At least four specialists in the floating production, storage and offloading vessel industry are hoping to qualify for the bidders’ list for Harbour Energy’s Tuna FPSO opportunity in Indonesia’s Natuna Sea.

A turret-moored FPSO is part of the basecase development concept for the project, along with an offshore wellhead platform hosting the production wells.

There are at least four FPSO contractors which are in the running to be selected for Harbour’s bidders’ list for the FPSO including Bumi Armada, BW Offshore, HBA Offshore and Yinson Holdings, and possibly others, according to market sources.

Bumi Armada and BW Offshore both have experience in Indonesia as they have provided FPSOs there in the past.

It is understood that pre-qualification documents have been submitted to Harbour, and the UK-based operator will assess those documents prior to deciding which companies will bid for the lucrative FPSO contract.

Leased FPSOs contracts are typically multi-year charter agreements with the possible addition of an operations and maintenance arrangement.

Market sources said the potential Tuna bidders are offering either existing FPSOs that would be upgraded or conversion solutions whereby a tanker is converted into an FPSO.

The turret mooring system, which holds the FPSO in position and acts as a conduit for the oil and gas production, will be provided by a specialist contractor.

Companies with a track record in Asia including Bluewater, London Marine Consultants and Sofec are understood to be in contention for the Tuna turret mooring contract, said sources.

The Tuna block hosts at least two discoveries — Kuda Laut and Singa Laut — in water depths of up to 120 metres.

The block contains more than 100 million barrels of oil equivalent on a gross basis of which 55% is gas and 45% is liquids.

Harbour recently said it aims to submit an initial field development plan to the Indonesia authorities later this year.

Front-end engineering and design will then get under way, at which point the FPSO contracting, and other contracting processes, are likely to pick up pace.

Harbour said in its March 2022 results that the final investment decision is targeted in 2023.

Harbour also said first production from Tuna would be possible three years after the final investment decision at an initial rate of between 40,000 and 50,000 barrels of oil equivalent per day.

The Tuna production sharing contract is located in the Natuna Sea off northern Indonesia close to Vietnam’s maritime boundary. The plan for the produced gas is to supply Vietnam via a subsea pipeline.

Harbour’s early technical and commercial work has showed that capital expenditure and operating expenditure based on a leased FPSO would be between $20 and $22 per boe. The project will have a breakeven cost of $25 per boe.

Pre-FEED work has been completed by Indonesia’s Synergy Engineering.

Harbour’s 50:50 joint venture partner in the Tuna PSC is Russia’s Zarubezhneft and, in March, Harbour said it was looking at its options regarding Zarubezhneft’s participation depending on how the Russian invasion of Ukraine developed.

Harbour also said at the time the Russian company was paying its bills and the pair were working together on the plan of development.

There has been no substantial change in the situation since then, according to well-placed market sources, with Zarubezhneft still a 50% supportive partner in the project.

Following the drilling of two appraisal wells on the Tuna project in late 2021, Sergey Kudryashov, general director of the Zarubezhneft Group, said Zarubezhneft had been the first Russian oil company to receive support from the Indonesian government in offshore development.

https://www.upstreamonline.com/exclusive/fpso-contractors-angling-for-indonesian-project/2-1-1238466

Added at RM0.41

Bumi Armada stock price will never fail to confound me. Oil is trading at near record high levels, with supply set to be constrained for years/decades to come. More and more marginal fields are due to be developed using FPSOs going forward. The opportunities in the FPSO market are aplenty, and Bumi Armada is finally in the right place, financially-speaking, to take advantage of these opportunities. On top of that, there is a booming FLNG/FSRU and other green floating platforms market out there that Bumi Armada is also hoping to tap into. The company has cut its fat (read, the OSV vessels), reduced debt significant and can now re-gear when the need arises. Operationally, all its floating assets are sound. The performance at Kraken over the last 24 months has been admirable, given the dire situation in the 2017-2020 period. Additionally, Kraken and TGT1 are highly likely to see their contracts extended in 3 and 2 years time respectively.

