Posted by Robert Waters > 2023-06-14 12:03 | Report Abuse

So, they have ONLY 1 (one) healthy transformer on the Kraken, that is online now. 3 other failed. One failed likely long ago, another on May 20, and one the day after, when restarting.
That is only best guess. But it is all we have. Anouncement is purposely vague.

Now, it is fun to live on the edge, isn't it ? Production may stop at any time and there will be absolutely no mean to restore it. But there is some positive too. While FPSO is producing, the procurement and operations people are making calls, emailing, catching up with friends. They may be even calling in a favor. Search is on. So replacement will be found eventually. My bet is they find replacement or fix one before the last one fails. And every day is working in our favor. With shut in, every day was increasing our loss. That is changing loss into a possible win.

Posted by alenac > 2023-06-14 12:34 | Report Abuse

Looks like problems may not be resolved that soon.

Posted by Johnchew5 > 2023-06-14 12:58 |

Post removed.Why?

Posted by nikicheong > 2023-06-14 13:13 | Report Abuse

For now, they are operating at roughly 50% capacity. Will take a while (anywhere between 1 to 6 months) to get back to full production.

The good thing is, at 50% production, Bumi Armada will still get paid. Loss per day will be around RM1mil, compared to loss per day of around RM2mil before this during the shut-in.

The worst case scenario is over, now a matter of how fast the faulty transformers can be swapped out.

The good thing is, these transformers cost less than RM1m each, so rather cheap.

Posted by sense maker > 2023-06-14 14:11 | Report Abuse

Are you sure they have achieved 50% capacity production? Any link for n this info?

Posted by ageetkumar > 2023-06-14 14:39 | Report Abuse

It is not the cost the transformer that is high. But rather the cost of getting it offshore, lifting it, and installing it on the FPSO that will be many times over the cost of the transformer itself. But even that will be nothing compared to the loss incurred from charter hire loss for a prolonged period even in weeks.

Posted by Robert Waters > 2023-06-14 14:45 | Report Abuse

Reservoir is already depleted. 50% of capacity is the new 100%. Nobody will attempt to produce 80 Boepd any more. Your guess is as good as mine about what can be achieved.
One note is that there are 3 x 33% charge pumps (each with transformer). So even 1 pump is capable of 80 / 3 = 26.7 Boepd. That is good enough, these days. I recall production was not high lately, though availability was 95%.

Even at 33% we are relatively ok, no comparing to shut in. At least reservoir is not deteriorating, pipes are cleared of plugs, doglegs are avoided, corrosion prevented to some extend, etc.

Posted by Robert Waters > 2023-06-14 14:49 | Report Abuse

Made on basis of official information submitted to the UK Gov. May not be up to date.
___________________________

EnQuest’s Kraken Field Description
EnQuest’s Kraken Field is in the northern North Sea in UKCS Block 09/02b, approximately 126 kilometres (km) east of the nearest UK coastline and approximately 46 km west of the UK/Norway median line, in a water depth of between approximately 108 metres (m) and 125 m.

The Kraken Area is developed as three separate fields, Kraken North, Kraken Central and Kraken South. A total of 14 horizontal production wells and 11 horizontal water injector wells are tied back to a Floating Production Storage and Offloading vessel (FPSO). Because it is a ‘heavy oil’ development, all the production wells require artificial lift using Hydraulic Submersible Pumps (HSPs), which are powered from the FPSO.

The production wells are tied-back to four production manifolds, each connected to two production flowlines, a HSP power fluid flowline and a control umbilical tied-back to the FPSO; and the water injection wells are tied-back to three water injection manifolds, each connected to a single water injection flowline and a control umbilical tied-back to the FPSO.
Oil is exported via a shuttle tanker on a fortnightly basis. The anticipated field life is 25 years, and the maximum recoverable reserves are estimated to be 185.2 million standard barrels (MMstb) or 24.72 million tonnes of heavy oil. Based on the projected P10 (highest) recovery rate, it is estimated that oil production in the first year of approximately 11,100 tonnes per day (t/d), increasing in the second year to approximately 11,900 t/d, will be gradually decreasing to approximately 819 t/d by 2039.

