For the first half of 2020, PetroVietnam Drilling & Well Service Corporation (PV Drilling) reported an estimated total revenue of VND 3,180 billion, an increase of 64% compared to the same period last year, and a profit after tax of VND 85 billion compared to VND 22 billion of the first 6 months of 2019. Such encouraging performance of PV Drilling is definitely a real highlight, particularly in the dire context where the “dual shock” of COVID-19 pandemic and collapse in oil prices battered the whole industry on global scale.
To confront the threat of COVID-19 pandemic, PV Drilling has closely monitored its course of development and proactively implemented effective action plans including promptly deploying the preventive measures both onshore and offshore; customizing crew change within the host countries when the rigs are working overseas; developing a tailored remedial plans for various levels of COVID-19 pandemic to ensure the safety for all staff working abroad. As a result, PV Drilling has successfully maintained the stable and continuous operation of the whole rig fleet throughout the peak stage of the pandemic, with an average of 3.56 jack-up rigs operating compared to 3.45, and rig dayrate increasing by 9% compared to the same period last year. The surge in the operation of outsourced rigs has also contributed to the business results of PV Drilling, with an average of 2.4 rigs operating compared to none in the first half of 2019. In parallel, the joint ventures of PV Drilling also recorded positive results in business performance with outstanding profit growths.
In the second half of 2020, the economy and business outlook are expected to endure more challenges as COVID-19 pandemic is still progressing with complicated behaviors and has not been curbed in many countries around the world while improvement in investment and consumption demand seems quite marginal. In fact, from Q2/ 2020 when the oil price remained exceptionally low (statistics showed West Texas Intermediate (WTI) crude oil prices crashed to negative for the first time in history and was swiftly traded at minus 40 USD per barrel in a session on April 20, 2020), oil and gas operators continuously cut investment, postponed or cancelled drilling programs in 2020, thereby inducing a harsh competition in securing jobs for drilling rigs among contractors. As of August 2020, number of tenders for drilling programs in 2020 in Vietnam and Southeast Asia has become notably scarce with 26 out of 61 jack-up rigs in the region are unemployed. PV Drilling suffered the same pressure when both PV DRILLING II and PV DRILLING III had to cease operation in Malaysia from July 2020 and June 2020 respectively, which are significantly earlier than their contractual plan.
Recognizing the imminent difficulties and challenges, PV Drilling has consistently deployed a comprehensive range of remedial solutions to cope with COVID-19 pandemic and collapse in oil prices, regularly monitor the market trend and oil price outlook in order to implement appropriate approaches from time to time. Such consistent efforts have rendered PV Drilling to maintain the premium service quality for clients, ensure the safety record for drilling operation (Zero-LTI), deliver a remarkably high rig efficiency at approximately 99%, and contribute to realize many successful drilling campaigns for clients against all adverse conditions. PV Drilling has timely taken advantage of such competitively edges to seize the rare job opportunities remaining in 2020 in the country as well as in the region with the successful bidding and negotiation of the contracts for its two available jack-ups. In specific, the rig PV DRILLING II will commence a 100-day drilling campaign in Vietnam from September 2020 while the rig PV DRILLING III will be mobilized for KrisEnergy to implement a 5-well development drilling program in Cambodia with duration of around 3 months, tentatively commencing from October 2020. Such achievements emerged as the absolute bright spots in PV Drilling’s business activities amidst “the dual shock”. Although it would take more time for the oil and gas industry to fully recover, the market has started to see positive signs recently when crude oil has steadily bounced back and reached over 45 USD per barrel on August 18, 2020, higher than the average level in July 2020 at 43 USD per barrel and 25 USD higher than the benchmark in April 2020. (Source: EIA).
The rig PV DRILLING II will commence a 100-day drilling campaign in Vietnam from September 2020.
The success in securing new contracts for the rig fleet amidst the current difficult period in both domestic and regional markets has proved PV Drilling's reputation and capacity in the segment of providing drilling services. PV Drilling will continue to monitor market behaviors, observe closely the supply - demand situation to seek new drilling contracts and ensure the stable and efficient operation for the rig fleet in order to meet the business targets for 2020 approved at PV Drilling’s General Meeting of Shareholders.
Countries around the world are putting together all efforts in researching and developing COVID-19 vaccine and the prospects of deploying an effective antidote on global scale have become more and more promising in recent time. With the hope that the COVID-19 pandemic will be contained and pushed back soon, it is also realistic to expect the scenario where the world economy and the oil and gas industry will regain the growth momentum, thus leading to a robust recovery in crude oil prices. PV Drilling is confident that in 2021, all of our jack-up rigs will secure jobs. Especially from Q2/ 2021, we can see another bright spot when the tender-assisted drilling rig “PV DRILLING V” will commence to perform the long-term contract signed with Brunei Shell Petroleum (BSP). With such favorable conditions, PV Drilling will definitely achieve more impressive business outcomes with positive revenue and profit generated from the performance of its rig fleet, and continue to affirm its brand in the regional and international markets.