An insurance payout related to the sunken jack-up drilling rig Naga 7 helped lift Malaysian drilling contractor Velesto Energy to a gross profit in the quarter ending 30 June 2021.

Velesto's pre-tax profit was 20.8 million ringgit (US$4.9 million) compared to a pre-tax loss of 13.5 million ringgit in the same quarter in 2020.

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However, group revenue of 83.6 million ringgit in the just-completed quarter was 40.7% lower than the corresponding quarter, mainly due to lower activities in the drilling segment, said Velesto.

The company's average jack-up rig utilisation in the quarter was 38% compared to 67% in the same quarter of 2020.

However, the drilling segment made a pre-tax profit of 30.3 million ringgit "mainly due to the recognition of the insurance claim in relation to the Naga 7 incident", said Velesto.

"Survey work for the submerged Naga 7 is in progress and the 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," added the contractor.

The jack-up Naga 7 sank off the coast of Sarawak, East Malaysia following a punch-through incident on 3 May 2021.

Velesto said three of its six jack-up drilling rigs are working. Another two are scheduled to begin mobilisation in September.

The remaining unit is being tendered for a number of potential contracts.