rohank71

58 has always been a support and resistance... need to charge past that.

4 days ago

1pingpong

0.65 sure can reach

4 days ago

marlboroman2

Not forgetting old Brent at 83.5 translates to TP of the same value.

4 days ago

nikicheong

Anybody attended the AGM? I missed the Q&A.

4 days ago

nikicheong

One big nugget is that Armada Sterling V acceptance is expected in June 2024.

Discussions are ongoing to extend Sterling II, TGT and Kraken FPSO contracts.

4 days ago

nikicheong

$2bil worth of tenders in the Caspian Sea for the two subsea construction vessels.

4 days ago

TimCoke

Could be the new transitioning project, interesting.
---------

nikicheong

Point to note, they are borrowing USD400mil (RM1.85bil) to repay the existing Sukuk facililty of RM1.5bil.

1. Why is the new borrowing more than the old borrowing? Why does Bumi Armada need to borrow MORE cash?
2. Usually lenders want the borrowings backed by some project. What are they backing this with?

4 days ago

MM78

I was on the verge of cutting down my holding of Armada shares pending the release of the latest quarter and the AGM. Luke's answer to the question in AGM on intentionally hold back paying down the debt but build up the cash hints of something is up soon and his affirmation of no plan for right issues is also assuring. It is good to know Sterling V full acceptance is around June this year. Good Q 1 2024 results , so I hold back selling a big potion of Armada shares holding for now though I was pessimistic as well lately of Armada. Armada shares high traded volume today with 2 Sens rise seems encouraging as well. I wonder if Armada Kraken is fully amortized by the end of its fixed contract and before the starts of the optional extension contract ? Anyone has any idea ?

4 days ago

MM78

Further thinking about Gary's comment that the management decided not to take on an FPSO project as the risk / reward valuations is not in favor of Armada is something worth taking note of. If it is true, it may mean Armada is selective in their look out for better contract instead just for the sake of getting business at low margin high risk. Sapura Energy fell into big black hole and ended up bankrupt as the previous MD was taking on too much projects at low margins during the oil and gas boom period. I am still feeling the pain of my biggest loss cutting process a few years ago.

4 days ago

nikicheong

@MM78 care sharing more about the question you're referring to from the AGM on building the cash pile instead of paring down debt. I missed it, only heard the question being read but not the answer.

4 days ago

nikicheong

Does anyone have any screenshots or recording from the AGM? I also missed some of the written questions from MSWG and shareholders (including myself)

4 days ago

nikicheong

@MM78 no the Armada Kraken is not fully amortized at the end of the firm charter. If I recall correctly, they showed the amortization schedule in the previous quarter and it was previously on a fixed line basis to the end of the option charter period. They made some adjustments which resulted in the massive impairment in Q4 2023, but the vessel will still only be fully amortized in 2042.

4 days ago

nikicheong

Gary spoke about Kojo field, explaining that Bumi Armada has "first refusal" and have enquiries from potential partners on the field development. Very brief, nothing much more to it. He didn't speak about the Talu field, but I believe it is also in Indonesia.

4 days ago

nikicheong

Some information on Kojo joint study.

https://www.ruangenergi.com/ketika-lavender-dan-kojo-di-joint-study-kan-lemigas/

4 days ago

nikicheong

CFO Luke also spoke about the renegotiated O&M contract with Eni in Angola, and mentioned a positive contribution of RM60mil to Q1 2024 revenue. However, I am unsure if this is one-off in nature or recurring every quarter moving forward.

4 days ago

nikicheong

CEO Gary says that he will be travelling to Almaty, Kazakhstan to participate in talks with potential clients there. He is going on 30th June 2024. He sounded very upbeat and positive about prospects from the Caspian region for the SC vessels, and singled out Kazakhstan as a likely destination for their next contract win. In another reply to MSWG questionnaire, I believe they mentioned there is USD2bil potential SC contracts to bid for between 2024-2026.

