Last few minutes to buy before Sunday announcement re trade war.

As usual, relax, keep calm and continue buying on dips.

Wait for trade war de escalation announcement on Sunday, and perhaps afterwards potential bonus for Claire.

@IK Yup hence not commenting so frequently.

The market has not fully priced in the trade war de-escalation good news yet, because while Trump and the White House have unofficially declared it, investors still want to see it on paper on Sunday.

Also, this de-escalation is a big move as trade war has been dragging on for the past 18 months. It's going to have a strong positive demand on oil price, potentially pushing it to the US$65-70 per barrel range, if not more. Then we have Petronas ramping up their capex and budget with higher oil price, the positive reinforcement cycle so on and so forth.

Today's sentiment is markedly different from yesterday, when everyone's still worried that the tariff will happen on Sunday and not delayed etc. A 50% roll back on US tariff is very very substantial.

Anything below 50 cents is really a steal in these past 2 weeks due to profit takers.

But again, your money, your call. Happy holidays.

Once the trade war news is announced on Sunday, together with OPEC+ cut, share price will likely trend back to 50+ cents. Strong twin macro support for foreign funds inflow.

Then the last piece is just to wait for Claire to see if there's any year end bonus ;)

OPEC+ cut has happened.

Trade war de-escalation is happening - US delays Dec 15 Tariff, Rolls back 50% previous tarifff, China buys more US agricultural goods.

Claire news coming soon.

Take profit now if you're jittery - short sellers will prey on that fear.

Peace of mind is probably more important in that case.

Otherwise, if it doesn't bother you much and you can see the turnaround big picture, continue holding and buying on temporal dips and hold for at least a couple months.

Relax, keep calm and continue buying on temporal dips.

IMO 2020 approaching - crude oil with low sulphur content (Kraken's oil) will be in strong demand - it's already trading at US$10/barrel premium to Brent crude which will continue to rise with the latest OPEC cut.

All eyes on the Dec 15 US-China tariff rollback now.

Now the OPEC+ side is settled, good macro support.

If trade war phase 1 deal is reached before Dec 15 - then it will be a twin pillar strong macro support for oil. This will be as best as it can be, and any bonus award from Claire will be magnified with multiplier effect.

Stay tuned for the rest of the month and 2019, or even better, go on a fantastic holiday ;)

https://www.cnbc.com/2019/12/06/oil-moves-lower-as-traders-await-details-of-the-final-opec-decision.html

Oil moved higher on Friday as OPEC and its allies agreed to deepen oil production cuts to 500,000 barrels a day through to March 2020. This brings the total production cut to 1.7 million barrels a day.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told reporters on Friday that the oil-rich kingdom’s quota would be an additional 167,000 b/d through to March 2020. He also said that the kingdom would continue to exceed its quota by 400,000 barrels a day, which means the overall production cut will actually be closer to 2.1 million barrels a day.

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Fantastic news. Deeper cut than expected.O&G stocks likely to rebound across the board next week.

https://www.google.com.sg/amp/s/mobile.reuters.com/article/amp/idUSKBN1Y90UK

Reuters: Oil producers led by Saudi Arabia and Russia agreed on Thursday to cut output by an extra 500,000 barrels a day in the first quarter of 2020.

That’s a good observation. Seems like a short squeeze is due very soon.

Interesting.

14% drop in share price from its peak of 0.55 after record profit quarter announced. Counterintuitive to fundamentals. Looks like Affin’s recommendation for fund managers to take profit after Q3 stuck to their head.

When Q4 comes out, it’s gonna be like, oh wow, seems like this quarter is even better operationally with a fantastic FY2019. Then scrambling to buyback and shift next profit taking goals to 65 and 75 cents. Logic always prevails over the test of time.

0.255 => 0.22 => 0.355
0.355 => 0.32 => 0.495
0.495 => 0.42 => 0.550
0.550 => 0.52 => 0.475 ...=> ?

Relax, keep calm and continue buying in temporal dips.

3 consecutive quarters of strong, sustainable net profit with more to come. Steel your guts in times of panic selling, it’s much better than chasing high.

https://themalaysianreserve.com/2019/12/05/petronas-awards-psc-to-petronas-carigali-enquest-petroleum/

Enquest won contract from Petronas.

