Not looking good at Kraken. With the drilling cancelled, there is nothing to support the production plateau and the long term viability of the field may be called into question.

https://www.upstreamonline.com/rigs-and-vessels/partner-dispute-leads-to-costly-rig-cancellation/2-1-1741948

Yes there is a chance, albeit a miniscule one, that a dividend may be declared.

@Sovereign I believe the valuation basis is same. SOP valuation is derived from the DCF of each asset.

Bumi Armada is currently working on the following potential projects:

1. FSU/FSRU for SVT with Enquest
2. FCSIU for CSS Hub with Sarawak Shell
3. FLNG for Madura with Pertamina
4. Undisclosed offshore gas project in Indonesia
5. Budi Onshore gas project in Indonesia

So far no positive developments for any of these.

Heads up, Q3 results come out on Friday noon

For the moment all analysts are pencilling zero valuation for Akia stake as Bumi Armada gas yet to share any formal appraisal or the discovery. I believe they've undertaken seismic studies a couple months ago and may know more in the coming months. Obviously if there is value here, then it is management's duty to ensure it gets added to the EV and the share swap deal reflects that accordingly.

Robert if the share swap is conducted on an Enterprise Value basis, then the Market Value will not be an issue. The market value will slowly catch up to the Enterprise Value prior to the share swap.

Bumi Armada's FPSOs are also mostly at the tail end of their tenures. Meanwhile, MISC has 2 gigantic floating vessels, one of which is Mero 3 which just begun the multi-decade charter recently.

If we take EV of RM4.7bil for Bumi Armada and RM10.0bil for MISC, then Bumi Armada's shareholders' stake in the merged entity will be at 32% vs 68% for MISC. In this calculation, the market value DOES NOT matter. Logically though, the closer we get to a deal, the narrower the EV and MV will be as speculators take advantage of the arbitrage opportunity. There will however always remain a gap between the EV and MV because of the risk of a deal falling through.

Also, the EV can always be revised with new developments, e.g. if Bumi Armada gets any new contracts in the next 6 - 9 months.

Damn RM4.7bil (Armada) vs RM15bil (MISC). But like Raymond says, the best thing is the Bumi Armada market valuation might catch up to its RM4.7bil fair value. Still 50% to go, assuming nothing else changes.

I also don't understand why they keep saying that Bumi Armada doesn't have the balance sheet to fund the Bluestreak or Madura FLNG projects. There is RM1bil cash sitting there, plus there is room to take on significant funding given the lower gearing levels.

Bumi Armada might also focus on disposing the two SC vessels in the Caspian Sea. They are no longer a core asset.

Bumi Armada being valued at RM4.6bil seems fair, as things stand.

However, I don't know enough about MISC's offshore business to tell whether RM10.0bil is a fair valuation.

Don't discount the possibility of a dividend declaration in the Q3 2024 results. Might be a way to extract out the excess cash, and also might be a final hurrah for Ananda Krishnan before the 2% dividend tax kicks in next year.

Regardless, this shows that Bumi Armada is back on firm financial footing. Eventually being part of the Petronas group and having Mero 3 in its lineup will enhance the company's image even further.

There is also a separate matter of MISC buying Ananda's stake in Bumi Armada. I believe it should be part of the MOU.

So MISC will gain controlling stake eventually by taking over Ananda's shares and getting shares in return for injecting their offshore business into Bumi Armada

Anyone have any new research reports, please share. CIMB, RHB, HLB, Citibank, Philips Capital etc. I checked Maybank, they don't have any update.

Anyone have updated research report from CIMB?

@Gabriel I don't know about analyst expectation but it is slightly lower than mine. I had it pegged at around 2 sen per share per year, but this looks more like 1.5 sen per share per year. The extension should be worth around 3 sen per share in totality.

The extension was only until 2026, which is reflective of the fact that the license extension for the TGT field to 2031 has yet to be approved by the Vietnamese authorities.

Essentially, there is another potential 5 year upside to the extension beyond 2026.

The idea of absorbing the FPSO business of MISC into Bumi Armada sounds more sensible than MISC outright buying the entirety of Bumi Armada.

