47 Management Discussion And Analysis / Business Review DAGANG NeXCHANGE BERHAD Integrated Report 2024 BUSINESS REVIEW DDTOS Sdn Bhd (“DDTOS”) Established as the first local provider of Directional Drilling services in Malaysia, DDTOS has built a proven drilling track record. It has since evolved into a niche service player, now focusing on the rental of Directional Drilling/Measurement While Drilling tools, as well as the sales and rental of Solid Expandable Tubular systems and mud motors. These offerings support Malaysian upstream operations and strengthen the Group’s footprint within the oil and gas services and equipment (“OGSE”) segment. Together, these entities form an integrated Energy Business Segment, contributing to the Group’s presence across both upstream production and the OGSE value chain - extending from product supply (2S) to aftermarket and field services (4S), both in Malaysia and abroad. Financial Performance The Energy Business Segment recorded a drop in performance for FY2024, mainly due to lower production and operational setbacks at Ping. Revenue of Ping declined to RM253.1 million from RM346.8 million the year before, largely because fewer barrels were produced and sold, and prices dipped slightly. Several factors contributed to this, including a longer-than-planned maintenance shutdown, unexpected equipment issues, as well as a delay in restarting gas exports caused by oil contamination in the system. These events led to higher costs per barrel, which impacted profitability. Even so, Ping remained profitable on an adjusted basis, ending the year with RM27.1 million in normalised profit after tax. This was lower than last year (RM80.3 million), but it reflects the team’s ability to manage through a tough operating environment. The business segment’s support services, OGPC and DDTOS, also improved year-on-year. OGPC earned RM60.2 million in revenue and RM8.1 million in normalised profit after tax, while DDTOS posted RM5.7 million in revenue and RM1.8 million in normalised profit after tax on the backdrop of a resilient operating environment. Overall, the Energy Business Segment remained a positive contributor to the Group, even in a challenging year, and continues to provide a strong foundation for future growth. Key Initiatives and Developments FY2024 was a year of steady advancement and portfolio repositioning for the Energy Business Segment as Ping continued to strengthen its position as a niche operator focused on mid-life and marginal fields. The Group progressed multiple upstream assets across different stages of the development lifecycle, while continuing to enhance its service capabilities through OGPC and DDTOS. In Malaysia, key progress was made across assets acquired through the PETRONAS Malaysia Bid Round. The Abu Cluster reactivation remained on track, with the first oil now targeted for the first half of 2026. The Meranti Cluster secured Field Development and Abandonment Plan approval in January 2025, while the newly acquired Beta Cluster is being developed in synergy with the broader Abu hub strategy. In the UK, the Anasuria Cluster continued to serve as a core producing asset. The operation celebrated 10 years with zero lost-time injuries and received two health, safety and environment performance awards in FY2024. Ping also acquired new licences, including Hutton, Pilot and P2640, further strengthening its long-term presence in the North Sea. While the UK remains an important strategic market, recent fiscal developments - including the increase in the EPL and the removal of the 29% investment allowance - prompted a reassessment of near-term capital allocation in the region. In response, the Group sharpened its investment focus on Malaysian assets, where the regulatory landscape has more stable and predictable conditions. At the same time, Ping continues to uphold safe operations and cost optimisation at Anasuria, while progressing pre-development activities across its United Kingdom licences, including Fyne, Avalon, Hutton and Pilot. The Group also remains actively engaged with the United Kingdom’s oil and gas industry, advocating for a more progressive and stable tax framework that supports the sustainable delivery of lowercarbon energy from domestic sources. To strengthen its financial foundation, Ping successfully settled its Pareto bond in July 2024, inline with cash flow management and funding alignment with the Group’s Malaysian growth strategy. On the services side, OGPC and DDTOS continued to align more closely with Ping’s operations in Malaysia. These entities are now better positioned to support tool rental services, equipment supply and downstream integration, creating the potential for stronger synergy within the business segment. Overall, the year’s key developments reflected a strategic pivot toward portfolio stability, local optimisation and a more disciplined approach to managing regulatory and market volatility. As oil prices remain a key driver of earnings, the Energy Business Segment continues to emphasise downside risk mitigation and a productivity-led budgeting approach - reinforcing capital discipline and operational resilience across varying market conditions.
RkJQdWJsaXNoZXIy NDgzMzc=