Exceptionally strong Q3, record profit.

Kraken uptime significantly improved, impairment no longer necessary. If you wait until they announce a writeback to buy in, you are likely already too late.

OMS utilization will continue to improve in Q4, and once caspian sea 2 vessels deployed, probably will go above 70% utilization.

Trade war phase 1 deal closing in, once it's closed, O&G stock will benefit from higher oil price.

OPEC meeting in early dec to discuss production cut extention into 2020 will also boost oil price.

And lastly, the big RM1bn potential award from Claire is a huge bonus - and management guiding favorable outcome quarter after quarter in the past 3 years.

The current price now is still way too cheap.

1) Kraken uptime >90%

2) Kraken write back is highly likely going to happen

3) OMS utilization has gone up significantly generating additional cashflow

4) More idle OSVs vessels were sold at a gain to book value - generating additional cashflow to pare down debt. Also, lower maintenance cost base = higher profit next quarter

5) Perdana RM18m maintenance cost per quarter is going to kick in fully in 4Q, core net profit is highly likely to go up to RM100m

6) Claire award of more than RM1bn could be announced in 4 weeks or less

7) Mgmt pursuing Caspian sea contracts for Armada installer and constructor. From my understanding there are few alternative vessels available in Caspian sea - so the chances of getting this contract is very high - just a matter of time

8) Kraken ST debt will be restructured to LT by end of 2019 to fully remove any liquidity risk - this is in the quarterly report

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

Profit taking done. Uptrend to resume. Those of you who had the faith to buy more at around 0.47 - 0.475 when the market is giving you irrational discount, well done.

Relax, keep calm and continue buying on temporal dips.

Relax, keep calm and continue buying on temporal dips.

DBS increased TP to 75 cents

Management has stated that Claire award will be known before 2019 ends, and expect favorable judgment.

I expect people don’t really work much during the last 2 weeks of Christmas, so this could come in 1st two weeks of Dec.

If a favorable judgment is out, share price will go straight up past 70 cents.

This is just short term profit taking, and we’re starting to see a rebound now with value investors coming in.

Look at the big picture, this is a turnaround story. Before the 4 big FPSOs came online and oil price was at 30-40, share price was at 0.80.

Today, the 4 FPSOs are fully operational and contributing strongly to cash flow, oil price doubled to 60+, OMS segment recovering strongly, and selling below 50 cents.

Gotta bet on this mispricing ;)

Maybank secretly doubled their TP from 0.1 to 0.2 so that it's less embarassing for them.
Next quarter will double TP to 0.4, slowly catch up, so don't lose too much face.

Have we forgotten that this is an exceptionally strong Q3, a hugely positive news with Kraken >90% uptime? Some heavy profit taking because Affin recommended to take profit post Q3 I think, but now it's very overdone against a significantly improved fundamentals = mispricing = $ on the table.

See the big picture, this is a big turnaround story which was just further validated in Q3. Continuous improvement will happen in Q4 and FY2020. Strong BUY.

Heavy profit taking. The more your faith is tested, the more gains there are on the table ;)

https://www.theedgemarkets.com/article/hlib-research-raises-target-price-bumi-armada-60-sen

Buying more @ 0.475.
Thank you for the discount :)

Relax, keep calm and continue buying on temporal dips.

When they announced Kraken uptime >90%, and the price drops = mispricing.
Believe in fundamentals and have faith. Be courageous to buy when things appear illogical. Eventually logic will prevail.

Kenanga increased TP from RM0.20 to RM0.53

Hong Leong increased TP to RM0.60

CIMB increased TP to RM0.61

Jefferies increased TP to RM0.63

Relax, keep calm and continue buying on temporal dips.

Q3 is done. Look forward to Q4 and record profit for 2019.

1) Claire US$283.5m
2) Kraken write back
3) Higher OMS utilization - Caspian Sea contract

50 cents is still way too cheap. Zoom out when you see the price chart, see the big picture. We are at the beginning of a turnaround.

Relax, keep calm and continue buying on temporal dips.

Jefferies upgraded TP to RM0.61.
Further upgrades expected after today.