Lets see how this plays out.

The initial 6 year extension from 2018 to 2024 (6 years) was for USD285mil.

This additional 2 year extension from 2024 to 2026 (2 years) is for USD74.4mil. It seems a bit lower than the previous extension, which was worth around USD95mil for 2 years.

ocbc the cash generation will slow down next year April onwards as Kraken FPSO enters the optional charter period with 70% lower revenues.

In any case, the TGT FPSO charter expires on 14th Nov 2024. The announcement is coming, hang in there boys.

It's really a wonder how you can get more information from following their partners (Enquest, Pharos Energy, Navigator Gas, even ONGC) than you can get from Bumi Armada directly.

ocbc the FPSOs are all under RM1bil except Olombendo which is worth RM2bil

ocbc, that is one of the largest fpsos around. Bumi Armada's meanwhile are mostly smaller and mid sized FPSOs that are 7 to 15 years of age.

RM0.60 is likely to be the price to Ananda for his stake. If they want to take over the entire company, that's a poor offer to the rest of the market, especially minority shareholders.

Ananda has to dispose at a discount due to his large stake.

RM0.60 is the discount to fair value.

Not sure what their estimate of the fair value is, but it should be in the RM0.70 to RM0.80 range.

Damn RM0.60 per share. I prefer to have just AK exit and MISC drive the company forward, probably by also then injecting it's FPSO assets into Bumi Armada.

Nothing specific or damning. Makes sense, the synergies are there for all to see. Bumi Armada is a cash cow. In the absence of material new projects, shareholders can expect dividends of between 5 to 8 sen per share next year onwards through to 2030.

I don't have the access.

Also they're speculating the announcement is imminent within the coming couple of weeks. Yet, zero price action.

Not sure how credible this is, I did some checks with friends in IBs, no one has heard anything.

https://www.upstreamonline.com/rigs-and-vessels/malaysian-fpso-mega-merger-talks-heat-up-will-a-deal-be-struck-this-time-/2-1-1734699

Discussions surrounding Malaysian shipping giant MISC’s potential acquisition of compatriot floating production, storage and offloading (FPSO) vessel contractor Bumi Armada have resurfaced, with Upstream's sources hinting that an official announcement may be imminent, possibly within the next one to two weeks.

Gabriel, Bumi Armada is working with Shell on pre-FEED studies relating to CCS offshore Sarawak. This has been going on since mid 2022. However, unsure when (if at all) there will be any formal award.

Yes, it's all there in the statement.

"The capture and repurposing of flare gas will reduce Magnus platform greenhouse gas emissions, specifically CO2 and Methane"

Now the major announcement on the extension of the TGT FPSO should be imminent (within next 2 weeks for sure). That should contribute around 2 sen per share for every year of extension.

Finally! Something relatively small, but something nonetheless. Conservatively, this would be worth around RM25-30mil if the net margin is ~10%, i.e. around 0.4 to 0.5 sen per share.

Good news, TGT drilling campaign is over and the Wells are successfully tied back to the FPSO.

Not that I'm aware of. Is there any? I have shared whatever I know they are participating in but so far unaware of any wins.

Yes, just wait for the announcement.

TGT FPSO extension announcement is imminent.

One could say, that we are overdue some good news.

Good lord, what will it take for some positive news from the company.

Spencer the article claims Bumi Armada will be bidding. But these articles have been claiming the same rather frequently for the past decade with nary a win (except Armada Sterling V win in 2019).

Also, NTA would be badly hit (to the tune of around 10 sen) with the strong ringgit lately.

Ageetkumar most of the FPSOs are overstated. The recoverable amount will be much less. That value also assumes they complete the firm period and exercise all the optional periods, very optimistic. In reality, probably discount the NTA by 25% to 50% for an accurate picture.

