“ Even though there has been no change to the contracted charter cash flows,
adjustment to the carrying value of Armada Kraken FPSO (impairment) was required
in Q4 2023 mainly due to the impact caused by accounting depreciation recognised
on a straight-line basis and the reduction in the charter revenue during the optional
extension period.”

Surely this amounts to accounting fraud? Armada Kraken’s carrying value has been inflated all this while. No changes to contractual terms. The lease revenue dropped was known right from the beginning!

Haha. Now that’s one hell of a f-you!

Also, a key thing to look out for is repayment plans for the RM1.5b sukuk due in Sep 2024.

12.30pm

A part of me hopes for something good from the results, but another part of me says don't expect anything out of the ordinary

But again, profits mean nothing really. With sustained "good" profits, the company will probably head closer to 70 sen. But to go beyond that (looking at RM1.00 and above), the mantra is "new contracts, new contracts, and new contracts". Can't run away from that.

Just got confirmation that Q4 2023 results will be released at 12.30pm on 28th Feb 2024.

Expectations would be of a net profit of ~RM200mil to RM220mil (after stripping off any one-offs). Anything above can be said to be a bonus, anything below will be a disappointment as the Kraken FPSO was back to 100% during the whole quarter.

ConocoPhillips is ready at last to start a FEED competition for a floating production unit at the Salam-Patawali oil project offshore Sarawak, Malaysia.

ConocoPhillips has worked quietly on this project for some years, with its efforts last year focused on pre-FEED technical studies performed by floating production, storage and offloading specialists, according to Kuala Lumpur sources.

Market suggestions were that Malaysia's MISC, Dutch company Bluewater and a few other contractors had been engaged in last year's pre-FEED work.

Now, the focus has turned to a FEED competition to be performed by a minimum of two parties, with ConocoPhillips currently going through the process of selecting those companies.

All the top-tier Malaysian FPSO companies are keen on a new contract with a quality client, including BumiArmada with its Indian partner Shapoorji Pallonji Energy, MISC and
Yinson Holdings, all of which are currently wrapping up the delivery of FPSOs on their books.

Other Malaysian companies like MTC Engineering are also keen, while Bluewater is in the mix too.

https://www.upstreamonline.com/exclusive/eagerly-awaited-malaysian-floater-project-advancing-as-oil-giant-narrows-contractor-field/2-1-1601411

Gabriel, is that a guess or you checked with IR?

Felix, this week or next week?

Yinson mulls US$1b funding round for unit before IPO, Bloomberg reports

https://theedgemalaysia.com/node/701570

Got me excited and hopeful for a while there!

False alarm, looks like a pump scheme across the sector in KLCI.

Good Q4 alone shouldn't shoot up the price. There has to be more to this, otherwise chalk it down to Mr Market's manic episodes.

Some signs of insiders purchasing after getting to know some good news (new contract?). Or could just be the crazed market gyrating.

Alas, we shall get some better clarity as to what they've been up to this week.

@Gabriel, anything specifically new you've identified? I don't seem to see anything new compared to last week.

Seems like the floating carbon storage (FCSIU) project is still being worked on. We should get an official announcement to Bursa Malaysia in H1 2024 if they manage to secure a firm contract. If we hear nothing by June 2024, safe to assume this venture is dead in the water.

Unfortunately not too familiar with the technical stuff, I'm trying to find out and understand more too.

But from what I remember in the AGM two years ago, I recall the CEO saying that tiebacks are good for Bumi Armada as it's considered a variation order and Bumi Armada earns additional revenue from that.

By going to gas from diesel, the operating costs would also decrease, but I believe this will be to Enquest's benefit as they pay for it.

The FPSO would be "greener" though, and that benefits Bumi Armada as far as ESG is concerned.

@Gabriel Khoo, I believe there will not be any lumpy write-back. Rather, kind of "credit" from the initial writedown is usually given by Enquest as "credits" for meeting top quartile performance at every year end. Doubt Bumi Armada gets it for 2023 given the transformer issues.

Guys, the reduction in Kraken FPSO lease rate for the option period is known long ago.

