CGS-CIMB Research

Yinson Holdings Bhd - Agogo and Albacora opportunities beckon

Publish date: Sun, 25 Sep 2022, 11:10 AM
CGS-CIMB Research
  • Reiterate Add, with an unchanged SOP-based TP of RM3.20, as Yinson is on track to win the Agogo and SE-PAJ projects in Angola.
  • Yinson may be in a good position to win Petrobras’ FPSOAlbacora.

Main points from the 23 Sep analyst briefing

● In terms of the three existing projects on hand, the FPSO Anna Nery sailed from China on 19 Jul and should arrive offshore Brazil on 25 Sep, according to Yinson expects it to achieve first oil on the Marlim field in Jan 2023. The FPSO Atlanta, which is currently in Dubai’s Drydocks World, should be delivered to Enauta in late-2023, with first oil in mid-2024 on the Atlanta field, offshore Brazil. Finally, the FPSO Maria Quiteria is to be delivered to Petrobras in late-2024, with first oil around mid-2025 on the Parque das Baleias field, offshore Brazil. All projects are on schedule, with the FPSO Atlanta at 5% completion at end-Jan and 18% completion at end-Jul 2022, while the FPSO Maria Quiteria rising from 9% to 14% completion over the same time frame.

● As for future prospects, Yinson has already been identified as the preferred bidder for Eni’s FPSO Agogo project offshore Angola. The capex is more than US$1bn but below US$1.5bn, in our estimate. Eni has offered US$350m upfront capex funding, although Yinson is negotiating for more. The time charter for the FPSO Agogo will likely be over a 15-year firm period with a maximum 5-year option period. Yinson is likely to rope in an equity partner at the very outset of the project in order to share the 30% of the equity portion of the capex and to avoid any further equity capital raising. Given the limited availability of independent FPSO contracting capacity right now, daily charter rates and project IRRs are likely to be higher than Yinson’s existing FPSO projects in Brazil for Petrobras, i.e. the FPSO Anna Nery and FPSO Maria Quiteria. If Yinson secures the Eni award, the FPSO Anna Nery project execution team will manage this project. The FPSO Agogo will likely be delivered to Eni by late-2025 (and first oil in 2026).

● Separately, BP and Yinson have agreed to engage in exclusive negotiations for Yinson to reserve the laid-up FPSO Nganhurra (currently belonging to Woodside, with Yinson holding a purchase option) to develop Block 31 SE-PAJ, offshore Angola. Yinson is working with BP to begin the project only in early-2024, so that Yinson’s project execution team that is currently working on the FPSO Atlanta can migrate over to this project; the FPSO may then be delivered to BP in early-2026.

● Finally, Yinson’s project execution team that is currently working on the FPSO Maria Quiteria will be available to take on a new project once it is delivered to Petrobras in late-2024. Yinson is targeting to win Petrobras’ Albacora development. The Albacora is a mature field in the Campos basin offshore Brazil and Petrobras wants to rejuvenate the field with a new FPSO that can continue producing for another 20 years. Petrobras currently has two units in operation at Albacora — the P-25 semi-submersible production platform and the P-31 FPSO – and these will be decommissioned so that a new FPSO can be put in place for the revitalisation of the field. Petrobras has set 13 Feb 2023 for contractors to submit bids for the new FPSO Albacora. The FPSO will be a VLCC-sized ship, and the charter may be for 20 years. As this is a revitalisation project, there are no local content requirements, similar to the FPSO Anna Nery, and the FPSO Maria Quiteria. Bidders include Modec, SBM Offshore, Yinson Holdings, MISC, BW Offshore, Altera Infrastructure and Ocyan. However, with MISC struggling with the FPSO Mero -3 project, Altera Infrastructure in Chapter 11 bankruptcy proceedings, and Ocyan disqualified from Petrobras’s P-81 FPSO tender in May 2022, the only real contenders are Modec, SBM Offshore, and Yinson, with BW Offshore as a possibility, in our view. The FPSO Albacora project will likely be delivered to Petrobras in 2027.

● Other opportunities for Yinson may arise from the potential redeployment of the FPSO Lam Son, whose contract with Vietnam’s PTSC has been extended to 30 Jun 2023. After this, there is the potential to reuse the vessel on Jadestone Vietnam’s Nam U Minh project (PTSC may take the lead to execute this project), or on the ConocoPhillips’ Salam-Patawali project offshore Sarawak, Malaysia. Downside risks include potential unexpected project execution hiccups.

Source: CGS-CIMB Research - 25 Sep 2022

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