PV Drilling: Acceleration and Sustainable Development

In 2009, PetroVietnam Drilling and Well Services Joint Stock Corporation (PV Drilling) increased its chartered capital to VND2,105 billion after merging with PVD Investment Joint Stock Company (PVD Invest). This is the first successful horizontal merger of two public companies, making a strong resonance on the Vietnamese stock market.

 

This merger deal has helped PV Drilling to strengthen financial position and competitiveness, reduce operating and administrative costs and improve business efficiency. Especially, PV Drilling’s shares were honourably named the “Golden Vietnamese Securities Award 2009” and “Prestigious Securities Trademark Award 2009.” Vietnam Business Forum has a meeting with Ms Ho Ngoc Yen Phuong, Deputy General Director of PV Drilling.

 

In 2009, the global financial crisis and economic recession deteriorated all socioeconomic aspects, especially in oil and gas drilling sector. Crude oil price plunged from US$140 per barrel in July 2008 to US$37 per barrel in February 2009, leading to a cutback or suspension or delay of new oil field production plans. This cause a drop of 40 % in oilrig rent rates. The drilling market with strong supply and weak demand resulted to a severe competition of oil and gas service providers, especially rig services.

 

We could not stay out of general difficulties of the oil and gas drilling industry. Production and business activities at PV Drilling were considerably affected by the industry decline, particularly in the middle of the third quarter of 2009 when long-term rig leasing and drilling services contracts expired, putting heavy pressures on the leaders of PV Drilling in finding out new customers. Despite difficulties, PV Drilling still managed to complete business plans set for 2009. Total revenue reached VND4,097 billion (US$221 million), exceeding the annual target by2.42 %, a net profit amounted to VND815 billion, beating the yearly plan by 1.83 % and total assets valued at VND12,368 billion.

 

Better-than-expected results were attributed to the corporation’s effort to increase oil rig leasing contracts, accelerate the completion of PV Drilling II platform, which was completed three months ahead of schedule and started operating in September 2009 instead of December 2009 as initially expected. Moreover, PV Drilling has built up and developed a well-trained, experienced and enthusiastic workforce and possessed modern equipment, machines and technologies.

 

The oil and gas industry is defined as the spearhead of the national economic development. The Vietnam National Oil and Gas Group (PVN) annually makes up for 30 % of the country's GDP. As a member company of PVN, the development of PV Drilling plays an important role and is one of strategic objectives of PVN.

Which strategies has PV Drilling adopted to enhance the competitiveness and achieve the objectives?

PV Drilling’s action plan in 2010 will focus on increasing investments for technology in the light of the “Stronger at developing services and more professional at developing human resources” strategy. This strategy is expressed very clearly by Mr Do Van Khanh, General Director of PV Drilling, at Annual Report 2010 which has been sent to shareholders and investors. In 2010, PV Drilling plans to make revenues of VND5,100 billion, a rise of nearly 25 % from 2009, pre-tax profit of VND900 billion, a slight increase over 2009. Besides, PV Drilling will accelerate the investment pace of Tender Assist Drilling (TAD) rig project, aiming to put it into operation in the fourth quarter of 2011 to confirm its capacity, performance and trademark in the field of deep drilling. PV Drilling expects to make a long stride from the fourth quarter of 2011 and especially from 2012 when TAD rig goes into operation.

 

To ensure its production and business activities in 2010, PV Drilling is focusing on managing cash flow performances, issuing policies to centrally utilise its resources, planning and anticipating short-term and long-term cash flows and continuing to consider recycling solutions for fix the borrowing interest rate in the long term.

 

There are already many forecasts on oil and gas industry growth and reserves in Vietnam. Thus, I would like to brief that in 2010 the economy will recover, oil demand in the US and China will rebound and crude oil price is estimated to be traded in the range of US$80-90 per barrel. Especially, the rig market is also predicted to recuperate from the crisis and Vietnam will restart oil and gas exploration and production plans. Oil and gas exploration and production will be accelerated. Besides, with the support of the Vietnam National Oil and Gas Group in exchanging and seeking cooperation opportunities with partners in exploring and exploiting oil and gas and providing high-tech oil and gas services in the region and in the world. The oil and gas drilling industry of Vietnam will have more to leap forward in the coming time and PV Drilling platforms will work throughout the year.

 

On the occasion of 35th National Liberation Anniversary, on the behalf of the Executive Board of PV Drilling, I would like to deliver deepest thanks to ministries, branches, the State Securities Commission (SSC), the Hochiminh Stock Exchange (HOSE), the Vietnam National Oil and Gas Group (PetroVietnam), investors, shareholders, customers and partners for their favourable cooperation and support for PV Drilling to develop in the past years. I believe that with the attention and support of concerned entities, PV Drilling will develop to a new plane to deserve the title of “Pioneer of Vietnam Drillers.”