Some interesting things to note:

1) Pre-FEED revenue was recognized during the quarter. This could be a strong sign that a FPSO contract win is imminent.

2) With the RM88 impairment on Armada Claire receivables, and with the vessel fully depreciated in Q1 2022, I believe that the entire Armada Claire saga is now negligible on the balance sheet.

Net profit attributable to shareholders: RM186.3m

Adjustments:

1) Net allowance for impairment losses: RM65.4m (RM88m impairment charge on Armada Claire, partially offset by what I believe is RM22.6m writeback on Armada Kraken following remarkable FPSO performance)

2) Unrealised FX gains: RM25.2m

Adjusted core net profit: RM186.3m + RM65.4m - RM25.2m = RM226.5m

Debt analysis: https://i.ibb.co/SR7b8nq/armada-2q22.png

Time series: https://i.ibb.co/sPb3Y7d/armada2q22-ts.png

Quarter results is confirmed for tomorrow noon. Although the buying trend these past few days could mean nothing, it can sometimes mean the insiders know a good result will be reported. Let us see. Not long to go now.

Repsol fires the starting gun for brand new FPSO project in Mexico

Spanish energy company Repsol has launched the process for securing a new floating production, storage and offloading vessel to anchor its planned offshore oil development in Mexico's Block 29, where the deep-water Polok discovery and a smaller find called Chinwol are located.

Floater market sources said Repsol intends to place a leased FPSO on Block 29 in water depths of between 460 metres and 600 metres, and later tie-in an adjacent area, referred to as Block X.

Multiple FPSO market sources said selected floater contractors have been approached to compete for a front-end engineering and design contract for the Block 29 FPSO.

FPSO contractors said to be looking at this opportunity include Bumi Armada, BW Offshore, MISC and Yinson Holdings.

Japanese floater giant Modec International already operates the Miamte FPSO in Mexican waters, under a charter with Eni. The Italian operator celebrated first oil on the Amoca-Mizton-Tecoalli oil and gas complex in February 2022.

Sources consulted by Upstream suggested that Polok opportunity might fall under the radar of the two biggest floater suppliers Modec and arch rival SBM Offshore, as the pair are focused on delivering bigger units for Brazil and Guyana.

Another potential floating production project involving a foreign operator in Mexico is Woodside's Trion joint venture with state-run oil company Pemex.

The Australian player has pushed back until next year a final investment decision for a development that would feature a planned 100,000 barrel-per-day semi-submersible production unit, from a previous FID target of 2022.

Medium-sized

According to market sources, Repsol’s Block 29 requirement is for a medium-size FPSO with oil production capacity for around 60,000 barrels per day of oil, plus associated gas production, and vessel size permitting either Suezmax or Aframax tanker dimensions.

The Spanish operator is receptive to either a conversion model or a redeployment of an existing vessel and featuring an external turret mooring system.

The lease and operate term could have a fixed term of 15 years with options for extensions, but the contractual period was still to be confirmed, said sources.

First oil from Block 29 is being targeted for 2026, and Block X is expected to start producing in 2027 or 2028.

Block 29 is located in the Salina basin, in the southern part of the Gulf of Mexico.

Block 29 discoveries

Repsol and its Block 29 joint venture partners announced the Polok-1 and Chinwol-1 discoveries in May 2020. They followed up that effort with more drilling in late 2021.

Polok-1 and Chinwol-1 had a net oil pay of 200 metres and 150 metres, respectively.

In September 2021, the drilling of the Polok-2DEL appraisal well was completed with positive results, said Repsol, which added that the evaluation of the well was key to sanctioning the project towards its development phase.

“Repsol thus becomes the first international company to carry out a test of these characteristics in deep waters in Mexico,” added Repsol.

Joint venture partner Wintershall Dea said the successful appraisal well had potentially opened up a new play within Mexico’s Salina basin.

German goal

Wintershall Dea is drilling a well of its own on the same trend, targeting the Kan-1EXP well in Block 30, a few kilometres to the north of Amoca-Mizton-Tecoalli field.