The facilities are gas deficient from start up, and power demand is initially met using the associated gas and crude oil as fuels, However, EnQuest proposed to import gas via the Bressay / Vesterled pipeline system from 2018. For most of the field life, the FPSO will require approximately 240 t/d of crude oil or 2.8 million to 3.1 million cubic metres (m³) of imported gas as fuel.

Posted by sense maker > 2023-06-14 15:03 | Report Abuse

Fraught with relatively complex issues since inception, just hope this issue will be solved and production resumes at meaningful levels within 3 months, if not already.
Otherwise, anything can happen when the cards start to fall: prolonged production outages, huge financial losses, contract termination by customer, impairment loss, share plunging to 30sen.

Posted by rr88 > 2023-06-14 15:08 | Report Abuse

Pump transformer kaput. Repair also still kaput. Then announced. Share price dove down free falling. This is not on the shelf item like gula and gandum. It is called a long lead item. Long time to arrive after order - 4 to 6 months. Idling hegeh2 no production. Share price will get worse b4 it gets better.

0.415 bottom
Rebound top now 0.45/0.455.
Will retest 0.415 and break.

Posted by Zhuge_Liang > 2023-06-14 15:14 |

Post removed.Why?

Posted by luckyfrankie > 2023-06-14 15:29 | Report Abuse

Zhuge, can buy using shoppee pay later

Posted by Kakume > 2023-06-14 15:41 | Report Abuse

I think they try to execute the shut down Turn around TAR maintenance which suppose to be in Q3, to minimize the lost time, but TAR also need to be pre-prepared with all those parts/spares, which might not be available in short notice, overall, situation is very challenging, hope to hear some update from EQ Forum, maybe someone working on FPSO can share some update, Bumi is not going to make any announcement soon unless it is a positive one, which is not forth coming at this time.

Posted by Kakume > 2023-06-14 15:45 | Report Abuse

I think we should wait for EQ announcement, as previously they said no product material impact, but longer the pump is down, the more production down, it will have material impact sooner. We hope the transformer is as easy as changing car oil filter. LOL

Posted by Kakume > 2023-06-14 16:20 | Report Abuse

1 day $450,000 loss income, 30 days = RM60,000,000 loss. or RM24M to the bottom line each month.
After this, the rate will go down due to SLA uptime criteria, that is why Bumi know this is going to be very material impact to the earning.

Posted by David Gunter > 2023-06-14 16:45 | Report Abuse

rr88 is a piece of … I remember he saying sell Supermax at 3.5, 5 etc but he could only buy 1000 units of HLT! He might forget but the internet doesn’t

Posted by Johnchew5 > 2023-06-14 16:57 | Report Abuse

Woh HLT 3 times Limit Up in a week during 2020 ???

Posted by Johnchew5 > 2023-06-14 16:58 |

Post removed.Why?

Posted by luckyfrankie > 2023-06-14 17:03 | Report Abuse

is Mr. Gary Neal participate in last minute ?

Posted by Felix888 > 2023-06-14 17:06 | Report Abuse

Wow Armada close green today and yesterday. Let's celebrate it! 🎉🎊

Posted by David Gunter > 2023-06-14 17:08 | Report Abuse

You don’t want to know how much I made from TG, Supermax, Harta, Care+ and Comfort

Johnchew5
Woh HLT 3 times Limit Up in a week during 2020 ???

Posted by David Gunter > 2023-06-14 17:09 | Report Abuse

HLT didn’t limit up

Posted by nikicheong > 2023-06-14 17:29 | Report Abuse

@Kakume

"1 day $450,000 loss income, 30 days = RM60,000,000 loss. or RM24M to the bottom line each month.
After this, the rate will go down due to SLA uptime criteria, that is why Bumi know this is going to be very material impact to the earning."

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

Please get your facts right. USD450,000 day rate charter is currently being paid to Bumi Armada. However, due to production deficit and performance issues (given that only 1 of 4 transformer is online at present), Bumi Armada will have to issue a credit for some of that revenue, for failing to meet the SLA. To be conservative, lets assume the credit is 50% of the day rate charter.

This means, at present, Bumi Armada is effectively earning a topline revenue of USD225,000 per day from Enquest.

