Velesto Energy Berhad : - Addendum to the 12th AGM Questions & Answers

ADDENDUM TO THE QUESTIONS AND ANSWERS - 12TH ANNUAL GENERAL MEETING ("AGM") 2022 (28 JUNE 2022)

NO.	QUESTIONS	ANSWERS
1.	How does the company benefits, ie. wars	The geopolitical conflict has resulted in higher crude oil
	and the rising USD Brent oil prices? Does it	prices and reduced global supply of oil. As a result, oil
	translate into more output?	companies are investing more in exploration and
		development activities, increasing the demand for
		drilling services.
2.	Can the new board of directors brief the	The Company will continue to focus on strengthening the
	shareholders on what are new ideas or any	core businesses. The Group's priorities and focus areas
	new plans to turn around the company and	include:
	enhance the shareholders' investment in	(i) expanding the suite of integrated drilling services;
	Velesto?	(ii) upgrading rigs with Offline capabilities;
		(iii) explore strategic collaborative models with clients
		and other industry players;
		(iv) drive sustainability;
		(v) focus on talent retention and acquisition; and
		(vi) instill the continuation of cost and operational
		discipline.
3.	In view of losses for many years by now,	On this question, please refer to the response to
	what revamp exercise that the company	question 2 above. The remuneration to the senior
	expect to embark on especially the	management remains competitive and in support of
	continuous high remuneration paid to	talent retention.
	senior management?
4.	Given all that is said and done, the Company	On this question, please refer to the response in question
	is still making losses and share prices are	2 above.
	low. What can be done to increase ROI and
	shareholder's returns?
5.	Are the banks willing to finance newbuild or	We are not in the position to comment the bank's
	purchase of resale jackup rigs now? If so,	perspective. In our view, the Company has a strong
	what is the loan-to-value ratio and loan	cashflow projection.
	rate?
6.	The results for 1st Quarter 2022 showed an	The revenue will be in tandem with the utilisation.
	increase in turnover. Based on current
	contracts in hand, will the Group be able to
	report increasing revenue growth in the
	remaining quarters of 2022?
7.	How much is the company's overhead	Please refer to Notes 21 and 23 of the Annual Report for
	expense per year including staff salary?	employee benefits and other operating expenses
		breakdown.
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ADDENDUM TO THE QUESTIONS AND ANSWERS - 12TH ANNUAL GENERAL MEETING ("AGM") 2022 (28 JUNE 2022)

NO.	QUESTIONS	ANSWERS
8.	Please comment on rig supply/demand	As at April 2022, the worldwide marketed rig utilisation
	environment currently, and 18-months out?	is 84%.
		The Group is cautiously optimistic that the rig utilization
		is expected to continue its upward traction due to the
		increase in activities as more upstream projects are
		being sanctioned and more drilling activities are taking
		place globally.
9.	Does the Management team evaluate the	With regards to the 4 years long term PTTEP THAILAND
	reasons that Velesto lost local contracts to	contract, this is due to client's requirement.
	Borr Drilling? 4 years long term PTTEP
	contract was award to Borr, not Velesto?
	How lock-in day rate under Petronas	We will continue to engage the client for works awarded
	Umbrella contract benefit Velesto while day	by the client.
	rate is uptrend this year?
	How the company ensures it can achieve	With the Group's focused on as explained in item 2
	full-utilization rate in the current good	above, we are cautiously optimistic for improved
	jackup market?	utilisation rate.
	The demand in Middle East is strong lately.	The Group is selectively participating in tender
	How company capture this chance?	opportunities in the Middle East via direct participation
		and collaboration.
10.	Are there any increase on directors / board	There are no increase in the non-executive directors'
	members fees or allowances as compared	fees and allowances from last year.
	with previous year?
11.	Company has any plan to follow FGV path	There is no such plan. Remuneration will be evaluated
	road to seek for increase on remuneration	and benchmarked against the market from time to time
	benefit?	for talent retention.
12.	How do you rate the company's past 1 year	Velesto's financial performance for year in focus was
	performance in comparison to industry	impacted with the continuing unprecedented COVID
	performance?	pandemic and lackluster market condition as similarly
		impacted others in the same industry.
13.	Please show the Minority Shareholders	The MSWG's questions and the Company's answers was
	Watch Group ("MSWG") questions and	presented at the AGM which will be disclosed in the 12th
	related answers by way of a Power Point	AGM minutes.
	presentation. Thank you
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ADDENDUM TO THE QUESTIONS AND ANSWERS - 12TH ANNUAL GENERAL MEETING ("AGM") 2022 (28 JUNE 2022)

NO.	QUESTIONS	ANSWERS
14.	Why can't we venture into Consumer	The Group will continue to evaluate our strategic options
	Product like foreign company Nestle, they	and be open to explore opportunities.
	can make so much profit and the share price
	so high.
15.	How much are the Directors' fees and	Please refer to page 244 of the Annual Report 2021 for
	benefit for this year.	the details in director fees and benefits.
		The amount for director fees and benefits for 2022,
		would be tabulated in the financial statements for the
		financial year ending 31 December 2022.
16.	No need to engage poll scrutineer to save	The engagement of poll scrutineer is in compliance with
	cost.	the Bursa Malaysia's requirement.
17.	The Group still has outstanding USD Term	Currency translation affects both liabilities, i.e. the loan
	Loan B amounted to USD220 million with	as well as assets. With regards to interest cost, it will be
	interest rate of 3.71% as at 31 Dec 2021 due	subject to fluctuations to Libor and cost of fund. The
	in 2027.	Group will continue to manage the interest cost.
	Please confirm that the Group will have to
	book in a currency translation loss due to
	the depreciation of the RM against USD
	since the beginning of 2022 where the rate
	now stand at approximately USD1:RM4.40.
	The continuous aggressive interest increase
	in the US will continue in 2022. Will the
	borrowing rate of 3.71% for the Term Loan
	B see further increase?
18.	How will Velesto face the industry plan for	We will continue to strengthen our existing businesses to
	non-petrol,non-diesel vehicles such as EV	remain resilient in the oil & gas and energy producing
	in 2030? Velesto has any plan for it?	industry while exploring other opportunities for the
		Group.
19.	Oil has seen increased supply from the shale	Oil price dynamics are multi-faceted with various factors
	producers in the US in recent years. How is	influencing the prices of oil. Global oil production has not
	it that prices have not fallen given the	kept pace with increasing energy demand, especially
	increased supply? Pls provide some insight	post-pandemic. Decline in production during down-turn
	into the oil price dynamics. Is there a	market, requires reinvestment which were lagged.
	political dimension in how oil is priced?	Tightening of supply leads to rising oil prices on growing
		geopolitical tensions.
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ADDENDUM TO THE QUESTIONS AND ANSWERS - 12TH ANNUAL GENERAL MEETING ("AGM") 2022 (28 JUNE 2022)

NO.	QUESTIONS	ANSWERS
20.	What is the payback period investing in a	Payback period for investment made in a new rig would
	new rig now?	depend on the assumptions applied on forecasted
		utilisation and daily charter rates.

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