Currently TGT FPSO is on planned shutdown maintenance, we might see slightly lower revenue / profits in Q4 2023.

It's sad, but thankfully Bumi Armada is one of those stocks with ample margin of safety. The downside at these levels are capped, while the potential upside is high. However, the upside might still take years to materialise, and maybe even, never.

Lets see how things go though. Hopeful we get an announcement of TGT extension sometime next week.

Checked with someone from ONGC, internal target deadline pushed back to Dec 2023. Quite a shit show I must say. Indian nationals are the masters of overpromising and undderdelivering. If you've worked with them, you'll know.

Unlikely for the BBC to be higher, in fact there's even a small chance of being lower.

The O&M part might be higher, but only to offset inflationary pressures.

Felix I have flagged the TGT extension long ago and shared information from the Pharos Energy investor meets.

The latest information I can share is that they're meeting Bumi Armada in KL next week for contract extension discussion and finalization. No idea if the contract will actually be signed then, or later on. I gather that it will be on a 2y firm + 5y optional basis.

Pharos Energy is coming to KL next week, to discuss and maybe even sign the contract extension for the TGT FPSO charter hire.

From what I gather, they will sign a 2 year firm extension to Dec 2026 first, with a 5 year optional extension to Dec 2031.

Take note that the TGT field license extension was approved to Dec 2026, and the field operators are currently applying for the TGT field license to be extended to Dec 2031. The final decision will be known by Q1 2024.

Why would KLK have enough considered this deal? It was a stinker, a private bailout. Now the govt will do the bailout instead due to racial sentiments.

Anybody have the latest CIMB research report on Bumi Armada? Please share. Much appreciated!

Heavy selling on 24th May, dropped from 67 sen to 63.5 sen. Insiders knew of this issue on the 23rd of May. Stock was in downtrend until it gapped down on official announcement.

Of course I hope nothing of the sort has occurred here, but it is one possibility

Risk888 what nonsense Kraken was falling in the days before the official announcement (but after the shutdown occured).

Maybe one of the ships have blown up or something and heavy selling by insiders.

Otherwise this drop seems odd I must say.

Hmmm

The current low PE ratio is misleading, because stock prices are inherently forward looking. The earnings are expected to fall off a cliff in FY2025 / FY2026 due to the end of the TGT option charter period in Vietnam and the Kraken firm charter period in the UK. Add to that the Sterling II firm charter period ending in 2024 and only a 1 year option period to 2025 being agreed to for now.

Guys, Yinson is valued higher simply because they have far more lucrative, high quality, long term contracts compared to Bumi Armada. Bumi Armada's only significant contract is Armada Olombendo, even Armada Kraken is no longer significant as the firm charter ends within 2 years time. We simply need to replenish the orderbook to see any kind of significant re-rating.

Here's to a brighter October folks. A few interesting developments that should be positive for the prospects of the company, not the least first oil for Armada Sterling V!

Why listen to people, do you own research!!

Heads up guys, the official award for CCS project in Indonesia is coming soon.

The calm before the storm...

https://www.upstreamonline.com/field-development/fpso-contractor-confirms-upstream-oil-and-gas-debut/2-1-1524271

Interesting tidbit: Market sources informed that Bumi is also finalising a second upstream permit in Indonesia.

Previously, there were only two business units. "Operations" and "Others". See the previous structure:

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

The Group is organised into 2 reportable segments to reflect the nature of activities carried out by its business
units, as follows:

(i) Operations – provision of FPSO vessels, Floating Gas Solutions unit, OSV vessels, SC assets and marine
related services.

(ii) Others – consists of the following:

• Technology, Engineering and Projects – provision of engineering consultancy and project support
services.

• Corporate and others – Management services and corporate support services provided to subsidiaries
which are considered incidental to the Group’s operating business.

The above is from Bumi Armada's website which has just been recently updated. It looks like they have added a new business unit on "Gas Infrastructure", and splitting "Subsea Construction" from their "Operations" business unit.

It's unclear what "Gas Infrastructure" entails, if it includes FSRU and FLNG or is referring to gas pipelines etc.

But the fact that they are creating this category, means that it will be a substantial business unit going forward.

Bumi Armada Berhad provides services throughout the oil and gas value chain – from exploration through to field development construction, production and operations – via three central business units.

Business Units

1. Operations - The Operations business unit specialises in engineering, procurement, construction, commissioning, and the operations of floating oil and gas facilities as per the specific requirements of clients.