I can't and won't make share price predictions, but Bumi Armada is severely undervalued at current levels. Why? I have no idea.

Quite inexplicable the share price movement. It's as if there is no positive, and in fact many negatives, priced into the share price.

Then again, if the share price continues to hover at around RM0.40-RM0.42 I might increase my position.

Balance sheet risks are no longer a concern, and the company is now all set to grow. Discounting all that, just looking at what Bumi Armada is already doing, and we're still rather undervalued. Add to the fact that Armada TGT will be renewed, as will Armada Kraken, I am just lost for words.

Based on current orderbook, revenue is expected to continue falling. Armada TGT lease revenue is recognised on a decreasing basis. I know Armada Olombendo and Armada Mediterenia revenue is recognized in a straight line basis. I'm unsure if Armada Kraken revenue recognition is decreasing or straight line. Armada TGT lease expires in 2024, Armada Kraken firm charter period expires in 2025.

OSVs have been practically sold (only 3 left, from 40+ just a few years ago), so revenue contribution from them will continue falling too.

Bumi Armada has two projects in hand, Armada Sterling V (for 98/2 project) and Mumbai Port FSRU. For both projects, the revenue will NOT be recognised by Bumi Armada, as they are accounted for as associate and JV respectively.

As such, given how things stand, revenue has pretty much flatlined, and will likely be falling in the coming years. But curiously, the net profit will continue inching up due to lower finance cost (as loans are pared down), lower depreciation charges and higher profit contribution from associates/JVs as the two new India projects come on stream.

So the actual SOP has increased from RM0.61 to RM0.65, but they have imposed a 30% discount premised on an imminent rights issue. I may not necessarily agree with this, as Bumi Armada is generating cash hard and fast, and might yet be able to fund the equity portion of one large project using internally generated funds, especially if they can sell off Armada Claire, as well as since Tranche 1 of their term loans has been almost fully repaid as of March 2022. Also, as shared during the AGM, Bumi Armada will be partnering with co-venturers for all large scale FPSO projects, so we can assume a 50-50 split in equity commitment, further lowering the likelihood of a rights issue (which CIMB seems to not have mentioned about).

CIMB Report (all investors should read as it is very detailed):

https://rfs.cgs-cimb.com/api/download?file=47d5fd0d-de0e-482a-b3f6-430801a1f4ba

TP Update:

Maybank RM0.58 (no change)
CGS-CIMB RM0.45 (from RM0.55)
Macquarie RM0.48 (no change)
Citibank RM0.68 (from RM0.65)
Kenanga RM0.63 (no change)
KAF RM0.60 (no change)
JF Apex RM0.53 (no change)
Hong Leong RM0.84 (no change)
RHB-OSK RM0.58 (from RM0.65)

So far mainly downgrades or no change to TP. Very weird, does not tally with the reality.

TP Update:

Maybank RM0.58 (no change)
CGS-CIMB RM0.45 (from RM0.55)
Macquarie RM0.48 (no change)
Citibank RM0.68 (from RM0.65)
Kenanga RM0.63 (no change)
KAF RM0.60 (no change)
JF Apex RM0.53 (no change)
Hong Leong RM0.84 (no change)


Curious to know why CGS-CIMB has downgraded the stock rather heavily.

TP Update:

Maybank RM0.58 (no change)
CGS-CIMB RM0.45 (from RM0.55)
Macquarie RM0.48 (no change)

Curious to know why CGS-CIMB has downgraded the stock rather heavily.

2) the usage of a Combine Cycle Gas Turbine (not sure where).

This is for their future prospects I believe, as part of their green initiatives.

1st TP Update: Maybank RM0.58 (no change)

Some key points:

- No necessity for further impairment for now
- The Mumbai FSRU project discussion period has been extended 3 mths to June 2022, and can be extended further. Announcement will be made once the contract is final.
- not focusing on redeployment opportunities, only new projects as it'd be easier to integrate green components
- Discussions ongoing to sell Armada Claire with a party, carrying value on the books is negligible and the asset has been fully depreciated in Dec 2021. If not sold, it will be scrapped by year's end.