4 days ago

nikicheong

As I had shared before, the Mumbai Port FSRU project is officially scrapped as it is no longer economically viable given the run up in LNG prices.

4 days ago

nikicheong

CFO Luke spoke positively about extension to 2026 for the TGT FPSO. He pointed out that Pharos Energy had stated on their press release on their website that a two well drilling program will commence in H2 2024, which augurs well for the longer-term viability of the field and the continued need for the FPSO to extract oil.

4 days ago

nikicheong

CEO Gary highlighted that Bumi Armada is actively tendering for FPSOs on the leased model. They are not interested in EPC or BOT FPSO projects. According to him contract awards for the projects being bid will be at the end of 2024 or in 2025.

4 days ago

nikicheong

I was just on the webinar with Navigator Gas and posed some questions on Bluestreak CO2. Sadly, the CEO sounded rather downbeat. He said that he hopes it will pick up pace. He says emitters need sufficient incentive to set-up long-term CCS solutions. He says the business case has to work - for emitters, and for the Bluestreak partners. He says more regulation and subsidies are needed to push emitters to invest in CCS and the solutions being offered by the Bluestreak JV.

So my take on this is that the Bluestreak JV is a longer-term thing, do not expect any contract awards in the near or mid future.

Which then brings me to the question, what exactly is Bumi Armada on the cusp of attaining that they're building their cash pile towards? My bet would be either the FLNG with Pertamina, CCS with Shell, or some other smaller gas/carbon project in Indonesia.

4 days ago

1pingpong

Enter now.

4 days ago

nikicheong

Reading the analyst reports, there is more information that can be gleaned.

1. From CGS's report, the RM60mil O&M revenue adjustment recognised in Q1 2024 includes RM7mil for Q1 2024 and RM53mil for prior quarters.

This means the recurring adjusted O&M charge is around RM30mil/year or RM7mil/quarter, with further adjustments possible in line with escalations in actual O&M costs incurred. Do take note that the O&M is with a 50% subsidiary, so the net effects on Bumi Armada's profitability with be halved.

2. From CGS's report, Bumi Armada's 30% stake in the Armada Sterling V FPSO incurred a loss of RM56mil in Q4 2023, which then narrowed to RM25mil in Q1 2024.

If we conservatively estimate that this will contribute RM100mil per year to Bumi Armada once the vessels earns the full bareboat charter rate, this means that recurring quarterly profits might see a RM50mil boost (reversal from RM25mil loss to RM25mil profits per quarter) from the Armada Sterling V FPSO.

3. From MIDF's report, the Akia PSC will be progressing to the seismic testing phase by Q4 2024, with appraisal wells expected sometime in FY2025.

If this is true, it is possible for a fast-track FID by 2026 with commencement of operations in 2028. I am unsure how much this play could be worth, if someone knows how to estimate and value oil and gas reserves, would very much welcome your input.

4 days ago

nikicheong

Some further good news from Enquest:

Kraken net production averaged 13,700 Boepd, reflecting 98% production uptime and water injection efficiency of 95% as partial offsets to natural field decline. This continued strong operational performance saw Kraken reach the milestone of 70 million barrels of oil produced during May.

Planning work is underway ahead of the planned return to drilling at Kraken during 2025, with joint venture approval granted to order select long lead equipment required to facilitate the two-well sidetrack programme.

https://www.enquest.com/media/press-releases/article/operations-update-18

4 days ago

MM78

@Nikicheong
The question of less paydown of debt and noticeable cash building up in the Q1 FY 2024 was posted by an active participant in the additional question session. Luke seemed pleased this was noticed and asked ; he affirmed the cash was built up intentionally instead of usually paying down the debt. Luke has also confirmed no right issue plan in near future oi another question. I sensed the management is preparing for project funding based on these answers. I failed to screenshot the Q&A session.
Thanks for answering my question on FPSO Kraken's remaining book value.

4 days ago

ZacYXZ

thank you niki and MM78 for the additional info and some insights. much appreciated been holding BAB from 0.24 till now with some buy and sell contra gains in between. really hope this share will get to Yinson level one day!