Drilling of Kan-1EXP is taking place in 50 metres of water using the jack-up rig Borr Ran, which is under contract until January 2023.

The full Block 29 partners are operator Repsol (30%), Petronas (28.33%), Wintershall Dea (25%) and PTT Exploration and Production (16.67%).

The partnership also drilled an earlier unsuccessful exploration well in 2021 called Chak-1.

https://www.upstreamonline.com/exclusive/repsol-fires-the-starting-gun-for-brand-new-fpso-project-in-mexico/2-1-1282743

Re-rating will only happen with a solid contract win. It might even re-rate once the Armada Sterling V begins operations in Q4 of this year. Without any catalyst, it'd be hard for any re-rating to occur as Bumi Armada is facing a rapidly dwindling orderbook every passing quarter.

Results out on Friday noon. I’m expected a solid set of results. Net profit of at least RM200mil for the quarter. The operating FPSOs have had great performance, especially Kraken. Maybe some positive developments on Armada Sterling V which is on course for a October 2022 sail away based on Sembcorp Marine’s recent results. Plus one or two additional good news (Armada Claire status, Mumbai Port FSRU status, new project etc).

Any idea when are the results due?

During the first half of 2022, average gross production was 27,698 Boepd, which is above the top end of full year guidance of 22,000 to 26,000 Boepd. The floating, production, storage and offloading vessel continues to deliver top quartile performance, with production efficiency of 92% and water injection efficiency of 95%.

https://www.enquest.com/media/press-releases/article/operations-update-14

Anybody got full link to Mkini expose on TGlov?

Yinson has got BP Angola FPSO (no contract yet, but exclusivity discussion stage now). With that, it should put Bumi Armada the prime candidate for Eni's Angola FPSO. Yinson is kinda stretched at the moment with up to 4 ongoing projects. Bumi Armada just has one ongoing project which is almost the finishing line (Armada Sterling V in India).

Still awaiting the following good news (the sooner, the better!):

1) New contract secured in Angola (Agogo field operated by Eni)
2) Finalisation of the Mumbai Port FSRU project contract
3) Sale of FPSO Armada Claire
4) Sail away of FPSO Armada Sterling V

These need to happen for the share price to move up. Otherwise, there will be no reason for it to move. Of course may have other good (maybe even bad) news that are unforseen, but these 4 are the key expected things to look out for in the short term.

Victorious: Woodside wins FPSO legal wrangle

https://www.upstreamonline.com/rigs-and-vessels/victorious-woodside-wins-fpso-legal-wrangle/2-1-1244905

Armada Angola job win announcement is due soon. Share price weakness is unprecedented. I topped up at 0.41, no bullets left now.

At least four specialists in the floating production, storage and offloading vessel industry are hoping to qualify for the bidders’ list for Harbour Energy’s Tuna FPSO opportunity in Indonesia’s Natuna Sea.

A turret-moored FPSO is part of the basecase development concept for the project, along with an offshore wellhead platform hosting the production wells.

There are at least four FPSO contractors which are in the running to be selected for Harbour’s bidders’ list for the FPSO including Bumi Armada, BW Offshore, HBA Offshore and Yinson Holdings, and possibly others, according to market sources.

Bumi Armada and BW Offshore both have experience in Indonesia as they have provided FPSOs there in the past.

It is understood that pre-qualification documents have been submitted to Harbour, and the UK-based operator will assess those documents prior to deciding which companies will bid for the lucrative FPSO contract.

Leased FPSOs contracts are typically multi-year charter agreements with the possible addition of an operations and maintenance arrangement.

Market sources said the potential Tuna bidders are offering either existing FPSOs that would be upgraded or conversion solutions whereby a tanker is converted into an FPSO.

The turret mooring system, which holds the FPSO in position and acts as a conduit for the oil and gas production, will be provided by a specialist contractor.

Companies with a track record in Asia including Bluewater, London Marine Consultants and Sofec are understood to be in contention for the Tuna turret mooring contract, said sources.

The Tuna block hosts at least two discoveries — Kuda Laut and Singa Laut — in water depths of up to 120 metres.

