Something ought to be brewing...

Just an update, Pharos Energy had their investor meet recently, it was confirmed that the charter extension for the Armada TGT FPSO was secured until the end of 2026 (at similar rates to the current official extension to the end of 2024). The field operators are looking to get a license extension from 2026 to 2031, and thus the lease of the FPSO could be extended all the way to 2031 (at re-negotiated rates). My understanding is that the extension to 2026 was secured, and the potential extension to 2031 would be negotiated separately at some point in time in the future.

I wonder what the deal is today, it opened gap up +5%. Surely we are long due a positive announcement from Bumi Armada on Bursa Malaysia.

https://www.upstreamonline.com/exclusive/plans-afoot-for-ageing-fpsos-under-new-ownership/2-1-1427618

According to UpstreamOnline, a sale agreement has been reached (but not completed) for Armada Claire.

That's good news, this chapter is finally nearly closed. I wonder what price Bumi Armada manages to fetch, anything above USD20mil will be a bonus.

Any reason banking sector down today?

Is it easy to subscribe to RHB's DRP? Can be done online?

So even this is no longer confirmed. Not a good look for Bumi Armada

https://www.upstreamonline.com/exclusive/totalenergies-to-sanction-6bn-angolan-project-in-june/2-1-1419539?zephr_sso_ott=FBm2eu

That first oil / full acceptance must be coming near: https://www.linkedin.com/posts/ongc_ongc-on-board-engineering-marvel-activity-7039081149708578816-0-Fz

Bloodbath after recent high. Oh well, such is life. These market gyrations should have no bearing on long-term investors.

Just to share my thought process:

In the absence of any new developments, I will consider start to consider selling at RM0.80 level, strongly consider at RM0.90 level, and definitely cash in at RM0.95 level.

As and when further developments come to light, I'll adjust my price target view accordingly.

One thing I've missed out on and just realised is that there is a high likelihood of an extension in the firm charter period upon the expiry of the initial firm charter period for Armada Sterling II in Q2 2024.

From ONGC 2022 annual report:
Production of Cluster-7 & 8 fields of Mumbai High Asset increased from 5,700 bopd on 1 April 2021 to 16,800 bopd on 28 January 2022.

Cluster-7 and Cluster-8 are both tied to the Armada Sterling II FPSO. This augurs well for the long-term viability of the FPSO.

Why always remove my posts?

https://www.upstreamonline.com/exclusive/malaysian-floater-player-pins-down-strategy-for-african-fpso/2-1-1407761

The above is a bearish news, so I now doubt if a potential Cameia win is driving the share price movement.

Post removed.Why?

Happy to be proven wrong but the price movement seems very "unnatural", I'm gonna double down and say "good news" is imminent (though it make take days/weeks to materialise as insiders can sometimes possess this information far in advance from the public).

Everytime there's spikes like this, my thought process always goes to if "good news" is imminent. I would expect that there would be a spike like this in advance of the "good news", since insiders would be buying.

The "good news" here is either one of:
1) Award of Cameia FPSO contract
2) First oil for Armada Sterling V
3) Sale of Armada Claire FPSO

Hopefully Yinson take a chill pill soon. Give Bumi Armada some chance also lah!

Bon888, by 2025 Yinson is gonna be a powerhouse generating RM1bil++ of net profits per annum, and things will only get better from then on. They have long-term visibility on all their contracts.

Heck, they just won the Agogo FPSO with aggregate value of RM20.3bil. Just ONE of their project exceeds Bumi Armada's ENTIRE order backlog. Try to understand that.

Yinson is already on the next level. The higher P/E for Yinson simply implies that expectations of future profits are elevated (which is wholly warranted), while on the other hand, the lower P/E for Bumi Armada simply implies that expectations of future profits are muted (again, wholly warranted).

