Velesto Energy : 14th AGM - Minutes of Meeting

CONFIDENTIAL

VELESTO ENERGY BERHAD

Reg. No. 200901035667 (878786-H)

FOURTEENTH (14TH) ANNUAL GENERAL MEETING

OF VELESTO ENERGY BERHAD ("VELESTO" OR "COMPANY")

MINUTES OF THE FOURTEENTH (14TH) ANNUAL GENERAL MEETING OF THE COMPANY HELD ON THURSDAY, 30 MAY 2024 AT 2:00 P.M. CONDUCTED LIVE VIRTUALLY AT THE BROADCAST VENUE AT

BALLROOM, LEVEL 2, ALOFT KL SENTRAL, 5, JALAN STESEN SENTRAL, KUALA LUMPUR SENTRAL,

50470 KUALA LUMPUR

PRESENT	:	Encik Mohd Rashid bin Mohd Yusof	Chairman / Non-Independent Non-
			Executive Director
		Ir. Dr. Mohd Shahreen Zainooreen bin	Senior Independent Non-Executive
		Madros	Director
		Puan Rowina binti Ghazali Seth	Independent Non-Executive Director
		Puan Haida Shenny binti Hazri	Non-IndependentNon-Executive
			Director
		Datuk George Ling Kien Sing	Independent Non-Executive Director
		Encik Megat Zariman Abdul Rahim	President / Non-Independent
			Executive Director
		Ar. Ahila Ganesan	Independent Non-Executive Director
		Encik Fadzihan Abbas Mohamed	Non-IndependentNon-Executive
		Ramlee	Director
		Puan Nadzrin Alia Md Azizis	Alternate Director to Encik Fadzihan
			Abbas Mohamed Ramlee
		Encik Alan Hamzah Sendut	Independent Non-Executive Director
IN	:	Puan Sazlyna binti Sapiee	Chief Financial Officer
ATTENDANCE
		Encik Abdul Hadi bin Abdul Bari	Chief Commercial Officer
		Mr. Chong Eu Jin	Vice President, Integrated Project
			Management
		Encik Norzaidi Mohd Zahidin	Vice President, Operations
		Encik Shahrul Nizar Ahmad	Vice President, Corporate Services
		Puan Zulfa Ashida Zulkifli	Vice President, Human Resources
		Encik Shahar Hashim	Vice President, Quality, Health,
			Safety & Environment

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Ms. Lee Mi Ryoung	General Counsel and Company
	Secretary
Puan Norzalizah Alias	Head, Internal Audit
Encik Mohammad Hafiz Saparani	Head, IGU & Compliance
Puan Mimie Joanna Johar	Messrs Ernst & Young PLT
SS E Solutions Sdn Bhd	Poll Administrator
Commercial Quest Sdn Bhd	Scrutineer
Shareholders present	693 representing
	8,599,815 ordinary shares
Corporate Representatives / Proxies	181 representing
present	5,435,529,967 ordinary shares
	including the Chairman who has
	been nominated as proxy in respect
	of 1,165,810,303 ordinary shares

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Fourteenth (14th) Annual General Meeting of Velesto Energy Berhad held on 30 May 2024

CHAIRMAN

Encik Mohd Rashid bin Mohd Yusof ("Chairman"), Chairman of the Board of Directors ("Board"), took the Chair and called the Meeting to order.

On behalf of the Board and Management, Chairman welcomed all the shareholders, proxies, corporate representatives and invitees to the Company's 14th Annual General Meeting ("AGM"), held live virtually from the broadcast venue at Ballroom, Level 2, ALOFT KL SENTRAL, 5, Jalan Stesen Sentral, Kuala Lumpur Sentral, 50470 Kuala Lumpur ("Broadcast Venue").

