PV Drilling explains preference for second-hand rigs over newbuilds
(NLDO) - The drilling market is currently experiencing a downturn, yet it presents new opportunities as many companies exit the sector.
Speaking at the company’s Annual General Meeting (AGM) on the morning of April 21, 2026, Mr. Nguyen Xuan Cuong, CEO of PetroVietnam Drilling and Well Service Corporation (HoSE: PVD), addressed shareholder inquiries regarding market outlooks and rig operations.
The CEO of PetroVietnam Drilling and Well Service Corporation noted that with almost no newbuild rigs entering the market over the past decade, there is a looming risk of supply shortages when the industry rebounds.
PV Drilling's 2026 annual general meeting on the morning of April 21
Foreseeing long-term growth potential in the drilling sector until at least 2050, PV Drilling is strategically investing to stay ahead of the next market cycle. However, the company is opting to acquire second-hand rigs rather than commissioning new ones.
Cuong explained that newbuilds require massive capital - upwards of $300 million per rig - and are only economically viable when dayrates reach approximately $200,000.
Currently, rig dayrates are highly volatile. After peaking at $160,000 and subsequently plunging below $80,000, rates are now hovering around $90,000, complicating financial forecasting. Despite this volatility, company executives see positive signs as dayrates gradually edge higher, driven by robust demand in the Middle East and a broader global push for energy security.
"In the short term, PV Drilling expects dayrates to hold steady and not decline further. We are prioritizing long-term contracts to stabilize our operations rather than chasing peak short-term rates," Cuong told shareholders.
This strategy follows the late March 2026 deployment of the PV DRILLING IX multipurpose jack-up rig. The addition expands the firm’s fleet to six jack-up rigs and one semi-submersible tender assist drilling (TAD) rig, bolstering its operational capacity and market competitiveness.
Looking ahead, PV Drilling plans to disburse approximately VND 4,229 billion in capital expenditure, focusing on additional jack-up rigs, technical equipment, and the expansion of well services. The firm aims to acquire two to three more rigs between 2026 and 2030 to meet market demand.
PV Drilling CEO and Board Member Nguyen Xuan Cuong addresses shareholder questions.
At the AGM, shareholders approved a conservative growth plan for 2026. The company set a consolidated revenue target of VND 11,185 billion, with pre-tax profit projected at VND 1,085 billion and net profit estimated at VND 800 billion.
These projections assume five rigs operating continuously throughout the year, with PV DRILLING IX commencing operations in the second quarter at an average dayrate of $90,000. Additionally, the company will maintain its PV DRILLING V deepwater rig in Brunei and operate two leased rigs domestically.
In a notable move regarding profit distribution, the board proposed retaining all 2025 earnings and paying no dividends. Management cited the need for significant capital to fund strategic projects, bolster financial resilience, and ensure robust cash flow.
Furthermore, the company submitted a plan to increase its charter capital through a share issuance to existing shareholders. This move is designed to strengthen its financial base and fund its long-term expansion roadmap.