2. Gas Infrastructure

3. Subsea Construction

Having simultaneously managed and delivered several large projects safely, the company has developed a reputation for its project management capabilities. We deliver innovative solutions and quality facilities that incorporate leading technologies to cater to your needs in field development, production and storage.

As an integrated oilfield services provider wherever your company is, in terms of field development and production, Bumi Armada offers a range of capabilities from life of field surveys, production facilities, installation and operations. Drawing on our decades of experience we will bring innovative solutions to bear, provide quality facilities safely and services as well as incorporate leading technologies where appropriate.

https://mkefactsettd.maybank-ke.com/PDFS/341911.pdf

Opportunities being actively pursued but with no finalised announcement as of yet:

1) FSRU at Mumbai Port - 50:50 JV with SP Energy
2) FCSIU in the UK - 50:50 JV with Navigator Gas
3) FLNG at Madura field - unknown ownership
4) Akia Field Operatorship in Indonesia - 51:49 JV with Pexco Energy
5) FPSO + FLNG (TBC) at Akia Field - unknown ownership

Recent positive news:

1) Armada Kraken back to producing at 100%, with two new HSP transformers brought abroad the FPSO to increase redundancy
2) 1 year contract extension for Armada Sterling II in the Mumbai High sector

Impending positive news:

1) First oil at the KG 98/2 field

Other positive catalysts:

1) Contract extension at the Armada TGT field (official announcement might only come sometime next year)

Another beautiful official announcement, adding some additional information to what we've already known previously.

Bumi Armada stands to get 2 levels of benefits here:

1st level: 51% operatorship, i.e. 51% of the net profits for every barrel of oil (or gas equivalent) sold.
2nd level: Charter income from the lease of the FPSO + FLNG

It's interesting that there's potential for BOTH FPSO and FLNG here.

This is now the 4th official announcement in as many months of future intent, though nothing concrete as of yet. If they were all to take off...mama mia!

Bumi Armada Berhad (“Bumi Armada”), wishes to announce that its wholly owned subsidiary Armada Akia B.V (“AABV”) (as Operator with 51% participating interest) and its co-bidder, Pexco Tarakan NV (“Pexco”) (with 49% participating interest), have signed a Production Sharing Contract with the Ministry of Energy and Mineral Resources of Indonesia for the Akia PSC in the Tarakan Basin, North Kalimantan Province ("PSC").

The Akia PSC covers an area of 8,394 square kilometers and contains the Aster and Tulip oil and gas discoveries. The Tulip discovery has an estimated recoverable resource of 860 BCF of gas and 60 MMboe of oil and condensate. Plans are to acquire new 3D seismic over the Tulip discovery to evaluate the potential for a fast-track development. The water depth at the Tulip discovery is 800m and Bumi Armada would provide and operate an FPSO and an FLNG or gas pipeline for the development. This leverages Bumi Armada’s core expertise of providing and operating floating production systems.

The Pexco Group is an independent upstream exploration and production group of companies. It currently operates two Production Sharing Contracts in Indonesia.

The AABV and Pexco consortium signing the PSC is a related party arrangement. Objektif Bersatu Sdn Bhd ("OBSB"), a wholly owned subsidiary of Usaha Tegas Sdn Bhd ("UTSB"), has a direct 34.61% interest in Bumi Armada. Tatparanandam Anantha Krishnan is a major shareholder of Bumi Armada (by virtue of his deemed interest through, inter alia, UTSB and OBSB), and also holds a 100% indirect interest in Pexco. No related party transaction announcement is required to be made by Bumi Armada at this stage as the relevant percentage ratio has not been exceeded.

The announcement is dated 25 September 2023.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3387592

The first of the new transformer units was delivered approximately two weeks ago and is now online. The second new unit is expected to arrive this weekend.

-----------
Update on Kraken from my source

@MM78 I wouldn't want Bumi Armada to pay out dividends anytime soon. Rather them use the money to pare down debts, and to reinvest into the business. Once they reach a point where they have lots of money and no idea what to do with it, then and only then, they should be paying out dividends.

Who is Fred Tham? Come share newsletter for us all

Big guns buying or insiders know something's up.