Production needs to be above 95% to earn the full day rate charter. If performance is higher than 95% there is also a bonus paid out in Q4 of every year.

We can forget about the bonus for this year, it ain't happening.

Something that softens the blow a bit is that the maintenance scheduled for August 2023 has been brought forward. Since the maintenance was due to be conducted on a single train basis, now is the perfect time to do it since the FPSO is limited to single train operations for now. Of course, the maintenance might end up taking slightly longer since it is being done ahead of schedule, but no major issue since Bumi Armada will have more than sufficient time to get it done.

The FPSO was offline for 22 days = loss of revenue of ~RM45mil (and consequently loss of profits of the same amount).

Each day more the FPSO is offline, there will be a loss of revenue and profits of around RM1mil.

As to the cost to get the transformer fixed, lets pencil in another RM15mil conservatively (might end up being a lot lower as the transformer itself costs <RM1mil, but I'm factoring other related costs such as shipment, lifting etc).

If Bumi Armada takes 3 more months to fix this issue, there will be a total hit of:

RM45mil + 90 * RM1mil + RM15mil = RM150mil.

This is a conservative estimate, might be slightly lower than this. Given an expected core net profit of RM800m for FY2023, this will result in a revised core net profit of RM650mil. Still not too shabby. The loss of RM150mil will be ultimately worth just 2.5 sen per share.

You can play around with the numbers as you wish and come to your own conclusion.

Posted by nikicheong > 2023-06-14 17:32 | Report Abuse

If Bumi Armada can fix the issue within the next 4 weeks, then of course the profit hit will be lower. And consequently, if they take longer (e.g. 6 months) to fix the problem, then the profit hit will be significantly higher.

If the final remaining transformer also fails, then of course that's another huge problem.

Since 3 transformers have failed for a relatively new vessel (<6 years operations), there might also be a possibility of structural defects that will make it unlikely for the option periods to be exercised, or to be tied back to the nearby Bressey and Bentley fields.

Posted by nikicheong > 2023-06-14 17:33 | Report Abuse

I'm actually still surprised they have not announced that the FPSO has come back online to Bursa Malaysia. As far as I can tell, this is a material development. They can always issue another update when the FPSO is back to full health.

Posted by nikicheong > 2023-06-14 17:42 | Report Abuse

Actually Bumi Armada has a track record of dragging their feet on material announcements. In 2017, when FPSO Olombendo achieved first oil, the share price started moving up before Bumi Armada's official announcement due to informational asymmetry. First oil was achieved on 8th Feb 2017 while the announcement was only made on 17th Feb 2017. Insiders already knew this and the price was pushed up over 10% before the official announcement came.

https://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=77852&name=EA_GA_ATTACHMENTS

All of you guys here are privy to what we might as well term as "insider information", although there is nothing illegal about it as the information was sought through legal channels.

That's why investing in Bumi Armada is rewarding if you have your eyes and ears fixed on the right places.

Posted by OrlandoOilSemiconIoT > 2023-06-14 18:55 | Report Abuse

If 4 and 1 transformer out long ago like years ago.. how hit 95% availability in recent past quarters?

Based on 3 or 4?

Posted by OrlandoOilSemiconIoT > 2023-06-14 18:58 | Report Abuse

Or 2?

Posted by Felix888 > 2023-06-14 19:28 | Report Abuse

I'm not expert in topside but based on the information from the EnQuest chat (could be layman like many of us) 2 transformer are enough bring the production up to 100%. 1 transformer able to produce 50%. The other 2 unit transformers are redundancy or spare units. Now the problem is 3 out of 4 already burnt out, only 1 still working.

Why the 2 spare units also gone ? Armada Kraken Maintenance department responsible for this.

Posted by OrlandoOilSemiconIoT > 2023-06-14 19:49 | Report Abuse

OrlandoOilSemiconIoT

Or 2?

49 minutes ago


That is why... 1 appears as 50%

Posted by OrlandoOilSemiconIoT > 2023-06-14 19:51 | Report Abuse

Indeed overdesigned overbuilt... the reason fo 1.5b impairment?

Original will never realise its full potential ....