Fantastic results above expectation. Strongest quarter in history.

Kraken uptime and OMS utilization both improved.

Now onwards to Q4 Claire award and Kraken write back.

See the big picture - the upward trend.

1) Turnaround with significantly improved fundamentals.

2) Stronger cash flow and profitability. 2H19 > 1H19.

3) Higher kraken uptime and OMS utilization. Kraken write back possible.

4) Lower liquidity risk with debt restructured to long term.

5) Major shareholder loan signifying commitment and optimism.

6) New FPSO contract won. Potential new jobs for installer and constructor.

7) Potential Claire award to be announced in Q4.

8) Cost rationalization exercise - reduce management overheads.

9) Idle Perdana sale to pare down debt, gain on disposal and lower maintenance expense.

10) Hands-on CEO, stock options pricing aligns interest with shareholders to improve share price.

11) Trade war de-escalation, higher global growth and oil demand, higher oil price.

12) Higher capex by Petronas - 36bn in 2H2019, Armada’s OSVs potential beneficiary.

13) Year end window dressing starting soon

14) Foreign funds begin to flow back to Malaysia, one of the worst laggers in Asia. That means an extra push to stock prices.

15) Still grossly undervalued at <1x P/B vs Yinson >2x P/B.

16) Bearish IBs like Maybank and Kenanga who called around RM0.10 TP after Q2 results will have no choice but to upgrade TP after Q3 results out. They already look like the stupidest fool in the market to the institutional investors.

17) EPF holdings quite close to 5% floor. Historically when they reach closer to 5% they net buy. When they reach 7-8% they net sell. When another positive Q3 is out, EPF will get justification to buy more.

18) 2020 will be even better, so it’s a sustained turnaround not just a quarterly hero.

Profit takers have exited. They don't want to take the risk and would rather sit on the fence - this usually happens right before every QR. If the QR is good, they come back, maybe they lose 50%-70% of the upward swing, but the remaining momentum is good enough for them. Makes sense for risk adverse investors - prudence is their strategy.

As for investors who have followed the stock long enough and understand the nuances of the dynamics, the probability of Q3 better than Q2 is much higher than the probability of it being worse. So the expected value of being in position prior to Q3 results release is positive, on a risk adjusted basis. This is the calculated risk that I'm taking.

But of course, make your own strategy, believe what you believe in and no regrets. We all took a risk (those who sold, risk losing the upside; those who's holding/buying, risk the downside) in line with our judgment.

Relax, keep calm and continue buying on temporal dips.

It’s so funny, when someone has shares - he says limit up everyday. When someone has sold his shares, guaranteed QR deficit.

Well, makes sense. Every man for himself, lol.

Write back imminent and highly possible in Q4.
2019 is going to be spectacular.
2020 greater heights.

EnQuest Chief Executive, Amjad Bseisu, said:

“The Group has continued to deliver on its targets for the year against its strategic priorities of deliver, de-lever and grow. Production at the end of October was 68,501 Boepd, with Kraken in particular performing strongly. Production efficiency at Kraken has been over 90% in the last few months.

https://www.enquest.com/media/press-releases/article/operations-update-4

https://www.morningstar.co.uk/uk/news/AN_1574330476468009200/enquest-operations-on-track-as-kraken-field-performs-well.aspx

See the big picture - the upward trend. Here's 18 reasons why:

1) Turnaround with significantly improved fundamentals.

2) Stronger cash flow and profitability. 2H19 > 1H19.

3) Higher kraken uptime and OMS utilization. Kraken write back possible.

4) Lower liquidity risk with debt restructured to long term.

5) Major shareholder loan signifying commitment and optimism.

6) New FPSO contract won. Potential new jobs for installer and constructor.

7) Potential Claire award to be announced in Q4.

8) Cost rationalization exercise - reduce management overheads.

9) Idle Perdana sale to pare down debt, gain on disposal and lower maintenance expense.

10) Hands-on CEO, stock options pricing aligns interest with shareholders to improve share price.

11) Trade war de-escalation, higher global growth and oil demand, higher oil price.

