Mainboard-listed integrated energy services provider, KS Energy Services, today announced a net loss of $11.6 million for the third quarter ended 30 September 2010 due to lower sales and capital equipment awaiting deployment.

Compared to the same period last year, the group saw a 30.5% decrease in its revenue $103.4 million due to lower contributions from both its distribution and drilling businesses. Demand for parts and components in the oil and gas industry in general were still weak as customers continued to adopt a conservative outlook. On the drilling front, performance of the business was affected by some of the roup’s drilling assets awaiting charter commencement with their new customers.

KS Energy says FY2010 will be a challenging year for the group because some charters were delayed and therefore it has to bear the stacking costs of capital equipment awaiting deployment. The income arising from these charters will only be reflected in the first quarter of next year.

Furthermore, the group may also recognise any negative revaluation of its capital equipment fleet at the end of the financial year. As such, it expects that its performance in FY2010 will reflect the market conditions and challenges currently facing the industry.

The group’s borrowings were lower this quarter, decreasing from $345.6 million at 31 December 2009 to $312.4 million. Cash and cash equivalents declined from $85.1 million at 31 December 2009 to $71.3 million. Together with new shares issued for the consolidation of the distribution businesses, net gearing improved from 0.64 times to 0.59 times.

Moving forward, the group is optimistic that more charter contracts for its remaining core drilling assets could be secured. The positive outlook is bolstered by the group’s recent expansion into Indonesia’s burgeoning oil and gas drilling industry with its strategic acquisition of PT. Petro Papua Energi (PPE). The recent deployment of KS Endeavor to West Africa will also pave the way for the group to make further inroads into Africa. These ventures will also certainly have a positive impact on the group’s distribution business.