Velesto rig working for ConocoPhillips sinks off Malaysia

A jack-up drilling rig owned by Malaysia’s Velesto Energy has sunk offshore Malaysia while working for the oil major ConocoPhillips.

The board of directors of Velesto Energy Berhad has informed that an incident involving one of its rigs, Velesto NAGA 7 jack-up, occurred at the worksite due to rapid penetration into the formation on Monday, 3 May 2021, while operating offshore Sarawak for a client.

The NAGA 7 rig tilted and subsequently submerged at the location on 4 May 2021, the company added in a statement on Tuesday.

Velesto added that drilling activities had not started and no well had been drilled.

All personnel onboard are safe on the rescue vessels and the majority have been transferred to Miri, Sarawak. The remaining personnel are in the process of being transferred.

The company is investigating the incident and evaluating options. The rig is covered by insurance and recovery efforts are ongoing and monitored.

Malaysian business and financial news publisher The Edge Markets said on Tuesday that, as a result of the incident with the NAGA 7 rig, Maybank Investment Bank Research had cut Velesto Energy’s FY21 to FY23 earnings by 58 per cent to 144 per cent due to the operational setback on the rig.

NAGA 7 is an independent-leg cantilever jack-up rig delivered in January 2015. It has a drilling depth capability of 30,000 feet and has a rated operating water depth of 375 feet.

The rig was in March 2021 hired by ConocoPhillips to drill up to three wells with the tentative start date sometime in the first half of 2021.

The value of Velesto’s contract with ConocoPhillips is about $8 million.

The NAGA 7 rig also previously worked for Petronas back in 2019. Before that, the rig worked for Shell.

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