Link: https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=1758639

Simplified calculation:
Firm: USD1,400mil for 8yrs = USD175.00mil/annum
Option: USD924mil for 17yrs = USD54.35mil/annum

54.35/175 = 31.1% (i.e. reduction of 68.9% which matches Enquest's statement)

Note: When the contract runs into the option period, the asset is almost fully depreciated and the loan fully repaid. So while the revenue is 70% lower, the profit margins will be higher, and thus the impact to net profit contribution from Kraken would be lower than 70%.

Positives from the update:

1. Kraken FPSO issues relating to the HSP transformer malfunction is well and truly resolved, with production at 98% in the final four months of 2023.

2. Firm plans for two new wells to be drilled in 2025 at Kraken. Preparations will begin later this year.

3. Firm plans to tieback Bressay gas field to the Kraken FPSO.

4. 70% reduction in Kraken FPSO lease rate from 1 April 2025.

Points 2 - 4 taken together paints a positive picture for the continued charter of the Kraken FPSO.

Excerpts from Enquest's Operation Update that was just published:

2023 Review:

Kraken net production averaged 13,580 Boepd. This reflected high uptime before and after the failure of HSP transformer units during the first half of the year. Full production was restored in early August, with production and water injection efficiencies averaging 98% and 99%, respectively, in the final four months of the year. Further 2023 production gains were achieved by the acceleration and early completion of planned maintenance work while production at the FPSO was shut-in, and deployment of new transformers provides increased resilience to future production capacity.

2024/2025 Outlook:

Ahead of a return to drilling at Kraken in 2025, EnQuest will purchase selected long lead equipment required to facilitate the two-well sidetrack programme. Capital investments are also planned to lower operating costs and reduce future carbon emissions. These projects include a new stabilisation facility and an electricity power grid connection at SVT, as well as preparation for a future tieback of the Bressay field's gas cap to Kraken; displacing diesel that currently powers Kraken operations.

Work is expected to continue to develop a technical solution in order to access the c. 115 MMbbls of 2C resources at Bressay, which remains one of the largest undeveloped fields in the UK North Sea, including the potential for a gas tieback to Kraken as an initial development phase. The Group will continue to consider options around the full Bressay development, including incorporation of an additional partner to lower the Group's equity share of development cost.

The Group also expects unit margins to improve as the Kraken FPSO lease rate reduces by c. 70% from 1 April 2025, while the culmination of major projects at SVT will crystallise significant operating cost reductions and emission reductions in 2026 and beyond.

https://www.enquest.com/media/press-releases/article/full-year-2023-operations-update-and-2024-guidance

While we look forward to new business coming in, the utmost focus must be on extending current contracts. We have 3 contracts expiring in the next year or so:

1. Armada Sterling II - Firm charter expires in March 2024. 1-year extension has been confirmed to March 2025. Subsequent 1-year extensions are possible.

2. Armada TGT - Firm extension charter expires in November 2024. There has been regulatory approval for TGT field license extension to 2026, and the operator is applying for extension to 2031. FPSO charted will almost certainly be extended to 2026, up to 2031.

3. Armada Kraken - Firm charter expires in March 2025. Enquest is likely to exercise 1 year renewals. Field end of life estimated in early 2040s.

Latest Maybank research: https://mkefactsettd.maybank-ke.com/PDFS/364186.pdf

While Maybank assumes full bareboat charter from April 2024 (and nothing before then), in reality the FPSO will start earning around 80-90% of bareboat charter when it hits first oil.

@Felix chill it takes time to connect additional wells.

All wells are planned to be connected by May 2024, the peak oil production is expected at 45,000 barrels. Although, I won't be surprised we don't even got to 40,000 (though no fault of the FPSO).

I posted it to show that there has been some progress. The initial start-up oil production was around 7,000 barrels, so they must've connected a second well.

Q4 2023 financial results should be out by the end of next week.

