Malaysia-listed drilling and oilfield services company UMW Oil & Gas posted a profit of MYR32.15 million (USD9.16 million) for the first quarter that ended on 31 March 2015, down 39% from profit of MYR54.15 million in the corresponding period in 2014.
The company’s revenue hiked 59.8% to MYR312.5 million in first-quarter 2015 from MYR195.6 million in first-quarter 2014. The increase was mainly due to the improved revenue contributions from both its drilling services segment and the oilfield services segment resulted in the revenue increase in the first quarter.
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The drilling services segment has improved revenue contribution due to various factors such as the company’s new offshore premium jack-up rigs – UMW Naga 5 and UMW Naga 6 – which commenced operations in May 2014 and October 2014, respectively. In the meantime, the company’s UMW Naga 2 and UMW Naga 3 have recorded operating efficiency in the first quarter of 2015, which helped attribute more earnings for the quarter.
Moreover, the company’s commencement of the new hydraulic work-over unit UMW Gait 6 in August 2014 and full-quarter utilisation of UMW Gait 3, as well as the translation gains from the appreciation of dollar against ringgit, have attributed to additional revenue for the first quarter.
Meanwhile, the company’s oilfield services segment revenue increased 19% or MYR2 million to MYR12.45 million in the first quarter of 2015, compared with MYR10.5 million in the corresponding period in 2014. The increase was due to the improved revenue from oil country tubular goods threading and repair services recorded by its Labuan and Turkmenistan operations.
On the other hand, UMW Oil & Gas saw higher costs incurred during the first quarter, where the company’s operating expenses increased 87% year on year to MYR267.4 million. Similarly, its finance costs increased to MYR11.8 million in the first quarter of 2015, as compared with MYR4.47 million in the first quarter of 2014.
UMW Oil & Gas expects a difficult market for 2015 in its drilling services and oilfield business segments due to lower timecharter rates from discounts given to its existing clients. In addition, some of the company’s existing contracts are scheduled for early completion as the options are not exercised. Besides, the company also faces with potentially lower level of rig utilisation due to stiff competitions for fewer new contracts in view of the bearish market outlook for the oil and gas industry.