UMW Oil & Gas posts wider net loss in first quarter

PETALING JAYA: UMW Oil & Gas Corp Bhd’s (UMW-OG) net loss for the first quarter ended March 31, 2017 widened to RM104.12 million from RM65.08 million a year ago due to lower time charter rates and reduced foreign exchange gain on translation.

In a filing with Bursa Malaysia yesterday, both drilling services and oilfield services segments incurred losses during the quarter.

The drilling services segment incurred a loss of RM96.7 million during the quarter compared with a loss of RM93.4 million a year ago. The oilfield services segment also incurred a higher loss of RM1.6 million compared with RM1.4 million a year ago.

Revenue for the quarter fell 15.28% to RM74.28 million from RM87.68 million a year ago due to lower revenue from both the drilling services and oilfield services segments, mainly due to softer time charter rates from drilling contracts and weaker demand for oilfield services.

The drilling services segment contributed a lower revenue of RM71 million during the quarter compared with RM81.3 million a year ago due to lower time charter rates.

During the quarter, its jack-up utilisation rate improved slightly when UMW Naga 7 was income-generating against at the end of March 2017.

The oilfield services segment also contributed a lower revenue during the quarter, of RM3.3 million compared with RM6.4 million a year ago.

“This segment of the value chain has yet to benefit from the increased activities in exploration and production. Thus, demand for oil pipes threading, inspection and repair services remained soft,” it said.

The group said all its seven jack-up rigs are contracted, five of which are income-generating while the remaining two are expected to start work by end of June 2017. This would improve the asset utilisation rate from 71% to 100% by mid-2017.

This month, both UMW Naga 3 and UMW Naga 4 secured a contract each from Petronas Carigali Sdn Bhd for works in offshore Malaysia.

Despite the improving asset utilisation, the group expects time charter rates to remain soft in line with prevailing market rates.

For the oilfield services segment, demand for oil pipes threading, inspection and repair services is expected to remain soft for the rest of 2017.