Maybank has cut the TP from RM0.71 to RM0.65

At present, the total oil and gas production at KG 98/2 stands at 12,000 barrels of oil per day and 1.75 million metric standard cubic metres of gas per day, ONGC said.

https://www.ndtvprofit.com/business/ongc-expects-5-6-rise-in-oil-production-in-fy25

Happy New Year to all Bumi Armada shareholders, be it short-term traders or medium/long-term investors.

Here's to hoping in the Year of the Dragon, Bumi Armada fulfils it's potential. Looking forward to some concrete announcements with regards to green energy initiatives (FLNG, FSRU, FCSIU).

Everyone here talking about trends, oil price etc. Okay yes they impact short term price fluctuations, but the baseline long term trend is informed by the underlying prospects of the business. For which, Bumi Armada has yet to deliver.

I wonder when will there start being an exodus of long-term investors.

Every other day, they post some nonsense initiative (that has zero bearing on their core business) on LinkedIn.

Hopefully there's more to come from them.

Indonesia is the new focus area but not sure if there's going to be much if any profits there.

Also, Akia is a JV with Anada's private company, hope we're not subsidising his foray into upstream O&G.

I believe Bumi Armada participated in the bid for this FSO. So far, no official winner announced. Something to keep an eye out for perhaps.

https://theenergyyear.com/news/murphy-oil-takes-its-fid-on-vietnam-project/

@rohank71 you jinxed it brother!!!

Possible FSRU announcement due soon. Unsure about the details at this point in time.

Always funny how Bumi Armada has a high beta (influenced by oil price fluctuations) when in reality, the business operations and profitability is not impacted by the day to day oil price swings.

Nothing that we don't already know about. Salam-Patawali (Malaysia), Tuna (Indonesia) and Kelidang (Brunei) are all bid prospects for Bumi Armada but nothing definitive.

Meanwhile, the purported FPSO + FLNG for the Akia field are still years away. I've spoken with people within the industry, even if Bumi Armada and Pexco initiate exploration campaigns later this year, FID will only be achieved in 2 years time. Most likely, if ever Akia field materialises, the first oil at the earliest will be at or around the year 2030. Still a long time to go.

Southeast Asia’s #FPSO market remains buoyant with several tenders for FPSO vessels under way or expected to hit the streets this year to exploit both gas & oil assets.

But floater projects in the region could find themselves in competition with field developments elsewhere that also require FPSOs.

The Southeast Asian FPSO opportunities are expected to appeal to the likes of the Malaysian contractors #BumiArmada, #MISC, #Yinson and MTC, as well as India’s Shapoorji Pallonji Energy, Oslo-listed #BWOffshore and Netherlands-headquartered Bluewater Energy Services.

Malaysia itself likely will have at least two FPSO opportunities, with potential for a third;

- #ConocoPhillips is advancing its plans for an FPSO to exploit its Salam and Patawali oil discoveries on Block WL4-00 offshore Sarawak, East Malaysia. ConocoPhillips has been in talks with floater contractors including Bumi Armada, MISC, Yinson, Bluewater and BW Offshore. Technical studies, followed by #FEED, are envisaged for this FPSO contract, with the operator said to be eyeing first oil as early as 2026 if it can secure a redeployment (a timeline that could prove ambitious if ConocoPhillips opts for a novel floater based on a tanker conversion.)

- #PTTEP is looking for an FPSO to replace the ageing unit on its Kikeh oilfield offshore Sabah. The current charter of which expires in January 2028.

- the 3rd, IF #PetronasCarigali were to revive its stalled deep-water Limbayong-Bestari project offshore Sabah as a floater-based development.

Elsewhere in South East Asia region,

- FPSO for ultra-deepwater Kelidang field offshore Brunei Darussalam. Late last year ITB documents has been issued to several FPSO contractors for a leased floater with gas handling capacity of up to 450 million cubic feet per day and the ability to handle small quantities of condensate. Submission due in May 2024 and the contract award is expected later this year.

- #Inpex requires a very large FPSO for its Abadi natural gas project in the remote east of the Indonesian archipelago. This will be a newbuild vessel, which is likely to be owned and operated by Inpex and its partners. Inpex is understood to have held a pre-Q meeting late last year with prospective bidders for the Abadi FPSO.