The block contains more than 100 million barrels of oil equivalent on a gross basis of which 55% is gas and 45% is liquids.

Harbour recently said it aims to submit an initial field development plan to the Indonesia authorities later this year.

Front-end engineering and design will then get under way, at which point the FPSO contracting, and other contracting processes, are likely to pick up pace.

Harbour said in its March 2022 results that the final investment decision is targeted in 2023.

Harbour also said first production from Tuna would be possible three years after the final investment decision at an initial rate of between 40,000 and 50,000 barrels of oil equivalent per day.

The Tuna production sharing contract is located in the Natuna Sea off northern Indonesia close to Vietnam’s maritime boundary. The plan for the produced gas is to supply Vietnam via a subsea pipeline.

Harbour’s early technical and commercial work has showed that capital expenditure and operating expenditure based on a leased FPSO would be between $20 and $22 per boe. The project will have a breakeven cost of $25 per boe.

Pre-FEED work has been completed by Indonesia’s Synergy Engineering.

Harbour’s 50:50 joint venture partner in the Tuna PSC is Russia’s Zarubezhneft and, in March, Harbour said it was looking at its options regarding Zarubezhneft’s participation depending on how the Russian invasion of Ukraine developed.

Harbour also said at the time the Russian company was paying its bills and the pair were working together on the plan of development.

There has been no substantial change in the situation since then, according to well-placed market sources, with Zarubezhneft still a 50% supportive partner in the project.

Following the drilling of two appraisal wells on the Tuna project in late 2021, Sergey Kudryashov, general director of the Zarubezhneft Group, said Zarubezhneft had been the first Russian oil company to receive support from the Indonesian government in offshore development.

https://www.upstreamonline.com/exclusive/fpso-contractors-angling-for-indonesian-project/2-1-1238466

Added at RM0.41

Bumi Armada stock price will never fail to confound me. Oil is trading at near record high levels, with supply set to be constrained for years/decades to come. More and more marginal fields are due to be developed using FPSOs going forward. The opportunities in the FPSO market are aplenty, and Bumi Armada is finally in the right place, financially-speaking, to take advantage of these opportunities. On top of that, there is a booming FLNG/FSRU and other green floating platforms market out there that Bumi Armada is also hoping to tap into. The company has cut its fat (read, the OSV vessels), reduced debt significant and can now re-gear when the need arises. Operationally, all its floating assets are sound. The performance at Kraken over the last 24 months has been admirable, given the dire situation in the 2017-2020 period. Additionally, Kraken and TGT1 are highly likely to see their contracts extended in 3 and 2 years time respectively.

I can't and won't make share price predictions, but Bumi Armada is severely undervalued at current levels. Why? I have no idea.

Quite inexplicable the share price movement. It's as if there is no positive, and in fact many negatives, priced into the share price.

Then again, if the share price continues to hover at around RM0.40-RM0.42 I might increase my position.

Balance sheet risks are no longer a concern, and the company is now all set to grow. Discounting all that, just looking at what Bumi Armada is already doing, and we're still rather undervalued. Add to the fact that Armada TGT will be renewed, as will Armada Kraken, I am just lost for words.

Based on current orderbook, revenue is expected to continue falling. Armada TGT lease revenue is recognised on a decreasing basis. I know Armada Olombendo and Armada Mediterenia revenue is recognized in a straight line basis. I'm unsure if Armada Kraken revenue recognition is decreasing or straight line. Armada TGT lease expires in 2024, Armada Kraken firm charter period expires in 2025.

OSVs have been practically sold (only 3 left, from 40+ just a few years ago), so revenue contribution from them will continue falling too.

Bumi Armada has two projects in hand, Armada Sterling V (for 98/2 project) and Mumbai Port FSRU. For both projects, the revenue will NOT be recognised by Bumi Armada, as they are accounted for as associate and JV respectively.

As such, given how things stand, revenue has pretty much flatlined, and will likely be falling in the coming years. But curiously, the net profit will continue inching up due to lower finance cost (as loans are pared down), lower depreciation charges and higher profit contribution from associates/JVs as the two new India projects come on stream.

