UMW Oil and Gas sees better utilisation rates next year on positive industry sentiment

Jack-up rig operator and oil and gas services player UMW Oil and Gas Corp (UMW-OG) is expecting that positive sentiment and more optimism in the sector will lead to higher utilisation rates for its drilling rigs beginning next year.

Local media cited UMW-OG president Rohaizad Darus as saying that one of the company's priorities is to turn around its business based on its existing asset utilisation.

"We have to make sure full utilisation of our assets is at least stabilised or achieve a high level of utilisation. But, I can't guarantee whether we can have full utilisation for the whole of next year," he said.

Nevertheless, UMW-OG will keep up with cost cutting measures to ensure sustainable earnings, even if the utilisation does not reach 100%, he added.

"We have done quite a significant cost operation in terms of operation including manpower last year. Now, we are looking at additional cost reduction along the same lines, which is in terms of operations such as consolidation of spares instead of having numerous of spares for every rig.

"Maybe, we can have about two spares only and the rest of the spares will be shared among the rigs," he explained.

 UMW-OG's current orderbook stands at MYR525m ($122.9m) with an additional MYR438min optional orders.

With the price of oil stabilising at $50 a barrel UMW-OG sees a return in investment. He however pointed out that the company will need to ensure continuous negotiation for contracts, especially to try and secure slightly higher charter rates.

"I can't expect the day charter rate to return to where we were before but at least higher rate would give us some margins," he said.

He said UMW-OG's current contracts are still profitable but some contracts are slightly not sustainable.

"We would like to go forward and hopefully at least achieve breakeven or profit on all the contracts," he added.

 UMW-OG achieved a 68% assest utilisation in the second-quarter ended 30 June 2017.

 

"We are bidding for 15 local contracts and 9 foreign contracts. But the chances of us getting overseas contracts is lesser than local,” he said.

Posted 04 September 2017

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Vincent Wee

Asia Editor, Seatrade Maritime News

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