@DannyArcher Many thanks for the clear explanation! Very helpful sharing of info from the AGM. I see why now. Perhaps, one way high oil price "benefits" Yinson is just that its customers, having made profits from high oil price, will pay whatever fees due to Yinson in a timely manner?
Peace99, even with high oil price, Petrobras was fussy with FPSO Maria. The good thing about high oil price is more contracts available, and more likely for oil company to pay for the FPSO, this will greatly benefit yinson as yinson cannot load up on debt anymore and rights issue or PP is already out of the question. FPSO Atlanta was paid by the oil co if I am not mistaken, thus, yinson expect the same for future fpso wins.
the good thing is, whatever the oil price or global economy is, yinson income is pretty much fixed. the down side is you dont expect them to suddenly make huge profit and expect the stock price to fly. not a stock for traders.
simply put it this way, their current profit from their FPSO is about RM77m, when all 3 FPSOs completed and achieved first oil in 2023, 2024, and 2025, yinson profit will most likely 3X, or 2.5X.
for those worried about their high RM9 Billion debt, they need to understand this, once all the 3 FPSOs completed and achieve first oil, their equity will rise too, estimated to be about RM10 to RM11 Billion, as oppose to current RM5 billion. So, pray nothing bad happens and 3 years down the road their equity will be higher than their debt, which I doubt so, because they will keep on seeking new FPSO projects, therefore their gearing will be high, but hopefully it will go down to 1:1 eventually.
their capital management strategies is a little bit complicated and not easy to comprehend for a lay person due to their usage of perpetual securities. on paper, the high level of debt will scare you off. unless you care to deep dive and understand their rationale of using these bonds.
i think the main risks investors need to care of is execution risk and counterparty risk. we can't anticipate future risks with much certainty, the only certainty investor can relied on is their track record and reputation over the years. and provided your risk appetite is up for it.
@DannyArcher Good analysis. I like company bosses who are ambitious but know how much they can handle. Yes, I will keep my Yinson, wait for 2-3 years, and see the progress on the building of the FPSOs.
they get back money from investor, ended up all the money spent on share buyback, later need money for business need to ask money again. so huge volume selling, dont tell me is retailer, who will win at last?
Keyman188, oil price has no effect on yinson's profit, maybe on new projects but not profit. yinson's profit is contract based, fixed at a certain rate regardless of oil price. just look at 2020 when oil price dipped to USD10+.... steady profit.
They plan to do dual listing, maybe in Norway since Fred Olsen Production is in Oslo, Norway. Thus the share buyback, maybe 10% required. The money raised will be used to build 2 more FPSOs if they win 2 more bids out of the 7 bids they are aiming now.
- Yinson said they have no plan to raise funds via perpetuals in the near future as of 2022. - Global FPSO market was valued at $11.91 billion in 2021 and is expected to reach $21.83 billion by 2028; it is estimated to grow at a CAGR of 8.0% from 2021 to 2028. - Yinson charter contracts, capital expenditure, borrowings and operating costs are more than 80% denominated in USD with a small portion denominated in Malaysian Ringgit and other foreign currencies. - 60% of its MYR9.3bn total borrowings have been hedged with interest rate swaps, to mitigate the exposure to any interest rate fluctuations. - The global RE market is expected to grow at a CAGR of 10.6% between 2021 and 2025 to reach a market size of USD500.4 billion in 2025. - Frost & Sullivan forecasts 32 new operating units will be under contract, apart from regular extensions, in the period 2021 to 2025. - Global number of FPSO installations expected to grow at a CAGR of 4.4% from 2021 to 2025. Brazil is expected to account for 53.1% of the projected FPSO orders between 2021 and 2025 due to the large number of deepwater and ultra-deepwater projects in the country.
- 98.7% of the group total borrowings as at Q1 FYE2023 comprises of committed debts with fixed repayment schedules (either in the form of long-term loans and sukuks/bonds). - The group has very limited outstanding short term revolving credits. - 60% of its MYR9.3bn total borrowings have been hedged with interest rate swaps, to mitigate the exposure to any interest rate fluctuations.