Bumi Armada is a sunset company if it cannot secure any new contracts. In this tight FPSO market with demand surpassing supply, it is tough to fathom how Bumi Armada still has nothing to show. Time is ticking, every day I check the news to see if Bumi Armada has secured a new contract.

For now, Bumi Armada is almost fairly valued, in the absence of any new contract wins.

No there is no immediate risk of rights issue. In fact, even if there is one more large scale FPSO fully owned by Buni Armada, I expect no issue to finance.

I think the reason is there has been an uptick of interest from buyers, so they can sell instead of scrap. I expect an update within 3 months.

Potential Bumi Armada Re-rating catalysts:

New wins:

1) Award of Cameia FPSO project in Angola from TotalEnergies - This is only an EPC contract and will only sustain earnings for 2-3 years. This is NOT a long-term charter contract
2) 1 Minor FPSO contract win (either a small/medium scale FPSO 100% owned) - Active bids in Tuna field (Indonesia) and Palok field (Mexico)
3) 1 Major FPSO contract win (large scale FPSO, likely with a JV partner) - Unlikely to be soon as there are no known large scale bids from Bumi Armada, but possibilities exist in West Africa / South America
4) Non-FPSO contract win (either 100% owned or JV) - e.g. FSRU, FSU, FSO - The Mumbai Port FSRU project has been deferred. No other publicly known bids for now
5) New contract win for the 2 SC vessels in the Caspian Sea and 1 JV-owned SC vessel in Indonesia. Potential for new wins for the Caspian Sea vessels as flurry of work in the region due to high oil price environment. All 3 vessels as at 31 Dec 2022 are laid up

Green energy:
1) "Green energy" initiatives for future FPSO/non-FPSO wins (e.g. zero flaring or fully electrified FPSO)
2) Decarbonisation for existing fleet of FPSO
3) Diversification into floating CCS and other "green" structures materialise

Business as usual:
1) First oil achievement and then full acceptance of Armada Sterling V FPSO by ONGC at the 98/2 field in India
2) Confirmation of sale or scrapping of Armada Claire FPSO
2) Full divestment of the remaining offshore vessel

Contract extensions:
1) Confirmation of contract extension for Armada TGT FPSO in Vietnam - Might only be announced in Q4 2024, but it's all but certain the contract will be extended as new wells are still being drilled in the aged TGT field
2) Contract extension of Armada Sterling II (due in Q4 2024)
3) Positive development at the Kraken field such as drilling of the Kraken Western flank or tieback to the nearby Bressay and Bentley fields - This would signal long-term contract extension for Armada Kraken FPSO which is due to expire in Q3 2025. For now, Enquest has indefinitely deferred drilling due to commence in 2023

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Note: All the above comes from my own research. Let me know if I've missed out on anything. I maintain that the Q4 2022 results, while extremely solid, were wholly "unexciting". We need positive developments that would enhance the long-term wellbeing of the company, only this will ultimately push the share price to higher levels.

https://rfs.cgs-cimb.com/api/download?file=d55634d7-cb61-4b88-bab7-427284362a73

Anybody have the full CIMB pdf?

Would be great if everyone can share the pdfs of research reports as they become available. Usually in the past AmInvest will update on the same day.

Yes that US$75m loan from Mezzanine Equities (Ananda's vehicle) was absolutely necessary at the point in time. Today, that amount looks like chump change. And mind you, that was right before Covid happened, and Bumi Armada weathered through as they were already on a corrected trajectory.

I don't believe Bumi Armada will be an easy privatisation target as Ananda doesn't own much of the company to begin with (around 35%). But there may always be an option to merge with MISC or Yinson to create a global flagship FPSO company.

Debt evolution: https://i.ibb.co/G5Bx1YF/armada-q4-debt.png

Time series visualisation: https://i.ibb.co/wKFsRSN/armada-q4-ts.png

Reported net profit: RM210.7m

Adjustments:
1) Loss on disposal: RM14.2m
2) Impairment loss: RM3.1m
3) FX gains: RM5.7m

Adjusted net profit: RM210.7m + 1 + 2 - 3 = RM222.3m

Bumi Armada is a cash cow, but it's just "unexciting" for now. Kinda boring. We need some positive newsflow people! Curiously, the analyst briefing slides also seem very boring - nothing new in there.

