The group will also not discount the possibility of further impairments this year due to the sluggish charter rates.
“Impairment depends on utilisation and day rates. While our utilisation has improved, the day rates remained subdued,” said UMW-OG president Rohaizad Darus.
Rohaizad noted that with 59 rigs still lying idle in Southeast Asia alone, it would be difficult to predict the recovery of the charter rates.
Although average day rates for Southeast Asia jack-ups were below $40,000 a day during the first quarter of 2017, it is believed that current contracts for UMW-OG on its five jack-up rigs were fairly competitive at a range of between $60,000 and $75,000 a day.
On a positive note, however, Rohaizad said the full utilisation rate of the group’s assets meant that its business would now be on a recovery path.
UMW-OG will achieve a fleet utilisation rate of 100% by July this year, following the award of two new contracts from Petronas Carigali.
The two contracts, worth $34.81m, were for its last two idle rigs – Naga 3 and Naga 4 – to provide services for firm and optional wells.
The contract for Naga 3 was to drill five firm wells with the option of drilling additional five wells, starting in June 2017, while that for Naga 4 was to drill two firm wells with the option of drilling additional three wells, starting in June 2017.
“We’ve just got the last two rigs working – Naga 3 and Naga 4 – and this will bring the utilisation to 100% by early July,” Rohaizad said.
According to Rohaizad, UMW-OG had submitted bids for 33 new jobs, with a combined value of MYR3.2bn for its jack-ups in Malaysia and overseas. Of the total jobs being tendered for, 20 were based overseas, while 13 were in Malaysia.
He noted that this was in line with the company’s strategy to defend its market position in Malaysia, while progressively returning to its previous markets in Southeast Asia, namely, Vietnam, Indonesia, Thailand, Myanmar and the Philippines.
“While we thank Petroliam Nasional Bhd (Petronas) for its support, I don’t think we should burden the national oil company by keep going back to it for contracts; so, we will try our best to explore our existing markets in Southeast Asia,” he said, adding that the market outlook for 2017 appeared to be better than last year.
Rohaizad said that with oil prices looking more stable now, some companies were already coming back to invest and develop oil fields.
“As long as oil prices remain above a certain floor price, that is around $48 to $50 per barrel, there will be a number of fields in Southeast Asia that will be profitable,” Rohaizad said.
“What happened before is that there were uncertainties with regard to how low the oil prices would go. Now, with the reduction in the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec production, we’re seeing the stabilisation of the price of oil around $50 per barrel. As long as it stays around there, it gives certainty to oil companies to invest,” he added.
He noted that these included Petronas and PetroVietnam who were already starting to develop fields.