4 days ago

nikicheong

Anybody have reports from UOB, HLB or Citi, would appreciate it if you could kindly share.

4 days ago

jacintateh

@Niki, this is from HL:-

Impressive start
Armada chalked up core net profit of RM239.4m in 1Q24 (-24% QoQ, +15% YoY), which we deem above our (31%) and street (31%) forecasts. Core net profit declined 24% QoQ mainly attributed to one-off net positive effect of c.RM70m on EBIT in 4Q23 relating to resolution of outstanding issues with EnQuest. However, it was partially mitigated by an additional RM60m revenue arising from operating fee escalation for Olombendo FPSO. Armada is currently working on obtaining the Final Acceptance of Sterling V FPSO, pending commissioning tests in Jun-24, which will lead to recognition of bareboat charter from 3Q24 onwards should Armada pass the relevant tests. Raise our FY24f/25f earnings by 12%/15% and introduce FY26f forecasts at RM612m. Retain BUY call with higher SOP-derived TP of RM0.78 (from RM0.75).
Results beat. Armada chalked up core net profit of RM239.4m in 1Q24 (-24% QoQ, +15% YoY), which we deem above our (31%) and street (31%) forecasts. Key deviation stemmed from higher-than-expected revenue arising from finalisation of daily operating fee escalation relating to Olombendo FPSO. Core earnings were arrived after adjusting for insurance claim (RM0.7m), reversal of trade receivables impairment (RM0.9m) and fair value gain on hedges (-RM0.2m).
QoQ. Core net profit declined 24% mainly attributed to one-off net positive effect of c.RM70m on EBIT in 4Q23 relating to resolution of outstanding issues with EnQuest. However, it was partially mitigated by additional RM60m revenue arising from operating fee escalation for Olombendo FPSO – RM53m of which was backloaded to this quarter given the successful negotiation with its customer on revising the O&M rates for the past year.
YoY. Core earnings rose 15% driven by stronger contribution from both Olombendo (aforementioned reasons above) and Kraken FPSOs (underwent remedial work on four engines in 1Q23). However, it was moderately offset by weaker contribution from JV/associates (-88%) which stemmed from start-up costs of Sterling V while awaiting the recognition of bareboat charter.
Outlook. Armada is currently working on obtaining the Final Acceptance of Sterling V FPSO, pending commissioning tests in Jun-24, which will lead to recognition of bareboat charter from 3Q24 onwards should Armada pass the relevant tests. Meanwhile, TGT FPSO is finishing its firm period in Nov-24 but management is confident of securing a lease extension as its client intends to drill more wells on the TGT Field. However, the discussion relating to the charter rates and length of extension remain fluid as the client is also seeking to extend the PSC which is due to expire in two years. Overall, we expect Armada to record double digit earnings growth in FY24f. Balance sheet wise, Armada’s net gearing marked another sequential decline to 0.56x (from 0.65x in 4Q23), allowing it to gear up for new job opportunities when it arises.
Forecast. Raise our FY24f/25f earnings by 12%/15% after imputing annual report updates and raising our margins assumption for Olombendo FPSO. Also, we introduce FY26f forecasts at RM612m.
Maintain BUY, TP of RM0.78. Post adjustments, our SOP-derived TP is revised upward to RM0.78 (from RM0.75), implying an undemanding FY24f PE multiple of 4.0x. We continue to like Armada due to (i) its undemanding valuation in anticipation of bumper earnings in FY24f due to contribution from Armada Sterling V and (ii) current tight FPSO market which gives Armada an upper hand in negotiating favourable charter rates for any new job wins that may arise.

4 days ago

nikicheong

Thanks Jacinta!

