Velesto Energy is making waves in Malaysia’s oil and gas sector with its forward-thinking approach and promising financial outlook. Despite temporary setbacks, the company is set to emerge as a significant player in the industry. In this feature, we explore Velesto’s journey, its financial prospects, and its commitment to environmental, social, and governance (ESG) principles.
The Road to Recovery: While Velesto Energy experienced a dip in its Q3 2023 results, with utilization rates at 53%, it’s important to look beyond this temporary blip. The company has been focusing on repair and maintenance works, underwater inspections, and other necessary activities to ensure the long-term sustainability of its operations.
Prospects for Velesto Energy
One of the key factors driving Velesto’s optimistic outlook is the expected surge in Demand Coverage Ratios (DCRs) in 2024. With a tight market and higher demand for jack-up (JU) rigs, Velesto is well-positioned to benefit from the industry’s resurgence. Notably, Velesto’s diverse and relatively young fleet of six Malaysia-flagged JUs provides a strategic advantage.
Financial Resilience: Velesto’s financial metrics reflect its resilience. While the oil and gas sector faced seasonality challenges, the company maintained positive cash flow through stringent cost control. A successful turnaround in FY23 and a projected net profit jump of over 200% YoY in FY24 illustrate Velesto’s commitment to financial stability and growth.
The green business
ESG Commitment: Velesto Energy has made significant strides in aligning its operations with ESG principles. The company has been proactive in improving its sustainability practices, setting emissions reduction goals, and adhering to international standards. Velesto’s commitment to ESG is not only commendable but also positions it favorably in a world where environmental and social responsibilities are increasingly crucial.
Navigating Environmental Challenges: While Velesto’s operations have limited direct environmental exposure, the company has worked diligently to reduce its carbon footprint and minimize resource consumption. Moreover, it has consistently reported zero major spills from its JUs, showcasing its dedication to minimizing its impact on marine environments.
Strong Corporate Governance: Velesto boasts a well-structured board with a good mix of independent non-executive directors and gender diversity. The company’s adherence to best corporate governance practices has earned it recognition in the form of awards and inclusion in prominent indices.
Velesto Energy’s journey is one of resilience, growth, and responsible business practices. As it navigates challenges in the oil and gas industry, the company remains committed to long-term sustainability, financial growth, and strong ESG principles. Velesto is undoubtedly a rising star in Malaysia’s oil and gas sector, and its future looks promising.
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Article Source: Maybank
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