A joint venture of India’s Shapoorji Pallonji Energy (SP Energy) and Malaysia’s Bumi Armada has achieved financial closure on a $948 million loan facility for the Armada Sterling V floating production, storage and offloading vessel deployed at Oil & Natural Gas Corporation’s delayed KG-DWN-98/2 asset.

The FPSO is set to begin production within a month or two at ONGC’s $5 billion Cluster 2 development offshore India’s eastern coast, where months-long delay to first oil from the FPSO has led to financial headaches for the JV in the absence of steady revenues from the ONGC project.

For Bumi Armada, the delay affected its ability to satisfy one of the conditions in the disbursement of its FPSO financing facility.

However, Bumi Armada confirmed this week in an announcement on the Bursa Malaysia exchange that its subsidiary “has successfully achieved financial close under its long-term project financing facility of $948 million” for the east coast Indian FPSO.

“The disbursement proceeds from the project facility have been utilised by A98/2 (the company subsidiary) to fully repay its $930 million bridge loan facility,” the company stated.

Awaiting hydrocarbons

Bumi added that the Armada Sterling V FPSO “is awaiting hydrocarbons from ONGC to conduct the necessary acceptance tests to achieve final acceptance”.

While Bumi has not specified a start-up date, Upstream understands that the first oil from the ONGC project will likely be achieved by October.

Bumi has a 30% interest in the joint venture with Shapoorji Pallonji Energy, which holds the majority stake of 70%.

The Armada Sterling V FPSO is expected to handle up to 60,000 barrels per day of oil at peak production.

The floater was a conversion from the tanker Ariake by Seatrium (Sembcorp Marine) and is understood to be the largest FPSO in Indian waters, with a storage capacity of 800,000 barrels of oil.

https://www.upstreamonline.com/finance/joint-venture-closes-on-948-million-loan-facility-for-indias-largest-fpso/2-1-1517846

Some further good news for the Armada TGT FPSO.

"TGT Revised Field Development Plan (RFDP) approved by MOIT, drilling rig tender is in progress for 2024 drilling campaign".

https://www.pharos.energy/investors/press-releases/interim-results-for-the-half-year-to-30-june-2023/

--------

The contract is due to expire in Dec 2024 but quite clearly it will be extended, perhaps up to 2031.

A hidden easter egg in the press release (final sentence):

"Bumi Armada is currently engineering a carbon capture injection system for a gas field in Indonesia."

However, of all these announcements, this seems to be the most definitive and has the clearest pathway to materialising as it is a "Heads of Agreement".

Also, it's been confirmed, this is a FLNG. Big win for Bumi Armada if and when the contract is finalised and officially awarded!!!

A lot of signings recently but we need a concrete contract award to be sure of anything. Recall, the Mumbai Port FSRU was disclosed on May 2021 but until now nothing.

So we have 3 green energy plays in the pipeline with nothing certain yet:

1) Mumbai Port FSRU (50:50 with Shapoorji) - Announced May 2021
2) Transport of Liquified CO2 and Floating Carbon Storage & Injection Unit (50:50 with Navigator Gas) - Announced June 2023
3) FLNG + LNG Carrier (unknown JV structure with Pertamina Shipping) - Announced September 2023

Officially announced to Bursa Malaysia:

13 September, 2023 – Bumi Armada Berhad (“Bumi Armada”), today announced the signing of a nonbinding agreement with PT Pertamina International Shipping (“Pertamina International Shipping”), a
shipping and marine logistics subholding of Pertamina, Indonesia’s state-owned energy company, and
PT Davenergy Mulia Perkasa (“DMP”), an Indonesian natural gas trading company to record key
principles to develop and commercialise liquefied natural gas (“LNG”) from the Madura Gas Field and
its surrounding fields.

By leveraging the expertise and experience of its potential consortium members, it is anticipated that
Bumi Armada and Pertamina International Shipping will design, engineer, construct, install,
commission, hook up and operate a floating natural gas liquefaction and storage facility, together with
an LNG carrier to transport LNG to consumers who are not proximate to clean energy sources.

DMP is dedicated to advancing Indonesia's LNG market while actively contributing to the nation's
growth. This commitment is reflected through the delivery of reliable and sustainable energy solutions
that support the nation's net-zero aspiration.

