Velesto takes $8m profit hit after contract termination for sunken rig

Velesto takes $8m profit hit after contract termination for sunken rig

Malaysian offshore driller Velesto Energy said that a contract with ConocoPhillips for its Naga 7 jackup rig that sank off Malaysia in May has been officially terminated.

With the termination of the contract, the earnings of Velesto Energy for the financial period ending December 31, 2021, are expected to be reduced by an estimated amount of $8m.

The rig sank off the coast of Sarawak, East Malaysia after one of its legs penetrated the soil formation while jacking up at the ConocoPhillips Salam-3 well.

Earlier in August, Velesto confirmed that its insurers considered the rig a total loss. As a result, the drilling contract with the US-based operator “is considered terminated without notice as from the moment that the loss occurred.”

The contract for the Naga 7 was awarded in March this year to drill up to three wells. The deal was worth around $8m.

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Published: 21-09-2021