KUALA LUMPUR: Velesto Energy Bhd is taking on the moderation path in its capital spending in the next seven years to prepare for transformation and financial target aspirations by 2030, said president Megat Zariman Abdul Rahim.
Megat told the New Straits Times that the company currently has a total of six functioning rigs, and it is not seeking to expand the number of rigs in the next few years.
He said the strategy is to better prepare the company for the next downturn as well as to be more disciplined in capital spending.
"We are quite happy with the number of rigs that we currently have and are optimistic that we are able to get the rigs working with higher utilisation rate for the next two or three years.
"Our utilisation rate in 2021 was 48 per cent, 62 per cent in 2022 where the first half of last year was below 50 per cent, and only after the second half it reached above 70 per cent, while in 2023 the average rate is expected to be maintained above 75 per cent.
"All of our rigs are contracted now and they are on firm contract until the middle of next year. We are already bidding for work for the end of 2024, 2025 and 2026," he said.
He said the prospect of Velesto's bidding is worth RM3.7 billion and it is a positive indication of the wealth of opportunities out there.
On local demand, Megat said Malaysia's domestic requirement is more than enough to keep Velesto's rigs busy.
This, he said, is based on the demand for jack up rigs supply in Malaysia stated in Petronas Activity Outlook report which is going to be 12 for 2023, 14 in 2024 and back to 12 in 2025.
On the overall outlook of the oil and gas (O&G) sector, Megat said he is optimistic about the future and judging by how rapid the recovery of the sector post-Covid-19.
"Actually the O&G market has been a depressed market since 2014 and the sector usually goes through a cyclical period of ups and downs which is influenced a lot by external factors such as the state of the economy as well as geopolitical stability.
"However, things got even worse during the pandemic, but now things are rapidly picking up and I'm seeing a lot of capex money going into the sector," he said.
In terms of the company's transformation, Megat said Velesto is aiming to transform the culture to be performance driven by its vision of 'Wawasan 2030' which entails expansion in revenue and margin.
He said the company is spending the next seven years to assess the opportunities to expand within the O&G sector and better manage the business operations.
"We are focusing on introducing more technologically advanced products and services, and at the same time retaining talent and equipping them with necessary skills and knowledge to flourish.
"On being technologically advanced, we are also looking into increasing the efficiency of the business process by installing new technologies and tools," he said.
He also said the company is aiming to grow sustainably by achieving 10 per cent reduction in emissions intensity on the operation side of the business.