Oil prices had ticked higher after Saudi Arabia and Russia, the world biggest oil exporters, extended oil cut in July and rising global demand.

Saudi Arabia extended its voluntary oil output cut of one million barrels per day for another month to include August, adding that the cut could be extended beyond that month. Meanwhile, Russia has already pledged to reduce its output by 500,000 barrels per day to 9.5 million bpd from March until year-end.

Prices have eased recently, with Brent prices down to 84.14 USD a barrel from the highest since January set in August 10, due to concerns over the Chinese economy.

However, supply cuts could erode oil inventories in the rest of this year, potentially driving prices even higher, according to the International Energy Agency (IEA).

In that backdrop, demand for drilling rigs is soaring globally, sending prices of new/renewed rig services higher and benefiting some Vietnamese oil and gas enterprises in the upstream sector.

PV Drilling, which leads the rig rental market in Vietnam with about 50% market share, has posted a positive business result in the second quarter.

During the period, the company reported a net profit of nearly 155 billion VND, compared to a loss of 73.8 billion VND in the same period last year. The figure is also the highest profit in 18 quarters since early 2019.

For the first half of the year, PV Drilling recorded net revenue of more than 2.6 trillion VND, a slightly decline of 0.8% year-on-year.

Thanks to the sharp decrease in the cost of goods sold, its profit after tax increased sharply to 207.1 billion VND, compared to the loss of 148.6 billion VND in the first half of 2022. With the results, the company has completed far beyond the profit target set for the whole year.

PV Drilling said that jack-up rig rental revenue increased on the efficiency improvement and a gain of over 30% on-year in unit price, helping it achieve the impressive results.

The company is expected to gain more after expanding its business to Southeast Asia markets.

According to VNDirect Securities Corporation citing IHS report, the average demand for jack-up rigs in the Southeast Asia will increase from 32.4 rigs in 2022 to 36.8/38.2 units in 2023-2024 with the main driver coming from Indonesia and Malaysia.

In contrast, about 28 jack-up rigs have moved out the Asia-Pacific region for the Middle East in 2022-2023. This may lead to a supply shortage of jack-up rigs starting the third quarter of 2023 when the Southeast Asian governments accelerate their Oil & Gas Exploration & Production (E&P) campaigns.

The rental price of jack-up rigs in the region was positive in the first half of 2023 and remained above 110,000 USD a day, said KIS Vietnam Securities Company.

And given the current background of the market, the rate is expected to stay above 120,000 USD in the futures, according to VNDirect, adding that the rental price of the reference jack-up rig hit highest since 2015 at the end of 2022, ranging from 95,000 USD to 134,000 USD.

As a result, PV Drilling's business situation is likely to continue to grow positively.

Another firm in the upstream sector, Petrovietnam Technical Services Corporation, also witnessed outstanding results in the last quarter.

In the second quarter financial statement, the company said that its net revenue climbed 24% year-on-year to over 4.7 trillion VND in the second quarter, while profit after tax was 236.7 billion VND, 23 times higher than the same period of last year.

In the second quarter of 2022, its profit before tax hit the bottom since the first quarter of 2020.

The business performances of enterprises in the upstream segment are expected to improve, as global investment in exploration & production (E&P) is set to rise rapidly in the next five years, Le Xuan, an independent trader, told Vietnam News.

“At the same time, I also expect domestic exploration and production activities to recover in 2024 when the Government recently approved the plan to develop the Lạc Đà Vàng oilfield with a total investment capital of 700 million USD”, Xuan added.

Mixed results

Meanwhile, companies in the mid- and downstream sectors of the industry saw mixed business performances in the second quarter.

Particularly, businesses in midstream posted poor results.

Revenues of Binh Son Refining and Petrochemical Company Limited, Petrolimex, PV OIL, COMECO, Thanh Le General Import-Export Trading Corporation, and Nam Song Hau Trading Investing Petroleum JSC dropped 22.07-64.45% on-year in the second quarter, with only Petrolimex and Nam Song Hau having positive profits after posting losses last year.

In the downstream sector, PV Gas and PVT Logistics reported declines of 38% and 58.4% over last year, respectively, in net profits, while that of PV Trans and PV Trans Pacific surged 46% and 236%./. VNS