4 days ago

UncleFollower

Bumi Armada (BAB MK)
1Q24: Profits In Line, Future Prospects Remain Unclear
1Q24 results are strong which we deem in line, due to: a) one-off Olombendo escalation
fee impact, b) unclear timing of payment from associate ASV (Jun 24 is the target
period for final acceptance), and c) unclear future prospects. In our view, cleaning up
the balance sheet is a noble move for shareholders, but should not take too long, and
the timing for BAB to chase for new quality contracts is long overdue. Retain HOLD.
Target price: RM0.50

https://marketing.utrade.com.sg/e3t/Ctc/L1+113/d4GP3-04/VWJ0Jv3NW5QgW6lyhZm2mSYmtVNrtzX5fLzF0N2ZRHCg3lYMRW8wLKSR6lZ3npW7vFpCk67PzYDW3Y2Jb114cndCW17vXx25W7H_3W7HphkP5XXKzLW5MZkyW7bPWL8W69nSCX6qDx0LW8bbCln612yjbW7L5-PQ2HM_QcW6m5HzT5NZrtSW7sMZBY15Yx-MW5pcgdV5nB-d_W1ZBj0-1ZVKv6W1C-H2L8j_TdGN8f61lRZ52wqW8v14rt7Z619gW4cnlwl254rRTW3ckcL63MxZDnVwwPSh8WhmtTW1VKSlJ8kX1gBW5Tln6h67MvldW3nqY9584_ZmxVJLVRY5vdbYjW53Nn3p4-bx-HW8_3Y0K1yRlzSW1s1ypC1zX7ghW6dpCLN25zpVBW4Z-Z1c1w8Jt9N88bB_s56smCdvfcP004

4 days ago

vespa

UOB may just have hit on the head for short term investors. Reality check perhaps.

4 days ago

nikicheong

One thing I disagree with UOB's and Kenanga's report is the treatment of the Lombendo FPSO's O&M adjustment. The RM60mil O&M adjustment is attributable to Angoil Bumi JV, which is a 50% subsidiary. So the net effect to Bumi Armada's net profit to shareholders is only half of that. So when you exclude RM53mil for previous quarters from the current net profit, it's foolish to deduct the full RM53mil - rather the deduction should be for Bumi Armada's share, i.e. RM27.5mil.

4 days ago

nikicheong

While I disagree with the overly conservative SOTP valuation by UOB (they don't provide a detailed enough breakdown), the content itself is scathing but accurate. Management has been talking a big talk for long enough, but no follow through. So I agree with their assertion that Bumi Armada's future prospects are unclear. Although, it's puzzling they didn't factor in the likely contract extensions for TGT and Kraken.

Some interesting nuggets:

- BAB is increasingly focused on securing gas projects (capex sizes: US$0.2b-1b) vs FPSOs (mega capex: US$3b)
- With lower gearing, management guided that it can take on two new FPSO projects, or in detail at least one new large wholly-owned FPSO (US$1b capex) and 1-2 FPSOs on the JV level with Sharpoorji, without the need to incur additional equity fund raising
- Other than FPSOs, BAB is also preparing for more floating gas (FSRU/ FLNG) type of projects, or even projects related to carbon capture

4 days ago

vespa

I doubt we are disputing the prospects but these have not changed over the year.

3 days ago

nikicheong

Evolution of Debt Profile since March 2019:

Table: https://i.ibb.co/HKnMpqr/barm-q12024ts.png
Graph: https://i.ibb.co/2kH0Csf/barm-q12024graph.png

3 days ago

Robert Waters

I read a few analyst reports from IB's. Both Kenanga and UOB downgraded Armada and reduced targets.
I agree with this ratings.
As they pointed out, armada is unable to secure new projects. It has been 8 years since last big contract win.

The problem is not that the are unable to secure contracts for future.
The problem is that they have not been able to get contracts in the past.
So the damage is already baked in the cake.

As a result the company is dying a slow death.
Even with a new contract win there will be disruption to the earnings... for about 8 years.

1 day ago

vespa

sobering thought

1 day ago

696988

Is quite funny to read this kind of report, what kind of future prospects must armada must have? They already mentioned their prospect (Building our energy transition pathway towards achieving net zero goal by 2050 or earlier, by focusing on carbon emission reduction and carbon injection technologies and solutions including the Bluestreak joint venture;) take from qtr. 2050 is not future then is what?

