Insurance payout boosts drilling contractor to profit

An insurance payout related to the wrecked Naga 7 (IMO 9679012) helped lift Malaysian drilling contractor Velesto Energy to a gross profit during the quarter ending on June 30th. Velesto’s pre-tax profit rose to 20.8m ringgit (US$4.9m) compared to a pre-tax loss of 13.5 million ringgit during the same quarter in 2020. Although group revenue was 40.7% lower than the corresponding quarter last year, mainly due to lower activities in the drilling segment, that segment made a pre-tax profit of 30.3m ringgit “mainly due to the recognition of the insurance claim in relation to the Naga 7 loss” (IMN May 7th 2021).

The company said that survey work for the submerged Naga 7 was in progress and that plans for the salvage operation will be finalised after the completion of the survey report. However, the rig has been declared as a total loss and compensation from the insurers has been agreed upon. The rig sank off the coast of Sarawak following a punch-through incident on May 3rd 2021.

Naga 7 was an independent-leg cantilever jack-up rig that was delivered in January 2015. It had a drilling depth capability of 30,000ft and a rated operating water depth of 375ft. The rig was hired by ConocoPhillips in March to drill up to three wells. The commencement of drilling was tentatively set for H1 2021. The contract was valued at about $8m.