12) Higher capex by Petronas - 36bn in 2H2019, Armada’s OSVs potential beneficiary.

13) Year end window dressing starting soon

14) Foreign funds begin to flow back to Malaysia, one of the worst laggers in Asia. That means an extra push to stock prices.

15) Still grossly undervalued at <1x P/B vs Yinson >2x P/B.

16) Bearish IBs like Maybank and Kenanga who called around RM0.10 TP after Q2 results will have no choice but to upgrade TP after Q3 results out. They already look like the stupidest fool in the market to the institutional investors.

17) EPF holdings quite close to 5% floor. Historically when they reach closer to 5% they net buy. When they reach 7-8% they net sell. When another positive Q3 is out, EPF will get justification to buy more.

18) 2020 will be even better, so it’s a sustained turnaround not just a quarterly hero.

See the big picture - the upward trend.

1) Turnaround with significantly improved fundamentals.

2) Stronger cash flow and profitability. 2H19 > 1H19.

3) Higher kraken uptime and OMS utilization. Kraken write back possible.

4) Lower liquidity risk with debt restructured to long term.

5) Major shareholder loan signifying commitment and optimism.

6) New FPSO contract won. Potential new jobs for installer and constructor.

7) Potential Claire award to be announced in Q4.

8) Cost rationalization exercise - reduce management overheads.

9) Idle Perdana sale to pare down debt, gain on disposal and lower maintenance expense.

10) Hands-on CEO, stock options pricing aligns interest with shareholders to improve share price.

11) Trade war de-escalation, higher global growth and oil demand, higher oil price.

12) Higher capex by Petronas - 36bn in 2H2019, Armada’s OSVs potential beneficiary.

13) Year end window dressing starting soon

14) Foreign funds begin to flow back to Malaysia, one of the worst laggers in Asia. That means an extra push to stock prices.

15) Still grossly undervalued at <1x P/B vs Yinson >2x P/B.

16) Bearish IBs like Maybank and Kenanga who called around RM0.10 TP after Q2 results will have no choice but to upgrade TP after Q3 results out. They already look like the stupidest fool in the market to the institutional investors.

17) EPF holdings quite close to 5% floor. Historically when they reach closer to 5% they net buy. When they reach 7-8% they net sell. When another positive Q3 is out, EPF will get justification to buy more.

18) 2020 will be even better, so it’s a sustained turnaround not just a quarterly hero.

Math question of the year:

0.255 => 0.22 => 0.355
0.355 => 0.32 => 0.495
0.495 => 0.42 => 0.555
0.555 => 0.52 => ?

shorties are betting against fundamentals.
trying to use pre-QR release jittery and US-China-HK issue to short.
extremely strong rebound and support.
now's your chance to enter before Q3. thank the shorties.

Relax, keep calm and continue buying on temporal dips.
This is your chance!

Once we have 3 consecutive quarters of strong net profit, the institutional funds will have stronger justification to buy in. The FPSO market sentiment globally is starting to get bullish, and funds are looking for FPSO companies. now that Armada's short term debt concerns have been addressed, operational performance has improved, cash flow is strong, all it's gotta do is just show the report card (i.e. net profit) and check the last box, then we'll probably see strong buy-ins.

Relax, keep calm and continue buying on temporal dips.

https://www.energyvoice.com/oilandgas/north-sea/212402/enquests-thistle-platform-to-undergo-repairs-early-next-year/

Enquest will start repairing Thistle right after new year and remove 2 redundant storage tanks. Voila, problem solved. Although completely unrelated to Kraken, but this is for the information of those who panicked earlier during the sell-down for no reason. So now hopefully you feel better, haha.

Relax, keep calm and continue buying on temporal dips.

Q3 is just around the corner, will be out in around a week’s time. Sit tight for the rocket launch.

Relax, keep calm and continue buying on temporal dips.

There’s no need for RI at 80 cents. The stronger operating cash flow now is more than sufficient to cover the debt repayment profile which has been restructured to long term.

AK also ready to provide additional shareholders loan if needed for capex for new projects.

Olombendo can monetize 30% and get hundreds of millions. Idle OSV sale can get further.

