PV Drilling - Sustainable Growth from Effective Business Management Model

PV Drilling provides drilling services including possession, leasing and operation of drilling rigs and drilling-related technical services to serve explorative and production missions of oil and gas contractors. PV Drilling currently owns three jack-up rigs, one land drilling rig, one semi-submersible tender assist drilling (TAD) rig and other advanced equipment. The jack-up rigs and the TAD rig were all fabricated by Keppel Fels, a leading rig builder in the world based in Singapore.

 

PV Drilling V TAD rig has safely operated for 800 days in Hai Thach - Moc Tinh oil field in Nam Con Son Basin. This site is approximately 200 nautical miles offshore Vung Tau City, lying on the edge of the continental shelf at the depth of nearly 150 metres. Bien Dong 1 project is a technically complicated project, but this toughens the spirit and determination of protecting the national sovereignty. In 1992, the UK-based BP discovered gas here. But hardships in production because of high temperature and high pressure plus political pressures and bargains of other countries forced them to abandon their effort, although they had spent more than US$500 million in vain. In November 2008 and January 2009, BP and ConocoPhillips officially announced to withdraw from the project as they lacked the mettle to follow the project though research reports showed potential oil and gas reserves.

Despite numerous difficulties, PetroVietnam decided to pursue this project. Overcoming pressures caused by other nations, Bien Dong 1 project was kept on schedule. February 14, 2012 became a memorable milestone of PV Drilling when the TAD rig drove the first drill in Moc Tinh field to start its mission of exploring oil and gas in the East Sea. On August 5, 2013, a joint venture between PetroVietnam and Russia’s Gazprom (Bien Dong POC - a customer of PV Drilling) formally received the first commercial gas flow from Moc Tinh 1 wellhead platform (MT1), transported through 20 kilometres of pipelines, to Hai Thach Production & Quarters Platform (Hai Thach PQP). On August 7, 2013, condensate distilled from the processing system was successfully exported to FSO vessel. This important event marked a solid foundation for the strong development of oil and gas projects in deepwater areas in the territory of Vietnam. The rig is expected to operate for 25 years.

 

According to the updated financial statements, we made revenue of VND4,322 billion and net profit of VND597 billion in the first quarter of 2014 ended March, up 36 percent and 42 percent year on year. The growth drive was the 15 percent rise in rig rent rates. Since the start of the year, drilling activities in Vietnam had been very active.

 

China’s illegal standing of Haiyang 981 in the territorial waters of Vietnam may cause a psychological impact on some investors but this event will not affect PV’s Drilling business results. The corporation’s drilling rigs, namely PV Drilling I, PV Drilling II and PV Drilling III, are currently operating quite far from the disputed area. Drilling contracts signed will ensure the corporation’s stable operation till 2015 and these potential drilling programmes will be continued then. PV Drilling V TAD is also effectively operating on the East Sea, about 200 nautical miles from Vung Tau, relatively distant from the sensitive area.

 

According to her development strategy, PV Drilling targets to become a world-class driller and gradually integrate into the drilling market in the region and in the world. The establishment of PVD Overseas Joint Venture in Singapore and the investment for PV Drilling VI rig is one of the corporation’s steps to realise its vision and strategy.

 

PV Drilling VI jackup rig is being built by Keppel Fels in Singapore and expected to be completed in February 2015. The facility belongs to the most advanced class of oil rig. It is able to operate in water depths of 400 feet (121.92 metres), drilling depth of 30,000 feet (9,114 metres). The jackup rig will not only operate in Vietnam but also in other countries in Southeast Asia, the Gulf of Mexico and the Middle East.

 

Not only affirming PV Drilling’s technology and operational capacity, the PV Drilling VI will boost revenue and profit growth by 10-15 percent and diversify PV Drilling’s market share in the region and in the world.

 

Since its inception, PV Drilling embarked on building professional and systematic financial management mechanism by successfully carrying out Oracle EBMS ERP Business Management Project to realise strategic orientations of the corporation’s leadership. The phased project has completed the first and second phases - with finance - accounting, contract management, material resources and human resources modules - and has continued the third phase - with budget management and online management reporting modules. As for platform operation, the Maximo system, featured by flexible Min - Max mechanism, has optimised inventory management, equipment purchasing and continuous operation of oil rigs. In 2013, PV Drilling successfully integrated Maximo into the ERP management system.

 

So far, the ERP system has increased management efficiency, become an effective information tool for the company’s leadership for running business operations and planning strategies and financial policies. As a result, PV Drilling’s financial situation stays healthy, typically operational indicators, liquidity and debt indicators. With effectively managed and regulated cash flows, the healthy and transparent financial and accounting system has enhanced PV Drilling's reputation on the market and actively supported it to mobilise capital for its investment projects with reasonable capital costs to ensure the highest benefits to shareholders. Thereby, Oracle EBMS ERP is one of successful governance projects that create the PV Drilling reputation to shareholders and investors.

 

Together with the Corporate Governance Project, in 2014, PV Drilling is preparing to implement the Risk Management Project to create a warning tool and solutions to risks. This is a very new field in Vietnam aimed to build a sustainable PV Drilling.

 

2014 will be a critically cumulative period for PV Drilling to prepare necessary stepping stones to enter a new growth trajectory. PV Drilling will persevere with overseas market expansion strategy, conduct researches on deepwater drilling techniques, and perfect corporate governance system based on information technology foundation. More importantly, PV Drilling is deploying a professional, methodical risk management system to cope with unpredictable fluctuations of the global economy, which has been a challenge for many businesses in the current period.

 

Besides, with the "Innovation builds sustainability" strategy, PV Drilling will also strengthen scientific and technological research in order to maintain sustainable growth and increase value for partners, shareholders and investors.