Posted by Robert Waters > 2024-02-13 17:29 | Report Abuse

Welcome back to our counter grindstone.
Well, it was a slow day today.
Oil price recovered, and we are now at $82+
Target for this counter (BAB) is MYR 0.82 for me now.

On the other side ....
We have limited time for BAB price appreciation.
Every few months they come up with a new disaster.
Kraken failure, huge impairments, lost court cases, no new contract from Total for Cameia, Sterling V delays, empty green intitiative with no follow ups, etc.
Let us hope that there is no new catastrope until earnings and a few days after.
That will give us a chance to collect a small reward.
Good luck in the new chinese year to all.

Posted by chankahmun77 > 2024-02-13 17:46 | Report Abuse

Robert Waters,

I like the way you determine the fair price of BAB. 😁

Posted by nikicheong > 2024-02-14 17:10 | Report Abuse

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

Posted by nikicheong > 2024-02-14 17:12 | Report Abuse

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

Posted by nikicheong > 2024-02-14 17:13 | Report Abuse

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

Posted by MM78 > 2024-02-14 18:46 | Report Abuse

My patience for Bumi Armad is wearing very thin lately after 9 years of holding it as flagship investment. Apart from strong FCF paying down the borrowings fast, I have not seen much business progress in Armada in the last 3-4 years. I am waiting for the coming quarterly report before deciding what to do with Armada. Reflecting back, the only saving grace I have for investing in Armada is to trade some portion of my holding over the years and buy back when it dropped back again just to compensate for no dividends over the years. I do made good money out of this mode so far.
Though not 100 % comfortable doing this as I had fairly strong belief in its business model but it seems the successive MDs have not been able to grow the company well enough to create more values. The Board of Directors need to be shaken out for successively selected mediocre MDs in the last 9 years.

Posted by Felix888999 > 2024-02-14 19:01 | Report Abuse

This 12,000 barrels is just 20% of planned capacity...🤐

Posted by nikicheong > 1 hour ago | Report Abuse

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

Posted by vespa > 2024-02-14 20:32 | Report Abuse

Armada is a hard slog

Posted by nikicheong > 2024-02-15 09:34 | Report Abuse

@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.

Posted by nikicheong > 2024-02-15 09:44 | Report Abuse

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.

Posted by nikicheong > 2024-02-15 09:50 | Report Abuse

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.

Posted by rohank71 > 2024-02-15 10:52 | Report Abuse

tq Niki for the insight.

Posted by MM78 > 2024-02-15 11:40 | Report Abuse

Tq Niki for your latest brief on Armada Sterling II, Armad TGT and Armada Kraken respective extensions. You are very helpful to share your insights.💎

Posted by nikicheong > 2024-02-15 15:22 | Report Abuse

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

Posted by nikicheong > 2024-02-15 15:36 | Report Abuse

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.

Posted by Felix888999 > 2024-02-15 15:46 | Report Abuse

Niki point #4 is not good news for Armada but good news for Enquest.

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

Posted by vespa > 2024-02-15 15:51 | Report Abuse

These asses had better get their act together to replenish loss revenue and none of this green mumbo jumbo that would need huge lead times

Posted by nikicheong > 2024-02-15 15:55 | Report Abuse

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%.

Posted by vespa > 2024-02-15 15:57 | Report Abuse

Point taken

Posted by Felix888999 > 2024-02-15 18:42 | Report Abuse

Thanks for the explanation Niki! 🙏

Posted by Gabriel Khoo > 2024-02-15 19:26 | Report Abuse

Can we expect some write back from kraken this year ?

Posted by rohank71 > 2024-02-15 20:20 | Report Abuse

extension period is free money for BA. no loan and no depreciation charges... almost as good as profit less OPEX

Posted by nikicheong > 2024-02-15 20:51 | Report Abuse

@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.

Posted by Gabriel Khoo > 2024-02-15 21:38 | Report Abuse

Thanks nik. Can you elaborate bit more the update you share under item no. 3 above. Interesting to know how it actually work. Does all existing FPSO support gas field. Its looks like more and more gas will be tie to FPSO going forward

Posted by nikicheong > 2024-02-15 22:23 | Report Abuse

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.

Posted by MM78 > 2024-02-16 10:16 | Report Abuse

Thanks Niki for your latest update of Kraken's potential development.

Posted by sugumaran > 2024-02-16 15:53 | Report Abuse

HSR

Posted by zhang > 2024-02-16 15:56 | Report Abuse

MRCB uptrend lo ... hoot9e

Posted by linheng > 2024-02-18 06:07 | Report Abuse

This week shd see Bumi Armada GO

Posted by nikicheong > 2024-02-18 12:49 | Report Abuse

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.

Posted by Gabriel Khoo > 2024-02-18 14:45 | Report Abuse

BAB updated their ESG in website ald

Posted by nikicheong > 2024-02-18 15:13 | Report Abuse

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

Posted by Robert Waters > 2024-02-18 17:51 | Report Abuse

Personally I do NOT believe in Carbon Capture project. You can buy credits for 18 USD in Brazil. Why would you pay Bumi Armada 80 USD for same credit ...

The only benefit is good mention by Investor Bankers in their recommendations.

Posted by nikicheong > 2024-02-18 23:14 | Report Abuse

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

Posted by ITreeinvestor > 2024-02-19 10:52 | Report Abuse

(SINGAPORE) ABS has awarded Approval in Principle to Bumi Armada’s pioneering
design for a floating carbon storage and injection unit (FCSIU).


Bumi Armada’s FCSIU concept is a floating terminal capable of storing and injecting liquified carbon dioxide (LCO2) into depleted oil and gas fields or aquifers. This novel concept incorporates the ability to accept LCO2 deliveries in an offshore setting, the flexibility to manage LCO2 at low or medium pressure, the provision of LCO2 buffer storage and the preparation of LCO2 for sequestration - permanent storage of CO2 deep beneath the seabed.

Posted by marlboroman2 > 2024-02-20 14:49 | Report Abuse

Price is moving up towards Brent Oil's current price?

Posted by rohank71 > 2024-02-20 14:53 | Report Abuse

highest level since Karken issue.

Posted by Ravi Kumar > 2024-02-20 14:56 | Report Abuse

record profit?

Posted by marlboroman2 > 2024-02-20 14:56 | Report Abuse

all heaven breaking loose now

Posted by TimCoke > 2024-02-20 15:01 | Report Abuse

rocketing soon, monitor ya

Posted by nikicheong > 2024-02-20 15:03 | Report Abuse

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

Posted by nikicheong > 2024-02-20 15:05 | Report Abuse

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.

Posted by Ninja _07 > 2024-02-20 15:05 | Report Abuse

Or maybe anticipating oil might break $90

Posted by marlboroman2 > 2024-02-20 15:05 | Report Abuse

Buyers in control of price action, Brent Oil TP 85 sens therefore BA shall follow suit

Posted by ITreeinvestor > 2024-02-20 15:07 | Report Abuse

Armada just follow the trend of oil sector, there is nothing related to new contract or good Q4

Posted by zonefinder > 2024-02-20 15:09 | Report Abuse

Huge volume pushing up price

Posted by zonefinder > 2024-02-20 15:12 | Report Abuse

Lets hope its a project win

Posted by TimCoke > 2024-02-20 15:13 | Report Abuse

everyone was right, its the sythesis of multiple factors

Posted by adikkici > 2024-02-20 15:18 | Report Abuse

Poonnnnnnn beri laluan, beri laluan

Posted by mroys74 > 2024-02-20 15:21 | Report Abuse

how high can bumi reach, bulan?