And potential Claire award of up to US$283.5m, when it’s announced in Q4, could bring cash balance up by more than RM1.1bn.

So, logic dictates that there will be no need for RI at all.

See the big picture - the upward trend.

1) Turnaround with significantly improved fundamentals.

2) Stronger cash flow and profitability. 2H19 > 1H19.

3) Higher kraken uptime and OMS utilization. Kraken write back possible.

4) Lower liquidity risk with debt restructured to long term.

5) Major shareholder loan signifying commitment and optimism.

6) New FPSO contract won. Potential new jobs for installer and constructor.

7) Potential Claire award to be announced in Q4.

8) Cost rationalization exercise - reduce management overheads.

9) Idle Perdana sale to pare down debt, gain on disposal and lower maintenance expense.

10) Hands-on CEO, stock options pricing aligns interest with shareholders to improve share price.

11) Trade war de-escalation, higher global growth and oil demand, higher oil price.

12) Higher capex by Petronas - 36bn in 2H2019, Armada’s OSVs potential beneficiary.

13) Year end window dressing starting soon

14) Foreign funds begin to flow back to Malaysia, one of the worst laggers in Asia. That means an extra push to stock prices.

15) Still grossly undervalued at <1x P/B vs Yinson >2x P/B.

16) Bearish IBs like Maybank and Kenanga who called around RM0.10 TP after Q2 results will have no choice but to upgrade TP after Q3 results out. They already look like the stupidest fool in the market to the institutional investors.

17) EPF holdings quite close to 5% floor. Historically when they reach closer to 5% they net buy. When they reach 7-8% they net sell. When another positive Q3 is out, EPF will get justification to buy more.

18) 2020 will be even better, so it’s a sustained turnaround not just a quarterly hero.

Relax, keep calm and continue buying on temporal dips.

JP Morgan report states that Kraken oil is sold at a US$10 premium to Brent price due to low sulfur content. Not Armada being paid US$10 per barrel if Brent above US$60.

In any case, the gist here is that Kraken’s oil is of premium quality and worth. That translates to more money for Enquest, and lowering the risk of client default (Enquest also has lots of debt) like what happened to Claire.

Lower risk = higher share price

DBS restarted coverage on Armada.
Strong buy call with 0.60 target.
Key paragraphs below.
—-

Kraken back on track: BAB’s Floating Production, Storage and Offloading FPSO segment improved in 1HFY19 due to the resolution of issues regarding its Kraken FPSO vessel which operates in the North Sea with extremely harsh conditions. There were unidentifiable issues previously. BAB sent a senior staff to oversee the vessel for 3 months and spotted operational and technical inefficiencies. BAB decided to replace 5 of its technical leads in 2QFY19 which improved profits by 34% q-o-q. Kraken’s earnings are expected to improve marginally in 3QFY19. There are no operational problems so far for BAB’s remaining vessels and everything is running according to plan.

—-

Installer still seeking jobs: BAB’s pipelay barge the Armada Installer is awaiting a decision by the State Oil Company of Azerbaijan Republic (SOCAR) for a contract in the Caspian Sea. Armada Installer is one of only 2 vessels that are able to handle the Azerbaijan job. The Armada Installer has submitted bids for jobs at Lukoil’s Filanovsky field as well bids to other players. The Armada Installer is on an on-call basis and is ready for work anytime. Its current running cost largely comprises manpower cost.

It's a turnaround story, the trend is up.

When the trend is up, the probability of making money when we buy on dips is higher than the probability of losing money.

It's just statistics - do this consistently and we'll make money.

Relax, keep calm and continue buying on temporal dips.

Seems like foreign funds are returning and getting on risk-on mood for Malaysian O&G sector.

Velesto, Armada, Sapura all rallied.

1) Trade war de-escalation => higher oil price = > good for O&G related stocks

2) Lower Fed interest rate, hot money outflow from US to emerging markets like Malaysia

3) Company specific performance - new contract for Velesto, turnaround for Armada with big positive news potentially coming. Sapura potential beneficiary from upcoming Petronas big contract

Conclusion: Relax, keep calm, and continue buying on any temporal dips.