So the actual SOP has increased from RM0.61 to RM0.65, but they have imposed a 30% discount premised on an imminent rights issue. I may not necessarily agree with this, as Bumi Armada is generating cash hard and fast, and might yet be able to fund the equity portion of one large project using internally generated funds, especially if they can sell off Armada Claire, as well as since Tranche 1 of their term loans has been almost fully repaid as of March 2022. Also, as shared during the AGM, Bumi Armada will be partnering with co-venturers for all large scale FPSO projects, so we can assume a 50-50 split in equity commitment, further lowering the likelihood of a rights issue (which CIMB seems to not have mentioned about).

CIMB Report (all investors should read as it is very detailed):

https://rfs.cgs-cimb.com/api/download?file=47d5fd0d-de0e-482a-b3f6-430801a1f4ba

TP Update:

Maybank RM0.58 (no change)
CGS-CIMB RM0.45 (from RM0.55)
Macquarie RM0.48 (no change)
Citibank RM0.68 (from RM0.65)
Kenanga RM0.63 (no change)
KAF RM0.60 (no change)
JF Apex RM0.53 (no change)
Hong Leong RM0.84 (no change)
RHB-OSK RM0.58 (from RM0.65)

So far mainly downgrades or no change to TP. Very weird, does not tally with the reality.

TP Update:

Maybank RM0.58 (no change)
CGS-CIMB RM0.45 (from RM0.55)
Macquarie RM0.48 (no change)
Citibank RM0.68 (from RM0.65)
Kenanga RM0.63 (no change)
KAF RM0.60 (no change)
JF Apex RM0.53 (no change)
Hong Leong RM0.84 (no change)


Curious to know why CGS-CIMB has downgraded the stock rather heavily.

TP Update:

Maybank RM0.58 (no change)
CGS-CIMB RM0.45 (from RM0.55)
Macquarie RM0.48 (no change)

Curious to know why CGS-CIMB has downgraded the stock rather heavily.

2) the usage of a Combine Cycle Gas Turbine (not sure where).

This is for their future prospects I believe, as part of their green initiatives.

1st TP Update: Maybank RM0.58 (no change)

Some key points:

- No necessity for further impairment for now
- The Mumbai FSRU project discussion period has been extended 3 mths to June 2022, and can be extended further. Announcement will be made once the contract is final.
- not focusing on redeployment opportunities, only new projects as it'd be easier to integrate green components
- Discussions ongoing to sell Armada Claire with a party, carrying value on the books is negligible and the asset has been fully depreciated in Dec 2021. If not sold, it will be scrapped by year's end.

No rights issue planned right now, but if a new contract is secured and the funding requires it, it will be done.

Compared to last year, noticeable shift in attitude. Very upfront that this year there will be growth, both in company's primary sector, FPSO, and also in the new green sectors (carbon capture, FLNG, FSRU etc). Bidding between 1 to 10 projects.

It falls under "Share of results of joint ventures and associates". There is no revenue contribution per say, just a direct profit contribution to the Statement of Income.

@Thirai, Bumi Armada does NOT recognise JV share of revenue as its revenue, this only comes in under the share of profit from JV/associates.

As such, the two new upcoming projects that should started contributing to earnings in the next 12 months, will not contribute to revenue.

Also, now that the debt levels are at a fairly secure level, Bumi Armada has the capacity to start taking on more debt to finance new projects. I am positive of a large, new FPSO contract within the next few months.

Time Series Analysis - https://i.ibb.co/5nmdWmw/armada-22-Q1-tsa.png

Table - https://i.ibb.co/1Gph9qf/armada-22-Q1-debtanalysis.png

Total core net profit of ~RM178mil.

On the whole, at first glance, the results are solid. This stock needs to be re-rated higher. I wonder why the market keeps discounting it.

wah liau nobody here even reads the announcement

which is?

So KNM sells a company it owns 100% of for RM1.03bil, greater than its market cap of RM570mil, and yet the stock doesn't even move up? ???