One of their prospect is (secure new projects in core regions and with our preferred partners;) take from qtr.
The most common thing, as a good company is seeking for a quality contract not a quantity contract because getting a new contract doesn't means you earn money there is a certain risk might be happen and need more capital to run for the new contract, if a company facing high debt situation they must more carefully get into new contract.

If company in high debt position is better to stable or increase their profit and try to reduce more debt, only think about new project.

7 hours ago

Robert Waters

This is a very good point about contract discussion. Come to think about it net zero and carbon capture is the future.
Would you tell me of few new contracts that Bumi Armada secured in these growth areas ? I will do more research. Even a couple of examples would help a lot. Do they have any projects approved for bluestreak you mentioned ? I know that UK power providers were involved. What is their order value ?

6 hours ago

696988

Good question, but you ask the wrong person. You should join the agm ask them to answer your question, because I'm not the one who set the prospect which is (Building our energy transition pathway towards achieving net zero goal by 2050 or earlier, by focusing on carbon emission reduction and carbon injection technologies and solutions including the Bluestreak joint venture; ) all is take from qtr.

5 hours ago

Robert Waters

Thank you. I missed the AGM, unfortunately. If you know of any carbon capture contracts or net zero projects that they signed later on, please post. This would be a game changer.
It is good that they focus on future, but what is the result of this focus in terms of bidding awards, please add here. In the past 8 years they had no contracts whatsover. Future related, or past, or present. Exception is ASV which is a JV only. But I like it that the 'focus' on new venture. I also like that they 'look' for opportunities. Probably means that the google things on the computer occasionally.

4 hours ago

marlboroman2

This forum is beginning to feel like a university study group doing a thesis on BAB. Anyway, once price goes up, which it will eventually, we'll all get A+ for our assignments (money made thereafter is merely a coincidence)

4 hours ago

Sslee

Outlook. On April 25, FPSO Kraken will transition to an extension contract as its firm charter with Enquest concludes, resulting in a lower recurring earnings base from this asset. FPSO Sterling 5 is still awaiting the final acceptance from the client, so the asset remains on a standby rate, which is lower than the full contract rate. Its RM1.5b sukuk maturing in Sep 2024 will likely to be refinanced with an USD400m facility of which the rate is yet to be determined

Anyone know after April 25 FPSO Kraken charter rate will be reduced by how much?

4 hours ago

chonghai

I sold 321,000 units of Armada over past few weeks. It is now not my major holding anymore. Keep 200,000 to see how things will unfold.

4 hours ago

chonghai

While I make some money, it could have been opportunity loss to me because all my other calls such as Orient, YOCB, FPI, Harbour, Homeritz are all doing well.

4 hours ago

nikicheong

@SSLEE the contract value reduces by 70% as per contractual terms. Everyone who has done solid research about Bumi Armada knew about this long ago.

4 hours ago

nikicheong

@Robert they've not won anything, we'll be one of the first to know once it's public knowledge.

4 hours ago

Sslee

Thanks nikicheong,
I already move from Armada to Yinson.
Hopefully by 2025 Yinson with addition two FPSO in operation the profit will be growing.

3 hours ago

nikicheong

SSLEE Yinson's job is just properly executing its contracts. That's partially Bumi Armada's downfall - they were working simultaneously on 4 projects in 2015, and there were delays for all. Compounded by Armada Claire being terminated and the OSV oversupply situation back then. Yinson would be wise to learn and avoid a repeat of the same.

2 hours ago

nikicheong

"This forum is beginning to feel like a university study group doing a thesis on BAB."

HAHA. Isn't that a good thing though?

2 hours ago

marlboroman2

Don't get me wrong Niki, I absolutely love reading the constructive arguments and points put forth by many in here. In my view, this is still a good value company despite the slowness of it all.

1 hour ago