UMW Oil & Gas registers RM409.13m net loss in Q4

PETALING JAYA: UMW Oil & Gas Corp Bhd reported a net loss of RM409.13 million for the fourth quarter ended Dec 31, 2015 (Q4) compared with a net profit of RM71.95 million a year ago.
In a filing with Bursa Malaysia yesterday, the group attributed the net loss to a non-cash charge of RM337.7 million associated with impairment of assets and goodwill as well as operating losses registered by the drilling services and oilfield services segments due to consistently depressed oil prices.
The drilling services segment incurred a loss of RM411.1 million in Q4 compared with profit of RM80.3 million a year ago, due to lower revenue, asset and goodwill impairment losses of RM331.5 million, and asset write off of RM12.6 million arising from the five-yearly periodical survey.
The oilfield services segment reported a loss of RM8.4 million in Q4 compared with profit of RM3 million a year ago due to revenue reduction and goodwill impairment loss of RM6.2 million of a subsidiary.
Meanwhile, revenue for the quarter fell 59.86% to RM130.96 million from RM326.23 million a year ago due to lower revenue contributions from the drilling services and the oilfield services segments during the quarter. Overseas operations contributed 13.4% of the group revenue during the quarter.
In Q4, the drilling services segment contributed revenue of RM124.8 million compared with RM314 million recorded a year ago, mainly due to deterioration in time charter rates and low utilisation of some of the assets in the group during Q4.
However, it added that the revenue reduction was mitigated by additional revenue contributions from two new jack-up rigs, UMW Naga 8 and UMW Naga 7, which commenced operations in September and November 2015 respectively. It also saw translation gains from the appreciation of the US dollar against ringgit.
Revenue from oilfield services segment was also lower at RM6.2 million in Q4 compared with RM12.3 million a year ago due to lower contribution from its operations in Labuan, Thailand, China and Turkmenistan.
For the financial year ended Dec 31, 2015, it posted a net loss of RM372.31 million compared with a net profit of RM252.00 million a year ago. Revenue fell 17.28% to RM839.53 million from RM1.01 billion a year ago.
The group expects oil price to remain low and continue to be volatile in the near future, resulting in lower activities in exploration and development of new oil and gas fields, which has in turn, led to lower drilling and workover activities.
“This poses continued challenges in terms of both time charter rates and utilisation of drilling rigs and hydraulic workover units. While the time charter rates are lower in line with global market, the reduction in utilisation is being cushioned with the support of Petronas and other regular clients,” it said.
In the oilfield services segment, UMW Oil & Gas said the current environment has affected the price and volume of oilfield services activities and expects the weak global market to continue in the near term.