Chairman proceeded to introduce the following members of the Board present at the Broadcast Venue:-

• Encik Alan Hamzah Sendut, Independent Non-Executive Director and Chairman of Board Audit Committee
• Ar Ahila Ganesan, Independent Non-Executive Director
• Ir. Dr. Mohd Shahreen Zainooreen Madros, Senior Independent Non-Executive Director and Chairman of Board Nomination & Remuneration Committee
• Encik Megat Zariman Abdul Rahim, President and Executive Director
• Puan Rowina Ghazali Seth, Independent Non-Executive Director and Chairperson of Board Risk Management Committee
• Puan Nadzrin Alia Md Azizis, Alternate Director to Encik Fadzihan Abbas Mohamed Ramlee

The following members of the Board who joined virtually:-

• Puan Haida Shenny Hazri, Non-IndependentNon-Executive Director and Chairperson of Board Whistleblowing Committee
• Datuk George Ling Kien Sing, Independent Non-Executive Director
• Encik Fadzihan Abbas Mohamed Ramlee, Non-IndependentNon-Executive Director

He then continued to introduce the following who joined the meeting at the Broadcast Venue:-

• Ms Lee Mi Ryoung, Company Secretary
• Puan Sazlyna Sapiee, Chief Financial Officer
• Puan Nor Liza Haryati Razak, Head of Corporate Communications

Thereafter, welcomed Puan Mimie Joanna Johar and Mr Tommy Chai representatives from Messrs. Ernst & Young PLT, the external auditor of the Company.

In his opening remarks, Chairman highlighted that 2023 has been an outstanding year for Velesto on many fronts. Velesto's record-breaking turnaround performance yielded not only a strong return to profitability but also the best financial results in 10 years, with total Group revenue more than doubling to RM 1.2 billion. The success is largely attributed to significantly improved revenues and earnings, backed by strategic efforts by Management to enhance Velesto's internal capabilities, as well as the Group's continued resilience and robustness in overcoming challenges.

Over the last few years, Velesto have embraced the challenge of dynamic and at times volatile market conditions, first due to COVID-19 and later, the gradual post-pandemic economic recovery. Chairman shared

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Fourteenth (14th) Annual General Meeting of Velesto Energy Berhad held on 30 May 2024

that this year the Group have successfully capitalised on the lower but stable crude oil prices to sustain exploration and production activities. This in turn supported higher rig utilisation and daily charter rates, and longer-term contracts.

The Company focus on enhancing technological capabilities, driving asset uptime and boosting operational excellence has also helped to position Velesto at the forefront of the market uptrend. The Group have responded proactively in managing constraints, and efforts have been well rewarded through improvements in cost and operational efficiencies and productivity.

2023 also saw Velesto effectively pursue the four core aspects of safety, service quality, technology and sustainability. As a result, the Company expanded its internal capabilities and strengthened the existing trust and confidence of clients in Velesto, which paves the way for future opportunities, both locally and abroad.

He continued to highlight the Group sustainability journey and noted that the Company have made notable strides in 2023. Velesto made a strong re-entry as a FTSE4Good Bursa Malaysia top-quartile index constituent, earning a 4-star rating for its sustainability efforts and disclosure. The Group will also push forward with the plan to develop a comprehensive net zero roadmap and set a science-based decarbonisation pathway and targets by 2025.

Looking forward, Velesto's path is bright and clear, with market conditions expected to remain conducive. The Group prospects are underpinned by a solid bedrock of high corporate governance standards, fiscal discipline, a leading industry track record and a firm commitment to embracing sustainability as an enabler in driving operational excellence and achieving competitive advantage.

He further mentioned that the Group will continue to build a more resilient, agile and performance-driven Company that is ready to operate sustainably within a dynamic operating environment. In conclusion, Velesto is very much on the right track for even more growth and success. The Group's ethos of "Performance Driven and Operations Focused" shall continue to drive the Group forward to a bigger and better year ahead.

PRESENTATION BY THE PRESIDENT

The Chairman then invited Encik Megat Zariman Abdul Rahim ("Encik Megat"), the President of the Company to present an overview of VELESTO Group's operations and its performance.

