everything that remained.
The first half tells the same story at a slower pace. Net profit for the six months came to RM28.38 million, 72 percent below the first half of 2025, with revenue down 21 percent to RM337.38 million.
The company expects the second half to look different. President Megat Zariman Abdul Rahim said he expects performance to strengthen in the coming quarters on the back of contracted activity, noting that five of the six rigs are committed through the end of 2026 with work in hand worth RM1.3 billion as at July 2026. A further RM3.7 billion of prospects sits in the pipeline, and the company continues to chase employment for NAGA 3, the one uncontracted unit.
He pointed to regional energy security as the underlying demand driver, saying a sustained focus on it keeps jack-up drilling demand in place across Malaysia and Southeast Asia.
The dividend was maintained rather than cut. An interim payout of 0.25 sen per share brings the total declared so far this year to one sen.
Investors took the result in stride ahead of the announcement. Shares closed the Friday noon session half a sen, or 1.96 percent, higher at 26 sen, valuing the group at RM2.15 billion.
The gap between the earnings line and the order book is the thing to watch. A contracted backlog of RM1.3 billion against half-year revenue of RM337 million implies visibility well beyond the current weakness, but the quarter shows how quickly a rate move and a few idle units compress margin in a business with high fixed costs and no way to lay up cheaply. Velesto's RM51 million North Malay Basin award earlier in the cycle is the kind of work that has to keep arriving for the recovery to hold.