Posted by OrlandoOilSemiconIoT > 2023-06-14 19:58 | Report Abuse

Spare also kong....

Act of god or management failure?

Posted by TCH1186 > 2023-06-14 20:01 | Report Abuse

just collect sure up

Posted by TCH1186 > 2023-06-14 20:01 | Report Abuse

50c cabut

Posted by Felix888 > 2023-06-14 20:20 |

Post removed.Why?

Posted by nikicheong > 2023-06-14 20:26 | Report Abuse

@Felix888, please get your facts right.

This is from Enquest IR:

"There is a mechanism under which Bumi compensate EnQuest through availability credits, with the basis being performance against daily targets for potential production. It’s not quite as simple as equating production level to lease day rate paid, but retains material incentivisation for Bumi to perform."

Posted by Felix888 > 2023-06-14 20:32 | Report Abuse

My estimation + Niki calculation earlier
RM45mil + 90 * RM1mil (3 months ) + RM15mil+ 30% ( 500k*4.4) * 30 days * 3 months = RM 209 mil

Posted by Felix888 > 2023-06-14 20:36 | Report Abuse

I could be wrong as we just layman reading Analyst report and we don't have access to the contract terms. Let's wait for Armada`s announcement.

Posted by nikicheong > 2023-06-14 20:41 | Report Abuse

Felix you are double counting what I've already done man. And I'm being more Conservative assuming a 50% haircut as opposed to your 30% haircut

Posted by Felix888 > 2023-06-14 20:42 | Report Abuse

Niki I believe you also read this posted in EnQuest chat. Looks like a reply from EnQuest IR. Last sentence "
"that mechanism will be in play going forward." What does this mean?

RE: Kraken back online13 Jun 2023 11:06
The HSP was restarted on Sunday evening as planned, with oil production resuming on a phased basis yesterday. We will look to ramp up production in the coming weeks.

Bumi were on a zero day rate since 48 hours following the shut in but will be paid now that we are back online. There is an availability credit mechanism in place at Kraken whereby Bumi compensate us based on reduced/restricted production, so that mechanism will be in play going forward.

Posted by Felix888 > 2023-06-14 20:44 | Report Abuse

I continue yours Niki, first 3 months 50% haircut, remaining 3 months 30% haircut until end of this year.

Posted by Felix888 > 2023-06-14 20:50 | Report Abuse

Remember in year 2017 to year 2019 Armada could not get final acceptance from Enquest. Enquest just get 70% to 80% of bare boat rate. After 3 years in 2020 Enquest only started paying the full charted rate.

Posted by bingoman > 2023-06-14 22:15 | Report Abuse

45 sen, buy and collect

Posted by Moneymore > 2023-06-14 23:03 | Report Abuse

Heard not a good sign so far, transformer order takes time for delivery.

Posted by KimSua > 2023-06-15 08:20 | Report Abuse

shorts at ~590K yesterday. Very mild compared to 3-6 mil daily before, buying power has also reduce. Downside risk is still high if no clear positive news.

Posted by Ravi Kumar > 2023-06-15 08:20 | Report Abuse

More BS in the morning like you know it all. The port congestion and long lead times have further been improved these days. No need heard, heard from where? Your foot or the fish that swam to the oil field? LOL Very credible

Moneymore

Heard not a good sign so far, transformer order takes time for delivery.

9 hours ago

Posted by Kakume > 2023-06-15 09:16 | Report Abuse

No news is bad news Run..

Posted by Felix888 > 2023-06-15 09:19 | Report Abuse

BA finance CEO cracking his head calculating financial impact. Lots of discussion with EnQuest also. Don't expect any announcement soon.

Posted by Ravi Kumar > 2023-06-15 09:37 | Report Abuse

This is why I tell myself never to listen to snake oil sales people

Felix888

BA finance CEO cracking his head calculating financial impact. Lots of discussion with EnQuest also. Don't expect any announcement soon.

16 minutes ago

Posted by Macgyver11 > 2023-06-15 11:21 | Report Abuse

Expected price to down lower further. 2nd qtr most probably Armada can escape from low earning but believed 3rd qtr onward budgeted in the kraken shutdown. Hopefully won't go back to where it start earlier (below 0.30c). Just 2c.