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UMW Oil & Gas picks up jack-up rig contract from Petrofac

The stabilising oil price has seen a slight recovery in fortunes of Malaysian oil and gas (O&G) service providers such as UMW Oil & Gas (UMW-OG) which announced the award of its second jack-up rig contract in a week.

UMW-OG said in a stock market announcement that Petrofac has awarded a contract to its UMW Offshore Drilling unit to drill two wells with the option of one plus one additional wells. The job will be fulfilled by its jack-up drilling rig UMW Naga 5 and is due to start in the second quarter of 2017.

The duration and value of the contract were not disclosed as it would depend on the extra well options.

Petrofac has been operating the Cendor field offshore Peninsular Malaysia since 2006. The marginal field is being developed with Petronas Carigali, Kuwait Foreign Petroleum Exploration Company (KUFPEC) and PetroVietnam.

“The provision of the drilling rig services is expected to contribute positively to the earnings and net assets of UMW OG Group during the contract period for the financial period ending 31 December 2017,” the company said.

UMW-OG late last week announced a small one well contract for its UMW Naga 2 jack-up rig from Petronas Carigali marginal field unit Vestigo Petroleum commencing in the first quarter of 2017.

UMW-OG, which took a MYR780m ($175.2m) charge in the fourth quarter of 2016, has massive idle capacity in its drilling rig fleet and while these jobs will help somewhat, they are a long way off full employment and are likely to have been taken on at sub-par charter rates.

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