INTRODUCTION

Further to the announcement made on 23 May 2025 in relation to the Letter of Award for the provision of jack-up drilling rig services ("Contract") for PC Ketapang II Ltd, PC North Madura II Ltd and PETRONAS North Ketapang Sdn. Bhd. (collectively referred to as the "Client"), the Board of Directors of Velesto Energy Berhad ("VEB" or the "Company") wishes to announce that Velesto Drilling Sdn. Bhd. ("VED"), a wholly-owned subsidiary of Velesto Malaysian Ventures Sdn. Bhd., which, in turn, is a wholly owned subsidiary of VEB, and the Client has agreed to terminate the Contract without cause on 7 July 2026.

The Board wishes to further highlight that, as announced on 25 February 2026, NAGA 8 is currently deployed under a separate contract with Jadestone Energy (Malaysia) Pte Ltd for the East Belumut Phase 9 infill drilling project, offshore Peninsular Malaysia, valued at approximately USD 16.49 million (approximately RM 64 million) and running from March 2026 to July 2026 ("Jadestone Contract"). References to the "current contract" and "upcoming prospects" in this announcement are made in the context of the Jadestone Contract and other opportunities being pursued by the Group.

DETAILS OF TERMINATION

The Contract (Contract No. 4850000756) for the provision of the NAGA 8 jack-up drilling rig has been terminated pursuant to Article 23.2 (Termination Without Cause) of the Contract. Prior to the termination, VED had successfully completed Phase 1 of the project, comprising three (3) of the 12 commitment wells over approximately eight (8) months.

The termination provides the Group with the opportunity to actively market the NAGA 8 rig for alternative deployment opportunities. The Group is currently undertaking efforts to secure new contracts with improved commercial terms, optimised drilling sequence and enhanced overall commercial prospects.

FINANCIAL EFFECTS

The termination is not expected to have a material adverse financial impact on earnings and net assets of the Group for the financial period ending 31 December 2026, after taking into consideration the Jadestone Contract (as announced on 25 February 2026), which keeps NAGA 8 deployed, and the Group's active pursuit of upcoming prospects.