BP has signed an exclusive option with Yinson for an FSPO to work on the proposed PAJ project, in Angola’s Block 31. BP Exploration Angola, the operator of the block, has reserved the FPSO Nganhurra. It will work on the proposed 10-well project, which covers the Palas, Astrea and Juno fields.
Yinson will reserve the FPSO for BP until the end of 2022, with an option to extend until June 23, 2023.
During this period, the companies will negotiate a contract to convert, operate, maintain and lease the FPSO.
The lease and operate contract, which should run for 10 years, is expected to begin at the end of 2024. This is subject to BP reaching a final investment decision (FID) on PAJ. BP is due to combine its Angolan operations with Eni in the second half of this year.
Yinson CEO Flemming Grønnegaard said the deal confirmed the company’s position as “preferred contractor in executing FPSO redeployment projects, which have significant capex and schedule advantages, for established oil & gas players such as bp”.
The official noted Yinson had recently carried out two redeployment projects, on the FPSO Abigail-Joseph and FPSO Helang. It is also working on a redeployment plan for FPSO Atlanta.
“We are confident that our track record, technical knowledge and experience in this industry will support and fulfil BP’s business needs,” Grønnegaard said.
Yinson has an exclusive option to buy the FPSO Nganhurra until June 30, 2023. The vessel has production capacity of 100,000 barrels per day. Samsung built the FPSO in 2006.
The FPSO was deployed on Australia’s Enfield field until autumn 2018. It is now laid up outside Labuan, in Malaysia.
Woodside Energy, in 2018, said the 270 metre-long double-hulled FPSO would be laid up. The Australian company said its “condition makes it too good for the scrap yard”.
Heerema Marine Contractors, on July 25, said it had won decommissioning work for the Nganhurra riser turret mooring (RTM), which is still on the Enfield field.
Yinson enters exclusivity agreement with bp to reserve FPSO Nganhurra for PAJ project in Angola
inson, through its subsidiary Yinson Acacia Ltd, through its subsidiary Yinson Acacia Ltd, has entered into an exclusivity agreement with bp Exploration (Angola) Limited (“bp”), as the operator of the Block 31 Contractor Group (the “Agreement”) for the reservation of FPSO Nganhurra, a floating, production storage and offloading (“FPSO”) vessel for use in bp’s proposed 10 well subsea Palas, Astrea and Juno Oil Fields (“PAJ Project”) based in Block 31, Angola.
Under the Agreement, Yinson will exclusively allocate FPSO Nganhurra to bp for the PAJ Project until 31 December 2022 with an option for bp to extend until 30 June 2023 whilst the parties negotiate a contract to convert, operate, maintain and lease the FPSO for the PAJ project (the “Lease and Operate Contract”). The Lease and Operate Contract, which is anticipated to include a 10-year fixed term, is expected to be executed by the end of 2024 subsequent to bp reaching final investment decision.
Yinson holds an exclusive purchase option for FPSO Nganhurra until 30 June 2023 with its owners, Woodside Energy and Mitsui E&P Australia Pty Ltd, with an option for Yinson to extend such exclusive purchase option until 31 December 2023.
Yinson Production Chief Executive Officer Flemming Grønnegaard commented, “This Agreement emphasises Yinson’s position as the preferred contractor in executing FPSO redeployment projects, which have significant capex and schedule advantages, for established oil & gas players such as bp. We have recently completed two successful redeployment projects, which are FPSO Abigail-Joseph and FPSO Helang, and the Group is currently engaged in a redeployment delivery for FPSO Atlanta. We are confident that our track record, technical knowledge and experience in this industry will support and fulfil bp’s business needs.”
FPSO Nganhurra has a production capacity of 100,000 barrels of oil per day and was built by Samsung in 2006. The FPSO, which operated at the Enfield field in Australia until autumn 2018, is currently laid up outside Labuan, Malaysia.
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