Beautiful set of results at first glance. Headline net profit of RM210m for Q4 2022!

Will post more thoughts after a deeper dive.

Now that I think about it, first oil should be imminent (in the coming days/weeks). May 2023 is the likely target date for the "full acceptance" of the FPSO vessel and commencement of oil production charter.

Armada Sterling V set to begin oil production in May.

https://www.upstreamonline.com/field-development/india-s-ongc-unveils-start-up-date-for-flagship-deep-water-development/2-1-1408642

Not sure if this means first oil will come earlier, or if May is the intended first oil date. Either way, seems like a slight delay. Not sure if the delay is due to FPSO operator (the vessel was hooked-up at the end of Dec 22), or with ONGC / other components of the 98/2 field.

There is also possible delay to the Armada Sterling V, or delay in FID for the Cameia FPSO. Insiders might have this information and might be selling.

Has anyone checked with Bumi Armada IR on the Q4 results release date?

By the way, the removed post was based on the Operational Update from Enquest, where they have deferred drilling at the Kraken field. Previously, it was due to occur in 2023. It is a less than ideal news, as the Kraken production is rapidly falling and Enquest needs to drill new wells or tieback the FPSO to adjacent fields to increase/maintain the production plateau. The firm period of the FPSO charter ends in 2026, and a lack of drilling is always worrisome on the long term viability of the FPSO. Although of course, if the drilling is merely deferred for a year, then there shouldn't be much of a problem. However, Enquest's plans for the Kraken field are now unclear as it has been years since a new well was drilled.

Lol why is my posting removed??

Post removed.Why?

Post removed.Why?

I think Agogo safely belongs to Yinson.

Shapoorji is planning to bid for Brazil FPSO contract, not sure if Bumi Armada is involved in some capacity. However, I recall last year AGM the CEO mentioned that Bumi Armada has zero intention to get involved in the Brazil market.

https://www.upstreamonline.com/field-development/race-is-on-four-contractors-mulling-bids-for-sizeable-petrobras-fpso-in-brazil/2-1-1402003

The acquisition should have a positive impact moving forward, as for FPSOs with turrets designed in house, Yinson will experience better margins. And if they continue to do turret designs for third-party FPSOs, then it will contribute to both the topline/bottomline.

Yinson is moving up the value chain with this acquisition.

Surprisingly not much news on this here, and no announcement on Bursa about this either.

-----------------------------

Yinson through its offshore production business unit, Yinson Production ("YP") has acquired 100% of the issued capital of London Marine Group Limited (LMG), the sole owner of London Marine Consultants ("LMC").

LMC, one of the few companies to have designed and provided production turret mooring and swivel systems , was appointed to work on the mooring system and turret mooring, respectively for FPSO (“Floating Production Storage and Offloading”) Atlanta and FPSO Helang. Additionally, they have provided engineering services related to mooring and risers for our spread moored unit, FPSO Anna Nery.

Established in 1990, LMC ranks among the top five global providers in the design and provision of turret mooring systems for offshore production vessels such as FPSOs, FSRUs (“Floating Storage and Regasification Unit”), FLNGs (“Floating Liquefied Natural Gas”) and FSOs (“Floating Storage and Offloading” More recently, this expertise has been used to provide similar expertise to the Floating Wind, Tidal and Wave Energy Sectors.

As a result of the extensive experience and expertise developed in the mooring industry, LMC can also offer its clients wide-ranging engineering consultancy services.

Chief Executive Officer of YP Flemming Grønnegaard commented on the acquisition, “LMC brings a wealth of knowledge and expertise that will greatly benefit our offshore production business unit. Having them onboard will enhance our in-house mooring and swivel capabilities and reinforce our leadership in the FPSO industry.”