No rights issue planned right now, but if a new contract is secured and the funding requires it, it will be done.

Compared to last year, noticeable shift in attitude. Very upfront that this year there will be growth, both in company's primary sector, FPSO, and also in the new green sectors (carbon capture, FLNG, FSRU etc). Bidding between 1 to 10 projects.

It falls under "Share of results of joint ventures and associates". There is no revenue contribution per say, just a direct profit contribution to the Statement of Income.

@Thirai, Bumi Armada does NOT recognise JV share of revenue as its revenue, this only comes in under the share of profit from JV/associates.

As such, the two new upcoming projects that should started contributing to earnings in the next 12 months, will not contribute to revenue.

Also, now that the debt levels are at a fairly secure level, Bumi Armada has the capacity to start taking on more debt to finance new projects. I am positive of a large, new FPSO contract within the next few months.

Time Series Analysis - https://i.ibb.co/5nmdWmw/armada-22-Q1-tsa.png

Table - https://i.ibb.co/1Gph9qf/armada-22-Q1-debtanalysis.png

Total core net profit of ~RM178mil.

On the whole, at first glance, the results are solid. This stock needs to be re-rated higher. I wonder why the market keeps discounting it.

wah liau nobody here even reads the announcement

which is?

So KNM sells a company it owns 100% of for RM1.03bil, greater than its market cap of RM570mil, and yet the stock doesn't even move up? ???

Expecting core net profit of ~RM180mil at least. Maybe even between RM200mil - RM250mil, as the OSV segment has been pretty much disposed. FPSO performance in Q1 2022 has been exceptional, and there was no OPEX this quarter, so there is some possibility that core net profit could reach up to RM250mil.

Further good news (must ask question during AGM):

EnQuest continues to work with its partners towards development of a Bressay field development plan (‘FDP’) throughout 2022.

If Bressey is developed using Kraken FPSO (which is the most likely solution), even more profits for Bumi Armada as it will use its existing asset for two fields. In fact, there is even a chance of a third field being developed using Kraken FPSO (Bentley), but that is still a couple years away from the field development plan being confirmed.

1) For Armada Kraken, this is amazing news. It means that more and more "credits" will be paid to Bumi Armada for the FPSO's uptime/performance/efficiency, resulting in higher profits. Production thus far has exceeded the top end of Enquest's production guidance for Year 2022. However, take note that there will be a long (2 weeks minimum) shutdown in Q3 2022, so expect profits to take a hit then.

2) For Armada TGT, this is great news. They fixed the gas compressor issue back in January 2022, and production this year has exceeded production last year due to the 4 new wells coming on stream. There are a further 2 wells to be drilled in Year 2022, so production will be further bolstered by that. The extension period ends in Year 2024, however it's pretty much a given that the FPSO will get a further extension from the client as the field has continued to produce well with minimal issues. Current production is at slightly above 15,000 bopd, so that's a really good sign that the client will extend the FPSO charter. The field license runs until 2029 (recently extended), so we can expect another 5 years of extension beyond 2024.

Promising updates on the FPSO performance/production with two clients:

1) Armada Kraken at the Kraken field operated by Enquest

During the first four months of 2022, average gross production was 28,173 Boepd. The floating, production, storage and offloading vessel continues to deliver top quartile performance, with production efficiency of 92% and water injection efficiency of 94%.

https://www.enquest.com/media/press-releases/article/operations-update-13

2) Armada TGT at the TGT field join-operated by Pharos Energy

Production from the TGT and CNV fields net to the Group’s working interest averaged 5,900 boepd from 1 January to 30 April 2022. The Group’s Vietnam production guidance for 2022 remains unchanged from the Preliminary Results announcement on 16 March 2022 at 5,000-6,000 boepd.

In the period, production from TGT averaged 15,229 boepd gross and 4,518 boepd net to Pharos. CNV production averaged 5,527 boepd gross and 1,382 boepd net to Pharos.