Mmm hard to predict hourly or daily movements.

Take a good holiday break, don't check it every minute of the day (the more you check it, the more you feel like doing something and becomes impatient), and come back early next year ;) That's what I'm going to do soon myself.

It comes down to risk-adjusted return again.

Why the stock will still go up:

1) OPEC+ meeting this Friday likely to deepen production cut, sending oil price higher, and this is good for O&G stocks in general.

2) Armada Claire potential compensation likely to come out in the next few weeks according to management. An award up to US$283.5m is really bonus free money that is very good for Armada's debt reduction / capex.

3) Petronas will be spending more than RM20bn+ capex in Q4, majority in upstream, and this will benefit Armada's OMS segment utilization when Q4 results come out.

4) Trade war resolution is in sight. A phase one US-China deal could be reached before Dec 15 and this will be hugely positive to oil price

5) Assuming Kraken writeback, valuation is still very cheap at 0.5x P/B, compared to Yinson at 2.2x P/B. A lot more room to go up, especially financial distress risk in the next few years now is literally close to 0%.

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Could it go down?

1) Profit taking. Share price has rallied more than 3x from its low point and people are getting increasingly jittery. But it's a matter of time for these investors to take comfort that the current price is the new baseline reflecting significantly improved fundamentals and much lower balance sheet risk after restructuring.

2) Short-selling. Similar logic to the above, short-sellers see this as an opportunity to short the stock when people are jittery about future upward movement. Again, they are shorting against fundamentals and the overall long-term upward trend. They could prey on short term insecurities and could be temporally successful for a couple days, but fundamentals always revert back to its roots.

3) More rhetorics from Trump on trade war. Whatever it is, it will be resolved in 2020 before the US election. Trump said he doesn't need a deal before the US election. Obviously bluffing. He needs this or else the entire US will be pissed at him for higher consumer price.

4) OPEC+ not cutting more or not extending production cut, leading to disappointment and oil price goes below US$60. On balance, the chances are low because Saudi needs this for Aramco IPO and good valuation. Also, Russia has strong ties with Saudi and is likely to support the new Prince oil minister.

5) Claire award = 0. This is also a possibility that I wouldn't discount, because a court judgment is very subjective no matter how management thinks a favorable outcome is most likely. However, the market does not expect anything from Claire, more like seeing it as a bonus. No bonus, nevermind. Large bonus, fantastic.


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On balance, I would say - relax, keep calm and continue buying on temporal dips.
All the very best.

share price likely to rocket next week after OPEC+ announce deeper cuts this Friday. Most expect 1.5m cut, up from 1.2m.

Petronas 4Q spending more than 20 billion for upstream and OSV segment will benefit.

Relax, keep calm and continue buying on temporal dips.

OPEC cut, trade deal and Claire all possibly over next 3 weeks. Sell now if you can’t stomach the risk. Buy strongly if you can see the very favorable risk adjusted return.

Buying more @ 0.48.

Gonna go on holiday soon. Here’s wishing everyone a great holiday season ahead and see you in 2020.

Feel free to sell and take profit if you’re jittery. My entry price mostly @0.215 and still holding and accumulating on irrational big dips.

Not selling until the triple major boost are realized, possibly until end 2020.

1) Kraken full write back
2) OMS full utilization
3) Claire compensation

2H2019 > 1H2019
2020 > 2019

This is a strong turnaround story and it’s just the beginning of a multi year rally and recovery. See the big picture.

Relax, keep calm and continue buying on temporal dips.

Trade uncertainties will create more buying opportunities.

But opportunity is one thing, taking action and execute is another.

Consolidating so people get used to the idea that 50 cents is the new baseline before next upward move to 80 cents.

@Simone feel free to sell. No one’s stopping you. Your money, your call.

Relax, keep calm and continue buying on temporal dips.

1) OPEC meeting this week, Aramco IPO, Saudi will make sure oil price remains decent with production cuts in 2020.

2) Claire potential award will be out anytime now. If no award, no impact on share price because the market expects nothing. If full award of US$283.5m, it will gap up to 70-80 cents. Nothing to lose, all to win.

