1. INTRODUCTION

The Board of Directors of Velesto Energy Berhad ("VEB") is pleased to announce that Velesto Workover Sdn. Bhd. (“VWO”), a wholly-owned subsidiary of Velesto Malaysian Ventures Sdn. Bhd., which in turn is a wholly-owned subsidiary of VEB, has received a Letter of Award from ExxonMobil Exploration and Production Malaysia Inc. (“EMEPMI”) for provision of one (1) hydraulic workover unit and services for EMEPMI (“Contract”). The duration of the Contract is one (1) year commencing from Q3-2022 until completion of EMEPMI’s selected wells programme (“Contract term”).  The value of this enabling contract with no guarantee of call-offs shall be based upon the agreed rates and work order, if any, issued by EMEPMI within the Contract term.

2. DETAILS

2.1       Provision of Hydraulic Workover Unit “VELESTO GAIT 6”

For the Contract, VEB assigns its VELESTO GAIT 6, a hydraulic workover unit with maximum pulling and snubbing capacities of 460,000 lbs and 225,000 lbs respectively capable for rigging up on offshore platforms to perform wells workover, plugging and abandonment operations.

3. INFORMATION ON PARTIES

3.1 Information on VWO

VWO was incorporated in Malaysia under the Companies Act, 1965 on 29 December 1983 and is deemed to be registered under the Companies Act 2016. VWO is principally involved in the business of providing workover operations for the oil and gas industry.

3.2 Information on EMEPMI

EMEPMI was incorporated in the State of Delaware, United States of America, with limited liability on 27 October 1965 and has its registered office at 18th Floor, Menara ExxonMobil, Kuala Lumpur City Centre, 50088 Kuala Lumpur, Malaysia. The principal activities of EMEPMI are exploration, development and production of petroleum.

4. FINANCIAL EFFECTS

The Contract is expected to contribute to the earnings and net assets of VEB for the financial period ending 31 December 2022 and 2023.

5. RISK ASSOCIATED WITH THE CONTRACT

The risks associated with the execution of the Contract are operational and execution risks, which will be mitigated and/or managed by VWO, a company with a proven successful track record of undertaking workover, plugging and abandonment operations.   

6. CONFIDENTIALITY

The contents of this Announcement are in accordance with the terms of the Letter of Award and endorsed for release by EMEPMI.

7. DIRECTORS AND SUBSTANTIAL SHAREHOLDERS INTEREST

None of the Directors and/or the substantial shareholders of VEB and/or persons connected with the Directors and/or substantial shareholders have any interest, direct or indirect in the above Contract.

8. STATEMENT BY DIRECTORS

The Board of Directors of VEB is of the opinion that the Contract is in the best interests of VEB and its group of companies.

This announcement is dated 22 February 2022.