On Block 16-1 – TGT Field, two additional development wells are planned to be drilled in H2 2022.

https://www.pharos.energy/investors/press-releases/2022-agm-trading-and-operations-update/

Should be lunch time release as the AGM is at 3.30pm.

Quarter report out on Wednesday. Expecting a record quarter.

https://media-exp1.licdn.com/dms/image/C4E22AQE6YR2gz-Shgg/feedshare-shrink_1280/0/1652419874641?e=1655942400&v=beta&t=if2nSj2p858DoBIy153Edd6jWf1UI0v6_tgdLDgf6oI

Massive new FPSO project incoming. Bumi Armada is looking to fill in over 50 positions supporting this project.

Announcement to Bursa Malaysia should be due within the next days/weeks.

Three leading international contractors or consortia are battling it out to provide a prized floating production, storage and offloading vessel required for Eni’s 1 billion barrel deep-water Agogo project offshore Angola.

Multiple people familiar with the development told Upstream that up to three players are said to be separately carrying out front-end engineering and design studies on the FPSO project, with the price offers for the project’s execution phase likely to be submitted later this year.

Those chasing the FPSO lease contract are said to include Malaysian players Bumi Armada and Yinson as well as Italy’s Saipem, one person said.

Malaysia’s MISC is likely to be involved in a grouping with Saipem, he added.

A second source familiar with the development suggested FEED studies are nearing their completion and the players are said to be preparing commercial offers, as it moves into the engineering, procurement and construction phase.

Up for grabs is a charter contract to supply an FPSO vessel — plus associated operations and maintenance services with a capacity of 120,000 barrels per day, Upstream understands — with a storage capacity of about 1.6 million barrels.

Another FPSO market watcher said Eni had earlier indicated the floater could be required for a period of up to 20 years, but the charter period of the Agogo FPSO could not be confirmed by Upstream.

Eni, Bumi Armada, Saipem and Yinson had not responded to Upstream enquiries about the Agogo project before publishing.

Upstream reported in July last year that the Italian major had hit the market with initial enquiries for the FPSO.

The Agogo project signals that upstream activities are picking up in Angola after years in the doldrums, with other projects on the move including TotalEnergies’ FPSO-based Cameia-Golfinho scheme on Block 21 — following a similar schedule to Agogo — and a shallow-water gas project, also operated by Eni.

Several subsea tie-backs and a swathe of development and infill drilling programmes are also being progressed, while onshore and offshore licensing rounds have attracted a decent number of bidders, as has a farm-out process by state-owned Sonangol.

Located in the far north-west of Block 15/06, Agogo is currently producing about 20,000 bpd of oil as part of an early production system (EPS) involving a 15-kilometre subsea tie-back to an existing FPSO.

There had been plans to boost output from the EPS to 30,000 bpd by 2023, but the status of this project is unclear.

First oil from the new deep-water project is expected to flow in 2026, Upstream understands.

The EoI floated last year mandated that the FPSO hull must not exceed 35 years of age at the end of its 20 years' operational and service life.

Agogo holds oil resources of about 1 billion barrels in place, Mario Dias, Sonangol’s director of E&P said last year during a presentation on the state-owned player's farm-out activities.

Block 15/06 currently hosts the N’goma and Olombendo FPSOs which, together, tap eight fields and produce about 190,000 bpd, according to Eni’s website.

Eni has a 36.84% stake in Block 15/06 and is partnered by Sonangol on 36.84%, with China's state-owned Sinopec on 26.32%.

https://www.upstreamonline.com/exclusive/feed-frenzy-three-chase-fpso-deal-for-eni-s-for-1-billion-barrel-angolan-project/2-1-1216730

FFU questions raised were never satisfactorily addressed, were they?

An open and shut case, and pretty much nothing is done.

What a laughing stock. Serba Dinamik is just a $#!tshow. I hope all those responsible for the grave fabrication of the facts and figures will rot in jail. RM3mil fine is nothing, the it is but a small drop in the bucked for the White Rajah of Sarawak

Limbayong FPSO is no longer an interest to Bumi Armada. The sole bid was submitted by a JV comprising of Shapoorji-MTC.