3) Year end window dressing and Santa rally coming.

Relax, keep calm and continue buying on temporal dips.

Boring boring boring spike

Relax, keep calm and continue buying on temporal dips

Difficult to guess whether it's going to go up 3 bids or down 2 bids in the next min, hour or day.

But if you ask me where the share price will be in 3-6 months time, definitely higher than 0.51 today. Make time and patience your friend, not your enemy.

Relax, keep calm and continue buying on temporal dips.

Relax, keep calm and continue buying on temporal dips.

I do think they stand a good chance to get something, because Claire has been idle for 3 years since they terminated contract, and BA incurred expenses to maintain it, not to mention the initial capex to convert Claire into an FPSO.

If Claire has been sold or redeployed elsewhere for another project and continue earning money, that would have been a different case. It’s only fair that Armada gets back some compensation.

Me too. I don’t expect the full US$283.5m claims to be awarded. Market doesn’t seem to expect it either, it’s more like a bonus.

Half of that would be more than good enough - immediately boost Armada’s cash balance by 50% and can be used to fund new FPSO projects or reduce debt.

Important for BA to break RM0.55 these 2 weeks to reach greater heights.

This has nothing to do with the Armada Claire compensation.

This is the surety of around US$500k that Bumi Armada has to give to Woodside as guarantee to cover legal costs in the event that Woodside wins.

A surety is very common in courts, when a plaintiff wants to sue a defendant, they need to provide guarantee that they will cover the legal costs incurred by the defendant, in the event that the defendant wins.

Otherwise, any tom dick and harry can sue anyone else and forces the other party to incur legal cost to defend themselves and then it will be 3-4 years before judgment for the defendant to recoup any legal expenses.

Directly from Q3 report:

The trial for this matter has commenced at the Supreme Court on 18 February 2019 and the parties served written closing submissions and made closing oral submissions on 26 and 27 March 2019.

Judgement is expected before the end of December 2019.

The management is of the view that there are reasonable grounds to expect a favourable outcome in respect of ABPL’s claims with regards to the said repudiation by WEJ of the Contract.

No more access. Don’t really like upstream, all they do is regurgitate information from elsewhere. Nothing original. Most likely they just repeating the fact from Q3 report.

Only 1 appeal allowed by either side and will conclude by 1H2020 - according to mgmt.

If the initial judgment is positive to BA it’s highly likely that the appeal result will be the same without new evidence.

Relax, keep calm and continue buying on temporal dips.

1) Oil price is likely to trend up with OPEC + Russia production cut extension through 2020. They meet in first week of Dec.

2) Expected Claire favorable outcome per management will be out before Dec 2019

3) Remaining Kraken debt restructured to LT - completely removing any liquidity risk for Armada, lowering risk of financial distress to 0 in the next few years assuming current operation level

4) Year end window dressing will occur

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With the above, the upward trend will be well supported through to end 2019, before an even better 2020.

Petronas spent 28bn in 9M2019 vs budget 50bn in FY2019.

22bn more to spend in 4Q2019, focused on upstream. OMS segment will benefit strongly.

Expect OMS utilization to go up to 70+% by 4Q19/1Q20.

That is how I see it in simple terms. And with Claire’s potential award - a fair price would be around RM1.1-1.2.

Assuming kraken write back, Armada is currently trading at 0.5-0.6x P/B, a heavy discount to Yinson at more than 2x.

There shouldn’t be any discount to P/B anymore because the OMS vessels have been written down to market value. In fact all the vessels sold in past few quarters have all made gains on disposals, meaning that the vessels were sold at more than 1x book value.

A fair TP would be at least 1x P/B - that’s around 5-5.5bn market cap, translating to around RM0.90-1.00.

On Armada Claire (Q3 Report):

The trial for this matter has commenced at the Supreme Court on 18 February 2019 and the parties served written closing submissions and made closing oral submissions on 26 and 27 March 2019.

Judgement is expected before the end of December 2019.

The management is of the view that there are reasonable grounds to expect a favourable outcome in respect of ABPL’s claims with regards to the said repudiation by WEJ of the Contract.