Thanks to the uptrend of the oil and gas market, the business performance within the first half of 2023 of Petrovietnam Drilling and Well Service Corporation (PV Drilling – stock code PVD) is quite positive and expected to have a full year with excellent business performance.
The spirit in overcoming challenges
During the period of 2016 - 2021, the crude oil price sharply fell and remained at low level, leading to the disruption or even bankruptcy of many drilling companies. When the crude oil price started to recover stably, reaching the average about 71.3 USD/barrel in 2018, then Covid-19 pandemic hit at late 2019. At this moment, the drilling industry continued to wildly fluctuate resulting from the disruption of global supply chain, an adverse impact on global oil demand, scarce workload, and bottom line day rate, etc. while operation cost considerably increased due to strict social distance regulations.
Operating in such a difficult period, PV Drilling increasingly implemented flexible response measures in order to conduct effectively the corporate governance, minimizing potential risks and optimizing internal resources based on maintaining service quality and enhancing service provision at overseas markets during the almost frozen condition of the domestic drilling market, all of which helped to ensure the stable business operation and adequate jobs for the owned rigs and over 2,000 employees.
With our right strategy, PV Drilling has successfully overcome the crisis period, proud to be a few drilling contractors over the world enabling to maintain the brand name without suffering a process of merging and acquisition/corporate restructuring to survive. Especially, “A pioneer of Vietnam’s Drillers” has gradually become a familiar brand name in the ASEAN drilling markets while sending 5/6 owned rigs to overseas markets in 2019. This result has proven the outstanding efforts and bravery of the management and the whole staff on the road to sustainable development.
The dedicated and skilled workforce of PV Drilling.
Taking opportunities
Covid-19 pandemic was gradually controlled over the world in 2022, as a result, oil demand and price started to increase while the global supply chain was re-established. The oil market generally and the drilling industry in specifically started to be busier, signaling another growth cycle is coming. However, in the short-term, PV Drilling still had to face many difficulties and challenges such as limited workload in the domestic market due to the delay of new E&P drilling programs from oil contractors. For overseas markets, PV Drilling had to bear other supplement costs like personnel, machinery and equipment transportation, strict compliance with host country policies together with taxes and violent fluctuations of exchange and interest rates, etc.
In danger there is always opportunity; actually, with the professionalism and spirit, PV Drilling has gradually overcome all the challenges as well as maximized all market opportunities to establish other key milestones in the journey of over 20 years of service provision in the domestic and international drilling markets. The greatest achievements of the Corporation within this period can be mentioned as below: all the rig fleet kept busy from quarter 2/2022 with day rate increasing 15% compared to 2021, jack-up average efficiency reaching over 99% and maintaining Zero LTI achievements for the rig fleet; performing well all drilling programs at overseas including the land rig, PV DRILLING 11 operating full year in Algeria; the jack-up PV DRILLING III setting a new record about the longest oil and gas well (6,963m) in Malaysia; the TAD – PV DRILLING V rig completed 5 wells, 2 of which ahead of schedule, especially breaking the record in term of time for releasing well completion set and time for connecting drilling rod set, being ranking No. 2 (runner-up) among rigs of the same kind currently working for Shell Global; the jack-up PV DRILLING II successfully penetrating and performing two continuous drilling campaigns in Indonesia – the drilling market which was potential but extremely hard to access.
In addition to the core business, PV Drilling quickly grasped the energy transition trend and initially achieved positive results in provision of wind power training and machinery maintenance - repair for the renewable energy industry. With all the above efforts, PV Drilling achieved the total revenue of VND 5,599 billion in 2022, an increase of nearly 30% compared to 2021 and exceeding 19% of the 2022’s plan. At the same time, PV Drilling achieved many prestigious awards and accolades such as “Top 5 enterprises with the best corporate governance”, organized by HOSE, HNX and Investment newspaper; VIFOTEC award (Vietnam Science and Technology Innovation) with the project “Design, manufacture and apply HEBA (Hydraulic Extendable Bail Arm) equipment”. Although the Corporation couldn’t meet the profit plan due to the impact of exchange rate fluctuation and increasing interest rate, our business operation in 2022 still achieved positive results, preparing for a new growth cycle in 2023 and upcoming years.
Generating growth
2023 and upcoming years will be the high time for oil contractors to heavily invest in E&P and development drilling programs. This trend will be clearer while the crude oil price remained stable at a high level, ranging from 70 – 80 USD/barrel within the first half year and day rate also increased over 20% compared to 2022. Domestically, the updated Law on Oil and Gas taking effective from July, 2023 will create more favorable conditions and attract more investment in E&P and field development activities. The event that the block B – O Mon gas pipeline project will be soon approved to implement, promising to bring the large amount of long-term workload for such drilling contractors as PV Drilling.
The international drilling markets continued to receive more positive signals as well as job opportunities; typically, in the Middle East, rig rental/purchase is increasing sharply leading to the shortage of rig operating in the ASEAN market. As a result, day rate has been improved in ASEAN region. The U.S Energy Information Administration (EIA) forecast crude oil price will stabilize around 80 USD/barrel for 2023 and 84 USD/barrel for 2024; in the meanwhile, global oil inventories will decrease in the next five quarter, which will be the main reasons for oil contractors to increase the implementation of drilling campaigns.
Together with the bright trend of the oil and gas market, our business performance in the first half of 2023 has also increased accordingly. All the rig fleet was busy for performing our clients’ drilling campaigns with long-term contracts lasting through 2024 with much improving day rates. Safety is also highly secured at the Corporation. In May, 2023, PV Drilling was honored to receive the award of “the Best Incident Rate Offshore Company” and the jack-up PV DRILLING I received the award “Years Recordable Free Offshore Rig” at Safety Conference organized in Malaysia by IADC – SEAC. These remarkable achievements continue to affirm our position and prestige in the field of drilling rig provision, which helps PV Drilling to win biddings at overseas markets, especially the most demanding markets in the region.
In order to be well-prepared for the best internal resources and ready to grasp more job opportunities in the upcoming time, PV Drilling will closely follow market progress as well as catch up market demand by enhancing research; applying the latest science and technology; strengthe
ning the ability to receive technology transfer from foreign partners to upgrade service quality; seeking opportunities to cooperate/ invest in newly built rig/machinery to timely meet market demand as well as upgrade current rig features, increasing competitiveness of the Corporation while participating in both domestic and international drilling markets.
As such, with the bright prospect of the current drilling market and positive long-term forecast, together with the best effort, the strong spirit, experiences in overcoming challenges of the management and the whole staff in the journey heading towards our sustainable development, “the pioneer of Vietnam’s drillers” strongly believes that the Corporation will complete even exceed 2023’s business plan, generating the new growth cycle and meeting the trust of our investors and shareholders.
PV Drilling's PR team.