This is a CIMB report on Yinson, but it is recommended reading for anyone with an interest in the FPSO space, which includes Bumi Armada investors: https://rfs.cgs-cimb.com/api/download?file=d559fd30-6fdc-479b-8c20-ebe0acb5ac6f

Fantastic write-up cruger, thanks for sharing!

From JPM:

Bumi Armada likely to be involved in Harbour Energy’s Tuna FPSO in Indonesia. Suppliers of leased FPSO vessels are preparing for a tilt at Harbour Energy’s Tuna FPSO opportunity in Indonesia’s Natuna Sea. The Tuna block contains at least two discoveries, Kuda Laut and Singa Laut, in water depths of up to 120 metres. Numerous potential FPSO suppliers are expressing an interest in the Tuna project, and Harbour wouldcontinue to test the FPSO market and then select, later this year, up to three competing bidders. An award of an FPSO contract is possible by 3Q23. FPSO contactors, such as BumiArmada, BW Offshore and Saipem (all recent suppliers of floaters in Indonesia), are likely to be interested.Harbour mentioned that first production from Tuna would be possible three years after an FID at an initial rate of between 40,000 and 50,000 barrels of oil equivalent per day. The Tuna permit is located in the Natuna Sea off northern Indonesian close to Vietnam’s maritime boundary. The plan for the produced gas from the project is to supply Vietnam via a subsea pipeline. Total capital expenditure will depend on whether the FPSO is leased or purchased, with capex and opex based on a leased FPSO to be between $20 and $22 per boe.The project will have a breakeven cost of $25 per boe.(Upstream, 25thMarch’22)

https://rfs.cgs-cimb.com/api/download?file=ff2a3f6c-f1cd-44d3-9637-18fe6f4d49ac

Any idea about Yinson's bids in Angola? There is Eni's Agogo, Eni's Chissonga, BP's Block 31 and Total's Cameia-Golfinho.

Anyone can share more light on this please, thanks!

Anyone have the full TheEdge story?

I mean Serba is hardly a Bumi company, owner is an ethnic chinese...

Bought a few additional lots at RM0.415.

Enquest posted their results for FY2021: https://www.enquest.com/media/press-releases/article/2021-full-year-results

Very good performance by Armada Kraken! Also, going forward, they are doing assessments if it makes sense to tie back other undeveloped nearby fields, namely Bressey and Bentley, back to Armada Kraken. At the same time, they will commence with new wells being drilled in the Kraken field in year 2023.

All in all, the picture looks good for Armada Kraken. Performance issues have been sorted. Should be good contribution to earnings in Q1 and Q2, but Q3 will see a dip as there will be a major scheduled maintenance of 2 weeks during UK summer time.

For the KG 98/2 project in India, we can see the status summary of latest progress as of Feb 2022 at the following link: http://www.cspm.gov.in/ocmstemp/PROJ_SUMMARY?prcd=N16000247&stat=O

The FPSO project (Package IV) is the further along at 81.68% compared to the other 4 packages (total 5 packages awarded in total).

Lots of positive news for Bumi Armada recently actually. All the more baffling for the fall in share price, as the company has confirmed two key matters, that are:

1) The proceeds from the 3 ice class vessels sold in Russia had already been received in full and used to pare down debts in January 2022.

2) The two SC vessels in the Caspian Sea are not materially affected from the Russia-Ukraine war.

Now, on to the positive news:

1) US$50mil contract secured with Lukoil for the two SC vessels. Recall, these SC vessels were sitting idle for more than two years! They've been incurring depreciation, impairment and other misc charges. Now, with the contract, we expect it to cover the depreciation and other misc fixed costs (such as salaries), and also no further impairment. On top of that, we can expect minimum of 10% net profit margin. All things said, this will reverse the losses, and lead to some profits. So the net impact to the bottom line won't just be the 10% net profit margin, but rather the 10% + the losses sustained the per quarter in the past.