FPSO contractors lining up for replacement of sizeable Malaysian floater

FPSO companies potentially lining up include Malaysia's MISC and Bumi Armada, India's Shapoorji Pallonji Energy and Singapore-based HBA Future Energy

https://www.upstreamonline.com/exclusive/fpso-contractors-lining-up-for-replacement-of-sizeable-malaysian-floater/2-1-1706125

Kraken Field Summary

Average net production of 13,637 Boepd (2023: 13,082 Boepd) in the first half of 2024 was driven by 98.5% production uptime and 97% water injection efficiency. This exemplary performance is testament to the focus and collaboration between the EnQuest and Bumi Armada operational teams, and the parties are undertaking further process work to extend this excellent performance.

The Group is focused on enhancing the next phase of Kraken operations and is working with its joint venture partner to finalise infill drilling plans for 2025. Work is ongoing to mature the Enhanced Oil Recovery (‘EOR’) project, which presents a material upside to the existing Kraken base reservoir performance. The EnQuest team is advancing the Bressay gas import project as a subsea tieback to Kraken, which will displace the majority of the diesel currently used to power Kraken operations; driving a material reduction in FPSO emissions and materially reducing operating costs. In the second half of 2024, trials will also commence to assess the potential for hydrogenated vegetable oil to be used as a diesel alternative for the equipment that cannot be run on gas. The Kraken maintenance shutdown is ongoing and is expected to be completed within ten days (six days full shutdown and four days on single train operations). The key scope to be completed is the five-yearly swivel inspection.

Source: Enquest 2024 Half-year Results
https://www.enquest.com/fileadmin/content/press_release_pdfs/2024/EnQuest_HY_Results_RNS_vF.pdf

I have been buying since 2020, always averaging up. My anchor purchase was way back in 2020 and been adding usually once or twice a year ever since. Average price is now RM0.3125 sen.

RM0.225 (2020) > RM0.310 (2021) > RM0.335 (2021) > RM0.39 (2022) RM0.45 (Kraken shutdown in 2023) > RM0.42 (Kraken restart before official announcement) > RM0.47 (now)

I have averaged up at RM0.47. Long-term, I don't see much of a future given the lack of orderbook replenishment. But in the short to medium term, this looks attractive at current price levels. The risk-return pendulum is now in favour of getting superior returns at lower risk levels.

Thesis:

1. Commencement of full charter of Armada Sterling V - will trickle to bottomline from Q3 2024 onwards, roughly net profits of RM25mil to RM32mil.

2. Imminent charter contract extension for Armada TGT. It will either be a 2+5, or 1+1+1+... (individual annual extension for 7 years), or direct 7+0 extension. At the bare minimum, 2 years is all but confirmed, with a full 7 year extension highly likely eventually.

3. Subsea tieback to the Bressay field is imminent. Next year, there will be a return to drilling at the Kraken field. Taken together, this means the Kraken production will continue far into the 2030s and even beyond. Firm contract period ends in Q1 2025, the first year extension has been agreed. I anticipate continuous annual extensions, or maybe even a renegotiated long-term fixed contract.

4. Extension of the Armada Sterling II charter. The firm charter ended in Q1 2024 and it has entered the first annual extension period. I anticipate continuous annual extensions, or maybe even a renegotiated long-term fixed contract.

5. Debt overhang is all but removed. Bumi Armada has substantial capacity to repay the refinanced debt over the next 6 years from its cashflows from operations.

The above is not even taking into account potential new job win for the subsea vessels in the Caspian Sea (or even their potential divestment), nor does it factor in any new floating job win for Bumi Armada. There are a number of projects that might get awarded in the coming months/years that may add to the upside potential.

i. Shell CCS offshore Sarawak
ii. Sullom Voe FSRU in the North Sea
iii. Uniper FSIU/FCSIU in the UK (Bluestreak CO2)
iv. Madura FLNG
v. Akia PSC (upstream)
vi. Akia PSC (FPSO + FLNG)
vii. Additional PSC (upstream) in Indonesia
viii. Mid-size FPSO win - e.g. Salam-Patawali (Malaysia), Nam Du / U Minh (Vietnam)

Ananda's demise might cause some panic selling, but does not alter the fundamentals of the company. By and large, the professionals and executives run the show at his businesses, including at Bumi Armada. If anything, it will be a solid opportunity if this heads to the lower 40 sen region to buy in the face of solid fundamentals.

Source, rohank71?