PTSC joint venture company standing on the brink of dissolution

16:03 | 18/11/2019
The nosedive in oil price has put the hundred-million-dollar joint venture between Petrovietnam Technical Services Corporation (PTSC, code: PVS) and its Dutch partner on the brink of dissolution.
ptsc joint venture company standing on the brink of dissolution
Binh Minh 02 ship of the joint venture company PTSC-CGGV

According to the latest information released by PTSC on November 4, PTSC-CGGV Geophysical Survey Co., Ltd. (PTSC-CGGV) – a joint venture company between PTSC and Netherlands-based CGGVeritas Services Holding B.V – has been carrying out procedures for dissolution.

PTSC’ financial report pointed out that the total investment poured into the joint venture company was nearly VND598 billion ($26 million) but all shifted to loan-loss provisions in late 2018. The continuous losses has forced the company to make loan-loss provisions since 2015.

The huge fall in oil prices in 2014 is the main reason behind the dissolution. Accordingly, the performance of most oil and gas companies have been seriously affected and PTSC-CGGV has not been able to maintain operations.

Due to provisioning several years ago, PTSC’s profit in 2019 will not be impacted by the dissolution. The loan-loss provision made for PTSC-CGGV was VND1.02 trillion ($44.34 million), accounting for the largest proportion of PTSC's allowances. Besides, PTSC also made the loan provisions of VND172 billion ($7.48 million), VND19 billion ($826,086), and VND228 billion ($9.9 million) for PV Shipyard, Petro Hotel, and PTSC Quang Ngai, respectively.

The joint venture specialised in collecting 2D and 3D seismological data and was founded in 2011 with the charter capital of VND1.172 trillion ($50.9 million). Accordingly, PTSC and CGGVeritas Services Holding hold 51 and 49 per cent in the joint venture.

As of the end of 2019’s third quarter, PTSC and its subsidiaries reached VND3.99 trillion ($173.48 million) in after-tax profit and VND26.030 trillion ($1.13 billion) in total assetS, including VND10.6 trillion ($460.89 million) cash, cash equivalents, and short-term deposits. In 2019’s first nine months, PTSC collected a net profit of VND637 billion ($27.7 million), up 12.3 per cent on-year.

By Van Anh

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