2) Mumbai Port FSRU contract is going ahead as planned, according to various Indian sources. It's a small 50-50 JV project with Shapoorji that will see at most around US$5-8 mil of net profits to the company per year, but still something.

3) TGT field is very healthy in Vietnam. Field operators seeking to extend field license from the Vietnam government till 2031 (they already have a prior extension to 2026). Current FPSO contract is only until Nov 2024. Very high chances of further 2-7 years extension, and this is further strengthened by the fact that there is active drilling going on at the field. In 2022 4 new wells were drilled, and in 2023 2 new wells will be drilled. All in all, this will inevitably extend the production plateau, benefitting Bumi Armada.

4) Active bidding for 2 contracts in Angola. One is with Eni in the Agogo field in Block 15/06, where Bumi Armada already has a FPSO, the Armada Olombendo. Another bid is with TotalEnergies in the Cameia-Golfinho field. For this, their competitors are MISC and Yinson. Strong chance Bumi Armada secures either one project. For the Eni project, they stand a strong chance as it is a field in which they already have an existing FPSO. For the TotalEnegies project, a strong chance as Yinson and MISC are busy with their multiple Brazil projects. With the improvement in the debt profile and sale of OSV assets (and likely sale of Armada Claire FPSO), it is possible that Bumi Armada could take on one of these projects (but not both) without the need for a rights issue.

5) Bumi Armada along with Shapoorji are unlikely to be penalised for the delays surrounding the Armada Sterling V FPSO, as the issues there seem to be with field owner ONGC. On the FPSO side, Bumi Armada-Shapoorji appear to be on-track to deliver their side of the bargain.

Also, read in the JP Morgan report that management has indicated Armada Claire will be sold off within the next few months. No other research report mentioned that the sale would occur in the matter of months.

I'm still trying to understand posts here that talk about how if oil prices skyrocket, Armada's price should go up.

Armada's revenue is not dependent on oil prices. If oil goes up to USD200 per barrel, its revenue is going to remain unchanged.

What it does need is oil prices to be at a minimum level so that it's clients (whose livelihoods are dependent on oil prices) can pay the bills.

As long as oil prices do not crash, Armada is in a good position.

Oil prices skyrocket, makes absolutely no bloody difference for the company.

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

Yes, true, but higher oil price environments means three things:

1) Lower likelihood of operators defaulting on payment and/or terminating the contract prematurely due to cashflow and/or yield issues
2) Higher likelihood of contract extensions being negotiated and exercised as it becomes more cost effective to extend the life of existing producing assets by drilling new wells and tying back new fields
3) Higher number of sanctioned projects, meaning more opportunities for FPSO operators such as Bumi Armada to get new contracts

From Bumi Armada IR:

Thank you for reaching out.

The Group’s day-to-day operations in Russia has not, at the moment, been materially affected by the conflicts between Russia and Ukraine. We would also add that operations in Russia form only a minor part of the Group’s overall operations.

We stand guided by the applicable Listing Requirements threshold for disclosures. Rest assured that BAB will make the necessary disclosures if there are developments that warrant an announcement or disclosure to Bursa as per the applicable Listing Requirements.


Thank you.

Bumi Armada Investor Relations

Full PDF: https://www.pharos.energy/media/y3rfhnaj/final_pharos-2021-preliminary-results_16-mar-2022.pdf

Pharos Energy FY2021 results have been released. They are part owners of the TGT field Vietnam, at which Bumi Armada has an FPSO. The extension contract for the FPSO runs until 2024, but very strong chance of further extension as new wells have been successfully drilled, and more are expected to be drilled in Q3 2022. Field extension had been previously granted to 2026 I believe, but now Pharos Energy says that a further extension will be applied from the Vietnam government, until 2031.

Meaning which, Armada TGT FPSO has potential upside in terms of contract length of between 2 (year 2026) to 7 years (year 2031), from the end of the original extension to 2024.

So much b*lls**t from Bumi Armada management. Can do exclusive session with CIMB and other analysts, but cannot provide this information to their public shareholders via a Bursa Malaysia announcement.