Encik Megat, upon thanking the Chairman, expressed his welcome and gratitude for the shareholders, proxies and attendees' participation at the Annual General Meeting of the Company. He then mentioned that presentation at the meeting have forward looking statements which reflect on the Management's expectations and strategies for the future and assumptions, which are subject to risks, uncertainties and contingencies. Actual results, performance or achievements may differ materially and significantly from those discussed in the forward-looking statements. Such statements are not and should not be construed as a representation, warranty or undertaking as to the future performance or achievements of the Company and the Company assumes no obligations or responsibility to update any such statements.

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Fourteenth (14th) Annual General Meeting of Velesto Energy Berhad held on 30 May 2024

He then proceeded with 'Safety Moment' as a reminder of the operational challenges at work and the importance of safety. After the presentation of a video on importance of wearing safety gloves at work, he highlighted the key takeaway on the human behavior being integral to maintaining and enhancing workplace safety. By fostering safe behaviors, Velesto can create safer work environment and he mentioned on the Group's safety programmes conducted to focus on people and safety.

Encik Megat then continued to present the highlights of the business for FY2023 and then proceeded to present on the following:-

Executive Summary

• The Group saw turnaround and positive financial performance with revenue of RM1.2 bilion (+109%), the highest revenue for the Group and PAT of RM100 million from LAT of RM100 million and the highest since 2014
• Share price increased to 29.5 sen on 23 May 2024 from 15 sen in January 2023 (+97%)
• Dividend payment of 0.25 sen per share, which was the first since 2014

Key facts of the Group were then shared as follows:-

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Fourteenth (14th) Annual General Meeting of Velesto Energy Berhad held on 30 May 2024

Key Achievements in 2023

On the key achievements in 2023 highlights the following were presented:-

He shared that the Company achieved a utilization rate of 83% and average daily charter rate ("DCR") of USD 94,000, the highest since 2014 and 2015 respectively. In the second half of 2023, Velesto successfully improved their operational uptime to 99%. This exceeds the industry benchmark of 98% and are committed to maintaining this high standard of 99% uptime, reliability, and excellence throughout 2024. As a result, clients have acknowledged the Group's exceptional performance with safety and operational awards, reinforcing contract renewals with improved terms.

On the technology highlights, the following were presented:-

He also noted on the ongoing adoption of new drilling technologies. In 2023, Velesto installed NOVOS autonomous drilling on NAGA 4 and equipped Starlink on NAGA 8. The Group is currently assessing a robotic arm for potential installation in 2024.

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Fourteenth (14th) Annual General Meeting of Velesto Energy Berhad held on 30 May 2024

The excellent HSE performances were highlighted as follows:

Velesto's HSE performance has been exceptional, achieving zero fatalities, zero LTIs, and zero major spills. Velesto has actively participated in industry events such as ZIZA and received recognitions from clients with numerous awards.

Encik Megat then mentioned on the importance of sustainability for the Group and shared on the following updates:-

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Fourteenth (14th) Annual General Meeting of Velesto Energy Berhad held on 30 May 2024

He then proceeded to present on the financial highlights for FY2023 as follows:-

In FY2023, the Group achieved revenue of RM1.2 billion, more than doubling the previous year, accompanied by an increased EBITDA of RM369 million. This turnaround led to a profit after tax (PAT) of RM100 million, marking a significant recovery from a loss of RM100 million in the previous fiscal year. He pointed out that Velesto is clearly performing even better than it did before COVID-19 in 2019.

The IPM segment has made significant strides in advancing the Provision of Integrated Rig, Drilling and Completion and Integrated Well Services projects, achieving a profit of RM23 million for the year. Velesto has successfully lowered borrowings to RM359 million, significantly below 2018 levels. Consequently, the Group's gross gearing stands at 0.14 times, and the Group's debt coverage ratios are at a comfortable level. He also noted that for the first quarter of 2024, Velesto achieved a revenue of RM339 million and a Profit After Tax of RM47 million.