Preliminary discussions have been initiated with several potential off-taker clients and the first
shipment of LNG is anticipated to take place three years after making final investment decision.
Gary Christenson, Bumi Armada’s Chief Executive Officer, said: “We are excited to collaborate with
Pertamina International Shipping and DMP in this opportunity to bring sustainable and scalable
solutions to reduce carbon emissions in Indonesia, which is also in line with Bumi Armada’s recently
launched decarbonization agenda to achieve net zero by 2050. This collaboration is a testament to
our strong commitment towards providing the best decarbonization solutions globally.”

https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=140265&name=EA_GA_ATTACHMENTS

If it's a FLNG with Bumi Armada being the leading partner, that's a big win. Let's wait for more details.

Not sure if this means Bumi Armada is going to develop and operate a FLNG + LNG carrier. Not clear on the structure of the JV as well. Unsure of the potential financial impact.

What is good about this is that the Armada Sterling III FPSO, whose firm charter period ends in 2027, will continue to see charter extensions for a long time to come.

I wonder if TheEdge jumped the gun, there is not yet any announcement to Bursa on this, no press release on the Bumi Armada website too.

KUALA LUMPUR (Sept 13): Bumi Armada Bhd has signed a non-binding agreement with PT Pertamina International Shipping and PT Davenergy Mulia Perkasa (DMP), an Indonesian natural gas trading company, for the development and commercialisation of liquefied natural gas (LNG) from the Madura gas field.

In a statement on Wednesday, Bumi Armada said the agreement would outline the key principles to develop and commercialise LNG from the Madura gas field and its surrounding fields.

Pertamina International Shipping is the shipping and marine logistics sub holding of Indonesia’s state-owned energy company Pertamina.


It said preliminary discussions have been initiated with several potential off-taker clients and the first shipment of LNG is anticipated to take place three years after making the final investment decision.

Bumi Armada chief executive officer Gary Christenson said: “We are excited to collaborate with Pertamina International Shipping and DMP in this opportunity to bring sustainable and scalable solutions to reduce carbon emissions in Indonesia, which is also in line with Bumi Armada’s recently launched decarbonisation agenda to achieve net zero by 2050. This collaboration is a testament to our strong commitment towards providing the best decarbonisation solutions globally”.

Bumi Armada and Pertamina International Shipping are expected to collaborate, utilising their respective expertise and experience, in the development of a floating natural gas liquefaction and storage facility.

The collaboration aims to design, engineer, construct, install, commission, hook up and operate the facility, along with an LNG carrier. The parties also intend to transport LNG to consumers located in areas that lack access to clean energy sources.

Bumi Armada shares were 1.9% or one sen higher at 53 sen at time of writing on Wednesday, translating to a market capitalisation of over RM3.1 billion.

@Felix888, the USD930mil loan is a "bridge loan" for the construction period. It's a lumpsum amount to be repaid.

The new USD948mil loan that has been drawn down to repay the bridge loan of USD930mil is a "project financing loan". It is to be repaid on a monthly basis over the firm charter period. Think of it like your car loan, once disbursement done, from next month onwards you have to repay a monthly installment.

This might also mean that Armada Sterling V has been able to secure standby rates from ONGC, otherwise without income how to start servicing the loan.

Bumi Armada Berhad ("BAB") refers to the disclosure in its quarterly announcement for the quarter ended 30 June 2023 regarding its 30% associated company, Armada 98/2 Pte Ltd ("A98/2"), and wishes to announce that A98/2 has successfully achieved financial close under its long term project financing facility of USD948 million ("Project Facility").

The disbursement proceeds from the Project Facility have been utilised by A98/2 to fully repay its USD930 million bridge loan facility.

As at the date of this announcement, the ASV FPSO is awaiting hydrocarbons from ONGC to conduct the necessary acceptance tests to achieve final acceptance.

The announcement is dated 12 September 2023.

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

Mildly positive news, means the project financiers are satisfied that first oil should be here soon and that other than the delay in first oil, everything else is in place and ready to go.

@KML most likely same rate, as this is only an extension. The loan has been fully repaid, the vessel has been significantly depreciated. So the margins are a lot higher. It's very normal for extension contracts to fetch lower dayrates as a result.

I have received confirmation from Pharos Energy's IR that Bumi Armada have submitted a proposal for the extension of the lease of the Armada TGT FPSO to Pharos Energy and they are currently in the midst of negotiating the extension. A formal announcement would be made once the extension is confirmed.

ABS Awards AIP for Bumi Armada’s Pioneering Carbon Storage and Injection Vessel

ABS has awarded Approval in Principle (AIP) for Bumi Armada’s pioneering design for a floating carbon storage and injection unit (FCSIU).

