Malaysia’s UMW Oil & Gas has seen its third quarter 2015 revenues and profit drop due to lower charter rates and expenses for an uncontracted newbuild rig.
The company’s revenues of RM212.7 million ($50.1 million) for the third quarter were 16.4% lower than the previous year’s corresponding quarter of RM254.3 million ($59.9 million).
According to UMW Oil & Gas, the revenue reduction was the result of lower revenue contributions from both the Drilling Services segment and the Oilfield Services segment in the third quarter of 2015.
The company further explained that the reduction in revenue was due to lower time charter rates and lower utilization of some of the rigs in the third quarter of 2015. However, this was mitigated by additional full quarter revenue from the new rig, UMW Naga 6, which started operation in October 2014.
The company’s net profit for the quarter amounted to RM2.3 million ($540 900), versus RM66.7 million ($15.7M) in the comparative quarter last year.
The profit was further weighed down by the additional operating expenses from the new offshore jack-up rig, UMW Naga 7, which has not secured any contract during the reporting period, UMW O&G said.
Challenging period ahead
UMW Oil and Gas says that its Drilling Services segment is expected to achieve lower levels of asset utilization in the final quarter of 2015 as more rigs completed their contracts in the third quarter of 2015.
Regarding its Oilfield Services Segment, the company says unfavourable impact from low oil prices on demand for OCTG threading and repair services is expected to continue. As such, profitability of the Oilfield Services segment is likely to remain flat in the fourth quarter of 2015, the company said.
UMW Oil & Gas concluded that its overall financial performance is expected to be challenging for the financial year ending December 31, 2015.
Offshore Energy Today Staff