Malaysia’s Velesto Energy, recognized for its premium jack-up rigs, has made headlines with the recent announcement regarding the termination of a contract for one of its rigs operating in Malaysian waters.
The termination, officially agreed without cause, is set for July 7, 2026. This decision follows a confirmation received in May 2025 regarding a letter of award (LoA) to provide jack-up drilling rig services for several important projects including those associated with PC Ketapang II, PC North Madura II, and Petronas North Ketapang. These expansions are crucial to maintaining the region’s energy supply and operational efficiency.
Currently, Velesto’s Naga 8 rig is actively engaged in a separate assignment with Jadestone Energy for the East Belumut Phase 9 infill drilling project, which is located offshore Peninsular Malaysia. This project, valued at approximately $16.49 million (around RM 64 million), is scheduled to run from March 2026 to July 2026. It’s a significant endeavor that underscores Velesto’s presence in offshore drilling.
Prior to this recent contract termination, the Naga 8 rig successfully completed Phase 1 of the East Belumut project, which included drilling three out of twelve commitment wells over a span of about eight months. This completion not only signifies successful operation but also reflects Velesto’s capability in managing complex drilling activities effectively.
Velesto views the termination positively, interpreting it as an opportunity to proactively market the Naga 8 rig for alternative deployment. The company is now focusing on securing new contracts that offer improved commercial terms and optimized drilling sequences. Enhanced commercial prospects are likely on the horizon as they reassess their business strategies in the evolving market.
Importantly, Velesto has stated that this contract termination is expected to have no material adverse financial impact on its earnings and net assets for the fiscal year ending December 31, 2026. This assessment takes into account the ongoing Jadestone contract, which keeps the Naga 8 rig operational and bolsters the company’s financial stability amidst changes in project commitments.
This shift comes on the heels of another recent announcement where Velesto terminated a sale and purchase agreement (SPA) for the disposal of the Naga 3 jack-up rig, an arrangement that had been inked with PT Indonesia Drilling Energy on December 14, 2025. Such decisions showcase Velesto’s agile approach to navigating evolving market conditions and the imperative to adapt to new challenges while seeking unceasing growth.
Power Your Brand With Offshore Energy ⤵️
Take the spotlight and anchor your brand in the heart of the offshore world!
Join us for a bigger impact and amplify your presence at the core hub of the offshore energy community!