Expecting core net profit of ~RM180mil at least. Maybe even between RM200mil - RM250mil, as the OSV segment has been pretty much disposed. FPSO performance in Q1 2022 has been exceptional, and there was no OPEX this quarter, so there is some possibility that core net profit could reach up to RM250mil.

Further good news (must ask question during AGM):

EnQuest continues to work with its partners towards development of a Bressay field development plan (‘FDP’) throughout 2022.

If Bressey is developed using Kraken FPSO (which is the most likely solution), even more profits for Bumi Armada as it will use its existing asset for two fields. In fact, there is even a chance of a third field being developed using Kraken FPSO (Bentley), but that is still a couple years away from the field development plan being confirmed.

1) For Armada Kraken, this is amazing news. It means that more and more "credits" will be paid to Bumi Armada for the FPSO's uptime/performance/efficiency, resulting in higher profits. Production thus far has exceeded the top end of Enquest's production guidance for Year 2022. However, take note that there will be a long (2 weeks minimum) shutdown in Q3 2022, so expect profits to take a hit then.

2) For Armada TGT, this is great news. They fixed the gas compressor issue back in January 2022, and production this year has exceeded production last year due to the 4 new wells coming on stream. There are a further 2 wells to be drilled in Year 2022, so production will be further bolstered by that. The extension period ends in Year 2024, however it's pretty much a given that the FPSO will get a further extension from the client as the field has continued to produce well with minimal issues. Current production is at slightly above 15,000 bopd, so that's a really good sign that the client will extend the FPSO charter. The field license runs until 2029 (recently extended), so we can expect another 5 years of extension beyond 2024.

Promising updates on the FPSO performance/production with two clients:

1) Armada Kraken at the Kraken field operated by Enquest

During the first four months of 2022, average gross production was 28,173 Boepd. The floating, production, storage and offloading vessel continues to deliver top quartile performance, with production efficiency of 92% and water injection efficiency of 94%.

https://www.enquest.com/media/press-releases/article/operations-update-13

2) Armada TGT at the TGT field join-operated by Pharos Energy

Production from the TGT and CNV fields net to the Group’s working interest averaged 5,900 boepd from 1 January to 30 April 2022. The Group’s Vietnam production guidance for 2022 remains unchanged from the Preliminary Results announcement on 16 March 2022 at 5,000-6,000 boepd.

In the period, production from TGT averaged 15,229 boepd gross and 4,518 boepd net to Pharos. CNV production averaged 5,527 boepd gross and 1,382 boepd net to Pharos.

On Block 16-1 – TGT Field, two additional development wells are planned to be drilled in H2 2022.

https://www.pharos.energy/investors/press-releases/2022-agm-trading-and-operations-update/

Should be lunch time release as the AGM is at 3.30pm.

Quarter report out on Wednesday. Expecting a record quarter.

https://media-exp1.licdn.com/dms/image/C4E22AQE6YR2gz-Shgg/feedshare-shrink_1280/0/1652419874641?e=1655942400&v=beta&t=if2nSj2p858DoBIy153Edd6jWf1UI0v6_tgdLDgf6oI

Massive new FPSO project incoming. Bumi Armada is looking to fill in over 50 positions supporting this project.

Announcement to Bursa Malaysia should be due within the next days/weeks.

Three leading international contractors or consortia are battling it out to provide a prized floating production, storage and offloading vessel required for Eni’s 1 billion barrel deep-water Agogo project offshore Angola.

Multiple people familiar with the development told Upstream that up to three players are said to be separately carrying out front-end engineering and design studies on the FPSO project, with the price offers for the project’s execution phase likely to be submitted later this year.

Those chasing the FPSO lease contract are said to include Malaysian players Bumi Armada and Yinson as well as Italy’s Saipem, one person said.

Malaysia’s MISC is likely to be involved in a grouping with Saipem, he added.

A second source familiar with the development suggested FEED studies are nearing their completion and the players are said to be preparing commercial offers, as it moves into the engineering, procurement and construction phase.

Up for grabs is a charter contract to supply an FPSO vessel — plus associated operations and maintenance services with a capacity of 120,000 barrels per day, Upstream understands — with a storage capacity of about 1.6 million barrels.