He then summarized that 2023 marked a significant turnaround in performance. The cultural transformation is gaining traction and yielding results where Velesto's immediate priority is to secure future earnings through long-term contracts.

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Fourteenth (14th) Annual General Meeting of Velesto Energy Berhad held on 30 May 2024

Thereafter, the Head of Corporate Communication, Puan Nor Liza Haryati Abd Razak read the queries raised by the Minority Shareholder' Watch Group ("MSWG") in their letter dated 24 May 2024 and the Company's written responses thereto as follows:

NO.	QUESTIONS			ANSWERS
1.	Daily Charter Rates ("DCR") should remain or
	increase as marketed rig supply continues to
	decline even as demand ramps up. In
	addition, oil and gas companies are tendering
	for	longer-term	drilling	contracts,
	signifying strong confidence	in expected
	increase of oil and gas	consumption
	going forward (Page 18 of IAR 2023).
(a)	What were the main reasons for the rig	The drop in global supply of rigs is due to:
	supply to decline? How acute is the mismatch	(i) Absence of new-build rigs; and
	between supply and demand?		(ii) Attrition of older rigs.
					The market is currently very tight. Global
					marketed utilisation is at 94%.
(b)	Does the Management foresee the positive	Yes, we expect the global outlook for jack-up
	outlook to continue from FY2024 into	drilling rigs to remain positive. According to
	FY2025?			PETRONAS Activity Outlook, Malaysia is
					expected to require 13 jack-up rigs in 2024, 14
					in 2025 and 15 in 2026 respectively.

2. A notable difference in 2023 was the increased confidence of clients to award drilling contracts for longer duration of 12-24 months compared to 3-6 month contracts in previous years. Longer contracts consequently lead to higher rig utilisation, higher contract values and provided extended revenue and earnings visibility. (Page 19 of IAR 2023).

(a) Is the practice of clients awarding drilling	Yes, we expect clients to continue issuing more
contracts for longer durations expected to	tenders for drilling contracts with longer
continue in FY2024?	durations in order to secure rigs due to the
	tight market conditions. This is reflected in the
	seven long term tenders we are currently
	participating in.

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Fourteenth (14th) Annual General Meeting of Velesto Energy Berhad held on 30 May 2024

1. What is the Group's percentage mix of In 2023, we had two rigs on long-term

contracts in FY2023 in terms of longer and	contracts i.e. NAGA 5 and NAGA 8. Our strategy
shorter duration? What is the desired	is to secure a balance of long-term and short-
percentage mix?	term contracts. As such, we are comfortable
	with our current position of having 4 of our rigs
	on long-term contracts until end-2025.

3. Velesto's performance on its Integrated Rig Drilling & Completion ("i-RDC") contract reinforces the Group's distinctive competitive edge as being one of the select few rig operators in the region capable of undertaking such contracts. The high-level of performance achieved firmly places Velesto as a prime choice for future i-RDC contracts, which clients are increasingly expressing a preference for. (Page 24 of IAR 2023).

1. What are the key competitive advantages Our competitive advantages for i-RDC are a

that Velesto possesses over its peers?

combination of

(i) Technical capabilities;

(ii) Track record and experience; and

(iii) (Ability to collaborate with our client and technical partners.

(b)	Is there a huge demand for such contracts? Is	There are few such contracts as it has to meet
	there a keen competition?	several criteria to make it worthwhile:
		(i)	The number/type of wells;
		(ii)	Duration of campaign; and
		(iii) In development phase.
		There are not many competitors as it takes a
		unique combination of capabilities and assets
		to undertake such contracts.
4.	The Group intends to leverage on the present	Our current order book as at April 2024:
	scarcity of marketed rigs in Malaysia and the	o	Drilling:	RM1.5	billion	(including
	region to actively tender for projects		options)
	extending into 2025 and 2026. Focus will be	o	IPM: RM0.2 billion
	on securing longer-term contracts to increase	o	Total:	RM1.7	billion	(including
	its earnings visibility going forward. At the		options)
	same time, Velesto shall continue to tender

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