Velesto’s contract for the NAGA 7 jack-up rig with ConocoPhillips in Malaysia is considered terminated without notice following an incident earlier this year in which the rig submerged, resulting in a total loss of the asset.
On 26 March 2021, Velesto Drilling Sdn Bhd was hired by ConocoPhillips Sarawak Limited and ConocoPhillips Sarawak Oil Limited for the provision of a jack-up drilling unit, to which VELESTO NAGA 7 was assigned for this Contract.
On 4 May 2021, Naga 7 was reported tilted and submerged offshore Sarawak. All POB was evacuated and rescued.
The Board of Directors of Velesto Energy Berhad announced that the VED’s insurance underwriters have confirmed on 9 August 2021 that VELESTO NAGA 7 is a constructive total loss.
Pursuant to the terms of the Contract, in the event VED’s underwriters consider the Rig to be a total loss (including a constructive total loss), the Contract is considered terminated without notice as from the moment that the loss occurred.
With the termination of the Contract, the earnings of VEB Group for financial period ending 31 December 2021 is expected to be reduced by an estimated amount of USD8 million; which was the estimated value of the Contract.