Managing Director of LMC Jon Dunstan commented: “The acquisition marks a new beginning for LMC, allowing us to expand our operations and services, and solidify our market presence. We look forward to contributing our industry knowledge while continuing to provide high-quality services to our current and future customers.”

So much rubbish being posted since the recent run up in price. Hard to have a serious discussion anymore.

RM1.00 and beyond is very much possible, however it will be predicated on fulfilling at least half of the following:

1) 1 Major contract win for FPSO (Cameia FPSO in Angola is a good bet)
2) 1 Minor FPSO contract win (either a small/medium scale FPSO 100% owned, or a large scale FPSO owned with a JV partner)
3) 1 or 2 non-FPSO contract win (either 100% owned or JV) - e.g. FSRU, FSU, FSO etc
4) "Green energy" initiatives especially for future FPSO/non-FPSO wins, and better still if current FPSOs also incorporate elements of green energy
5) Confirmation of sale or scrapping of Armada Claire FPSO
6) Confirmation of contract extension for Armada TGT FPSO in Vietnam (might only be announced in Q4 2024, but it's all but certain the contract will be extended as new wells are still being drilled in the aged TGT field)
7) Contract extension of Armada Sterling II (Q4 2024)
8) Diversification into floating CCS and other "green" structures materialises
9) Ongoing charter of the 2 SC vessels in the Caspian Sea and 1 SC vessel in Indonesia
10) First oil achievement and then full acceptance of Armada Sterling V FPSO by ONGC at the 98/2 field in India
11) Full divestment of the two remaining offshore vessels
12) Positive development at the Kraken field such as drilling of the Kraken Western flank or tieback to the nearby Bressay and Bentley fields (as this would signal long-term contract extension for Armada Kraken FPSO which is due to expire in Q3 2025)
13) No major issues at all its current producing FPSOs and FSU - Olombendo (Angola), Kraken (UK), Sterling I (India), Sterling II (India), TGT (Vietnam), Sterling III (Indonesia) and Mediterrana (Malta)

In fact, if all 13 above become a reality in the coming two years - then we shall see a strong rally to RM2.00 levels. If Bumi Armada can add a further large-scale FPSO contract win in the coming year or two (in addition to Cameia FPSO) that is backed by a long-term charter, then we might even be seeing RM3.00 levels.

Just my two cents, please share if I have missed out anything. I've been holding 350k from RM0.225 levels and added another 100k over the past year at an average price of RM0.40. I consider myself a long-term investor, but of course if there is a crazy run in price where the valuations over-run the fundamentals, I will be ready to sell.

Folks, the inclusion to F4GBM Index has ZERO impact. That index is by and large irrelevant.

Bon, if anything, this is just the start of the resurgence. Net gearing back to 1.0x level. The company can now re-gear and make the most of the tight FPSO market. Hopefully the green energy stuff comes to fruition too. If the company gets new projects on an annual basis, we could be in a position Yinson was in around 10 years ago and we could easily be a 10-bagger.

Robert, if anything, that should be a good thing! We could potentially extrapolate that there's more institutional presence in the recent run up, and on the flip side, there's been less retail interest in the company. Most retailers probably already sold off in the 40s and moved on.

In any case, not much to be happy about vis-a-vis share price movements per se. I'll only be happy when there's good news!

Akan ku bangkit...soon!

I believe Armada Claire has been sold for scrap. Not sure what residual value can be realised, I think it'd be around USD12mil - USD15mil. We should get further information during the Q4 22 results release in end-Feb 2023.

Hoping for some positive news out of Angola real soon.

Also, first oil for Armada Sterling V should be happening in the coming weeks.

The above strengthens the case that the FPSO charter extension in Vietnam is all but certain. From 2024 to end of 2026 - 2031.