Another FPSO market watcher said Eni had earlier indicated the floater could be required for a period of up to 20 years, but the charter period of the Agogo FPSO could not be confirmed by Upstream.

Eni, Bumi Armada, Saipem and Yinson had not responded to Upstream enquiries about the Agogo project before publishing.

Upstream reported in July last year that the Italian major had hit the market with initial enquiries for the FPSO.

The Agogo project signals that upstream activities are picking up in Angola after years in the doldrums, with other projects on the move including TotalEnergies’ FPSO-based Cameia-Golfinho scheme on Block 21 — following a similar schedule to Agogo — and a shallow-water gas project, also operated by Eni.

Several subsea tie-backs and a swathe of development and infill drilling programmes are also being progressed, while onshore and offshore licensing rounds have attracted a decent number of bidders, as has a farm-out process by state-owned Sonangol.

Located in the far north-west of Block 15/06, Agogo is currently producing about 20,000 bpd of oil as part of an early production system (EPS) involving a 15-kilometre subsea tie-back to an existing FPSO.

There had been plans to boost output from the EPS to 30,000 bpd by 2023, but the status of this project is unclear.

First oil from the new deep-water project is expected to flow in 2026, Upstream understands.

The EoI floated last year mandated that the FPSO hull must not exceed 35 years of age at the end of its 20 years' operational and service life.

Agogo holds oil resources of about 1 billion barrels in place, Mario Dias, Sonangol’s director of E&P said last year during a presentation on the state-owned player's farm-out activities.

Block 15/06 currently hosts the N’goma and Olombendo FPSOs which, together, tap eight fields and produce about 190,000 bpd, according to Eni’s website.

Eni has a 36.84% stake in Block 15/06 and is partnered by Sonangol on 36.84%, with China's state-owned Sinopec on 26.32%.

https://www.upstreamonline.com/exclusive/feed-frenzy-three-chase-fpso-deal-for-eni-s-for-1-billion-barrel-angolan-project/2-1-1216730

FFU questions raised were never satisfactorily addressed, were they?

An open and shut case, and pretty much nothing is done.

What a laughing stock. Serba Dinamik is just a $#!tshow. I hope all those responsible for the grave fabrication of the facts and figures will rot in jail. RM3mil fine is nothing, the it is but a small drop in the bucked for the White Rajah of Sarawak

Limbayong FPSO is no longer an interest to Bumi Armada. The sole bid was submitted by a JV comprising of Shapoorji-MTC.

This is a CIMB report on Yinson, but it is recommended reading for anyone with an interest in the FPSO space, which includes Bumi Armada investors: https://rfs.cgs-cimb.com/api/download?file=d559fd30-6fdc-479b-8c20-ebe0acb5ac6f

Fantastic write-up cruger, thanks for sharing!

From JPM:

Bumi Armada likely to be involved in Harbour Energy’s Tuna FPSO in Indonesia. Suppliers of leased FPSO vessels are preparing for a tilt at Harbour Energy’s Tuna FPSO opportunity in Indonesia’s Natuna Sea. The Tuna block contains at least two discoveries, Kuda Laut and Singa Laut, in water depths of up to 120 metres. Numerous potential FPSO suppliers are expressing an interest in the Tuna project, and Harbour wouldcontinue to test the FPSO market and then select, later this year, up to three competing bidders. An award of an FPSO contract is possible by 3Q23. FPSO contactors, such as BumiArmada, BW Offshore and Saipem (all recent suppliers of floaters in Indonesia), are likely to be interested.Harbour mentioned that first production from Tuna would be possible three years after an FID at an initial rate of between 40,000 and 50,000 barrels of oil equivalent per day. The Tuna permit is located in the Natuna Sea off northern Indonesian close to Vietnam’s maritime boundary. The plan for the produced gas from the project is to supply Vietnam via a subsea pipeline. Total capital expenditure will depend on whether the FPSO is leased or purchased, with capex and opex based on a leased FPSO to be between $20 and $22 per boe.The project will have a breakeven cost of $25 per boe.(Upstream, 25thMarch’22)