- Also offshore Indonesia, #HarbourEnergy wants an FPSO to exploit its Tuna oil and gas discovery, located near the maritime border with Vietnam. Front-end engineering and design work for Tuna could commence this year but the exact timing of this floater tender remains unclear, as Harbour moves to bring onboard a new partner or partners to replace the departing Zarubezhneft of Russia.

- Another FPSO could also be on the cards for Thailand if US supermajor #Chevron finally gets its on-off Ubon gas condensate project off the drawing board.

- Indonesia, Akia PSC in Tarakan Basin, Bumi Armada and Pexco have formed a 50:50 JV. Its informed that Bumi will provide FPSO and FLNG units.

https://www.upstreamonline.com/focus/fpso-market-remains-buoyant-in-southeast-asia/2-1-1580573

Any idea on the status of W Hotel transaction?

On TGT, Revised Field Development Plan (“RFDP”) approved by MOIT on 9 January 2024.

Planning underway for a two-well TGT drilling programme, expected to commence 2H 2024.

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

Thank you for your email. As you may be aware, Vietnam recently enacted a new Petroleum Law on 1 July 2023 which aimed to enhance the approval procedures for implementation of petroleum activities. Under this Amended Law, Field Development Plans no longer need to be submitted to the Prime Minister for consideration, and final approvals can be obtained from MOIT.



While the new Petroleum Law was coming into effect, Pharos’ TGT RFDP was being put in front of MOIT for consideration, and was then submitted to the Deputy Prime Minister for approval, as reported in our Preliminary Results statement on 13 September 2023. In 4Q 2023, the Deputy Prime Minister had decided to delegate this responsibility back to MOIT. This approval was then granted by MOIT on 9 January 2024, as stated in our Trading & Operations Update earlier this week.



The recent approval from MOIT is the final stage of the process. The drilling of two TGT wells, as agreed in the TGT RFDP, is expected to commence in 2H 2024.

Begun, the end has.

@Eden I've been attending Pharos investor meets and asking questions. The TGT FPSO extension is pretty much a done deal till 2026.

There will also most likely be an extension to 2031, but subject to them getting a 5 year license extension from the Vietnamese government.

The TGT FPSO extension will be invaluable and might be a small boost to the share price when announced.

Let that sink in for a moment, guys!

2015 to 2024....we only secured once project. Armada Sterling V FPSO in India, and that too only as a minority partner with 30% stake.

I have they have a f2f AGM this year. I wanna see Gary in the eye. If I am still holding my shares at that point in time lah!

From my sources, I gather that Bumi Armada is plagued by incompetency at the moment. Hence, they are unable to secure any new contracts.

They have lost Cameia FPSO to Saipem despite completing the FEED and getting a Conditional LOA (CLOA).

They have also lost Grain Power Plant in the UK as a customer for their CCS / FCSIU.

From what I gather, no active FPSOs being bid for.

There are a few smaller gas FEEDs ongoing. Two tenders for FSRU (one as a JV partner).

Seems like bleak times lie ahead.

@Robert, I have no direct knowledge of Bumi Armada's active participation in the Abadi field. However, I do know they're working on a mystery carbon capture injection system for a gas field in Indonesia. Could this be what it's referring to?

From one of their recent press releases:

"Drawing from this experience, Bumi Armada is currently engineering a carbon capture injection system for a gas field in Indonesia."

Source: https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=140265&name=EA_GA_ATTACHMENTS

Acceptance tests usually take 3 to 6 months. The most recent FPSO to hit first oil was rather infamously, the Armada Kraken acceptance tests was a shitshow and hope no such repeat this time.

Hopefully we hear some good news soon from the Caspian sea regarding the two subsea construction (SC) vessels. Either them securing new work, or disposed off to prevent any further bleeding and help with paring down the debt levels even further. The vessels have been out of work since Q1 2023.

Honestly I don't think Bumi Armada is going to be a dividend play any time soon. If that's what you're looking for, look elsewhere. Soon as they can win some firm contract(s), they'll be taking on more debt to grow the business.