PetroVietnam companies lower business targets due to falling oil price

This year, PetroVietnam Drilling and Well Services Corporation (PV Drilling) targets a revenue of VND7.5 trillion ($336.3 million) and a net profit of VND500 billion ($22.4 million), equal to 30 per cent of last year’s actual profit.

Viet Capital Securities (VCSC)’s analysis showed that with VND500 billion ($22.4 million) net profit, PV Drilling’s leasing price of a drilling rig will be about $80,000 a day with the rigs being used at 78 per cent capacity. This is a lot lower than the $120,000 per day and 98 per cent in 2015.

A source from the management of PV Drilling confirmed to VIR that the falling oil prices, especially in the last two quarters of 2015, affected the price of leasing the company’s drilling rigs. The company has already decreased the price by 20-30 per cent compared to 2014. In 2016, the company expects more hardships, anticipating its customers’ difficulties to spill over to them.

Meanwhile, PetroVietnam Drilling Mud Corporation (DMC) targets a revenue of VND3 trillion ($134.5 million) and net profit of VND82.7 billion ($3.7 million) in 2016. A DMC top personnel said contractors plan to drill at 50 rigs this year, a 40 per cent decrease on-year. DMC has to decrease its service prices by 6-8 per cent, resulting in an overall decrease of 50-60 per cent in profit.

Another member company, PetroVietnam Technical Services Corporation (PTSC), targets a consolidated revenue of VND24.3 trillion ($1.1 billion) and pretax profit of VND2.09 trillion ($93.7 million), lower than the actual figures of 2015. PetroVietnam Construction Joint Stock Corporation (PVC) targets a consolidated revenue of VND3 trillion ($134.5 million) and net profit of VND82.7 billion ($3.7 million), also lower than the actual 2015 figures.

Tran Quoc Khanh, chairman of the Petro Vietnam’s board of directors, said the group is building solutions to minimise the negative effects of the plummeting oil prices. One of the main solutions currently being implemented is controlling the cost of production at fields. According to the calculations of PetroVietnam, the average cost of production at domestic oil fields is $27.4 per barrel, with the highest production cost at Song Doc field, $58 per barrel, and the lowest at Cuu Long, Yellow Lion, and Black Lion, $12.7 per barrel.

According to Khanh, the company’s exploitation is only profitable above the $45 per barrel export price. If exploitation stops, PetroVietnam is going to post a loss due to the fields’ maintenance cost.

PetroVietnam is trying to cut costs by 10-20 per cent in its groves as well as increase its capacity to predict price fluctuations in order to have an appropriate plan for exploitation.