Bumi Armada’s FCSIU concept is a floating terminal capable of storing and injecting liquified carbon dioxide (LCO2) into depleted oil and gas fields or aquifers. This novel concept incorporates the ability to accept LCO2 deliveries in an offshore setting, the flexibility to manage LCO2 at low or medium pressure, the provision of LCO2 buffer storage and the preparation of LCO2 for sequestration - permanent storage of CO2 deep beneath the seabed.

The FCSIU can receive LCO2 from various sources, such as electricity generation, manufacturing and construction, offering a new solution for reducing CO2 emissions from these industries.

The AIP is applicable to either a new build or a converted donor carrier, with smaller tanks to optimize the cargo space layout.

“Carbon capture and reinjection in depleted fields is a promising technology for reducing greenhouse gas emissions, and it is likely that this process will become more widespread and play an increasingly important role in the transition to a low-carbon economy. ABS is a leader in the field and is committed to supporting the safe development and adoption of the technology,” said John McDonald, ABS President and Chief Operating Officer.

Gary Christenson, Bumi Armada’s Chief Executive Officer, said, “We are excited to bring sustainable and scalable solutions to reduce carbon emissions, which is also in line with Bumi Armada’s recently launched decarbonization agenda to achieve net zero by 2050. This solution is a testament to our strong commitment towards providing the best decarbonization solutions globally.”

https://news.cision.com/american-bureau-of-shipping/r/abs-awards-aip-for-bumi-armada-s-pioneering-carbon-storage-and-injection-vessel,c3830219

State-run Oil and Natural Gas Corporation (ONGC) on Tuesday said that crude oil production from its KG-DWN-98/2 block in the Krishna-Godavari basin is expected to hit 10,000 barrels per day (b/d) by November 2023.

Besides, the output from the block will double to 20,000 b/d by the end of the current financial year. It is also targeting to reach an output of 45,000 b/d by FY25, the oil and gas exploration and production (E&P) major said.

https://www.reuters.com/world/india/indias-ongc-invest-242-bln-meet-net-zero-emissions-goal-2023-08-29/

https://www.petrowatch.com/synopsis.php?artId=21067

Indian O&G site mentions: "ONGC is supremely confident it can meet its latest October 2023 deadline to begin first oil production from the deepwater Cluster-2 fields"

https://www.xm.com/research/markets/allNews/reuters/indias-ongc-sees-oil-output-from-east-coast-deep-waters-in-octnov-53627159

"INDIA ONGC EXEC: INTEND TO COMMENCE OIL PRODUCTION FROM DEEP WATER FIELD IN THE EAST COAST BLOCK IN OCT-NOV"

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

I'll see it when I believe it, but the difference this time seems to be that even Bumi Armada specifically mentioned October 2023 as the likely first oil date. In the past, they never mentioned a particular month.

Bumi Armada's future looks lackluster at the moment. No major FPSO project in the pipeline, which is the biggest worry. Of course , there might be some FPSO bids/tenders ongoing that's not being spoken about in the market and a sudden announcement of a contract win cannot be discounted, though it also cannot be hoped for.

The UOB guy is referring to this: https://www.enquest.com/fileadmin/content/operations/ICOP_PDFs/EnQ_ICOP_Kraken_2021_07_F.pdf

-----------

From the UOB Report:

Kraken’s Infrastructure Code Of Practice (ICOP) document, a key document behind our SELL downgrade in June, shows that all of the FPSO’s processing equipment (not just the HSP transformers) were expected to reach critical ullage constraint from 2023. In our view, for BAB to avoid another unplanned FPSO breakdown, the more prudent action must involve “diagnosing” the entire FPSO’s processing topsides, and we understand that this is not necessarily in its current plans."

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

I think it's a whole bunch of nonsense. This document has been published sometime last year. It's simply talking about capacity constraints as a part of the normal BAU and nothing out of the ordinary. If anything, it's in the FPSO operators best interest to stretch capacity to the maximum possible before replacing/refurbishing, to eke out every last dollar. Of course, it's a balancing act, take it too far, and you're faced with shut-ins. As far as I see this, seasoned FPSO operators such as Bumi Armada would already have a plan for tackling capacity constraints as they arise. Ultimately, they want to hit >95% production efficiency for those sweet, sweet bonus payout.