https://www.upstreamonline.com/field-development/petronas-tempts-fpso-players-with-new-malaysia-offshore-opportunity/2-1-1714598

PTTEP has launched a tender for a replacement floating production storage and offloading (FPSO) vessel for the Kikeh oil and gas field offshore Malaysia, aiming for operations by 2028. The current FPSO, deployed in 2007, supports the Kikeh, Siakap North, and Petai fields, tied to a Spar dry tree unit in waters 1,320 meters deep. FPSO players, including MISC, Bumi Armada, and Shapoorji Pallonji Energy, and HBA have shown interest, with technical offers expected by November 2024. The new FPSO will have a production capacity of 40,000-46,000 barrels per day (bpd) of oil and 90 million cubic feet per day (MMcfd) of gas, smaller than the current unit's 120,000 bpd and 150 MMcfd capacity. However, the transition is challenging as the new FPSO must connect to the existing Spar platform, requiring complex integration. Market skepticism also persists due to PTTEP's push for cost-effectiveness, which may limit contractor enthusiasm. XX Despite plans for a new vessel, there's speculation about extending the existing FPSO's life. MISC, which will take full control of the current FPSO in 2025, performed recent maintenance that could extend its service life by 10-20 years. If PTTEP considers prolonging the current unit's lease, it could affect the bid process for the replacement.

Is this related misc fpso kikeh in sabah?

MISC willing to increase stake for FPSO
Which analyst of the view that MISC will not increase explosure in FPSO?
Good indication ahead

https://www.thestar.com.my/business/business-news/2024/09/06/misc-acquires-full-ownership-of-fpso-kikeh

Will be acquired then resuffle of the management team

Uob

Firm orderbook boosted from RM9.7b to RM12.1b qoq in 2Q24. Albeit delayed due to various commissioning issues involving both sides ie the contractors Sharporji Energy and BAB, and the client Oil & Natural Gas Corp (ONGC), BAB will recognise its 30% share of the full bareboat charter for the nine-year contract. We noted that BAB’s firm orderbook from the JV FPSOs increased qoq from RM1.6b to RM4.3b in 2Q24, which clearly assumed a quarterly burn rate of RM0.3b-0.4b and the US$2.1b ASV contract.  However, ASV has have a risk of claim adjustments. We understand that ASV will be recognised as an operating lease accounting. However, Upstream articles reported that payment dispute issues still lingered even in Jun 24. We understand from management that while the RM9m associate income was recognised based on entitled work done, it is still awaiting the outcome of a joint delay analysis, and any additional outstanding claims are still being negotiated. However, BAB was unable to guide when these processes are expected to be completed. Hence, despite having achieved final acceptance, we do not discount the risks of further volatility in ASV earnings until all the processes mentioned earlier reach a resolution.  FPSO Kraken may have another impairment by end-24, given that the extension contracts were exercised on a yearly basis. To recap, BAB incurred RM514m impairment on FPSO Kraken in 4Q23. This was not related to the downtime due to HSP transformers failures nor the costs of repair, as the FPSO production recovered a few months after the incident. It was due to changes in macro-assumptions like discount rate (8.5% was assumed) and inflation rate. At that time, management guided that the residual value assumed was already conservative at 2%.  However, BAB still used the straight-line depreciation method and this included the 17 years of optional periods. In contrast, Enquest (the client) employed the unit of production method depreciation on the FPSO. Now, we believe BAB is reassessing its method of depreciation, but there is no guidance until 4Q24. We also do not discount other reasons that necessitates another impairment review so soon after 4Q23. This is despite BAB’s guidance that it does not need to follow Enquest’ method of depreciation.  Upgrade 2024-26 earnings by 7%/5%/14% respectively, after upgrading associate income assumption given that there are no more delays in recognising the full charter rate of ASV5, although we are mindful that there are still earnings risk related to these projects. VALUATION/RECOMMENDATION Upgrade to HOLD with an SOTP-based target price of RM0.55 after rolling over to 2025 valuations (5x 2025F PE). As expected, the share price retraced after we called a SELL on the stock back in Jul 24, when the rumours of the MISC-BAB merger surfaced. Despite the good earnings performance, we remain concerned that the low gearing may not be reflected as a positive market factor. BAB may appear as a discount to Yinson’s 15x PE valuation, but both peers are valued within 5-7x EV/EBITDA. ENVIRONMENTAL, SOCIAL, GOVERNANCE (ESG) UPDATES

1H24 core profit beat expectations, comprising 60%/58% of our/consensus estimates. Excluding a RM53m upward revision of the daily operating fee of FPSO Olombendo (this portion was recognised in 1Q24 and for the 2023 period), the positive deviation in 2Q24 provided a boost in associate income. Out of this, RM8.9m associate income is related to Bumi Armada’s (BAB) entitlement to works executed for the 30%owned associate FPSO Armada Sterling V (ASV), between the period of first oil in Jan 24 to the delayed final acceptance that was concluded only in July.  2Q24 EBITDA of RM360m in line with quarterly average (2Q23: RM183m; 1Q24: RM417m). Subsea vessels remain underutilised. Other than ASV5, there were no unusual trends in the FPSOs, which were expected to deliver higher earnings relative to 1H23. This was mainly due to: a) FPSO Kraken’s downtime in 1H23 for the failure of the hydraulic submersible pump (HSP) transformers, and b) FPSO Olombendo’s higher revenue base after the daily fee revision. As expected, FPSO Kraken’s first yearly extension option (out of 17) was exercised into firm contract for Apr 24 to Mar 25, at 70% lower charter rates.

UOB revised uoward tp to 55c

From cimb. TP revised upwards to 79c

Strong quarterly performance in 2Q24 2Q24 core net profit of RM265m was 11% higher qoq as the 30%-owned associate Armada Sterling 5 FPSO received cash payment from its client, ONGC, in relation to services performed since it achieved first oil on 7 Jan 2024. This enabled the FPSO to contribute RM8.9m in share of profits to BAB in 2Q24, against a RM25.1m loss in 1Q24. BAB also booked-in engineering consultancy revenues from its jointly-owned FPSO companies in 2Q24; these helped BAB deliver qoq core net profit growth despite 1Q24 being a high base, with the latter having enjoyed a lumpy RM60m O&M revenue uplift after BAB had successfully renegotiated O&M rates for the FPSO Olombendo to cover higher opex. Full earnings contribution from Sterling 5 from 1 Jul 2024 Reiterate Add, as we see a still-strong earnings outlook for 2H24F. As the Armada Sterling 5 FPSO received final acceptance on 1 Jul 2024, this will enable it to book its full bareboat charter daily revenues. As such, the contribution from the FPSO to BAB will increase qoq in 3Q24F, and we think the stronger earnings performance can be a potential share price catalyst. Another potential catalyst is a likely extension of the Armada TGT-1 FPSO charter, which is scheduled to end in Nov 2024F, with BAB currently negotiating to extend the charter to Nov 2026F, although we think the charter will likely continue into late-2031F; we have incorporated this into our SOP valuation and target price of 79 sen. Ignore the likely impairment for Kraken in 4Q24F Downside risks include a likely impairment of the FPSO Kraken in the 4Q24F results announcement during Feb 2025F, which BAB flagged at its analyst briefing this afternoon. BAB first impaired the FPSO Kraken by RM437m at its 4Q23 results which was announced at lunchtime on 28 Feb 2024; this caused its share price to fall 12% that day. That 4Q23 impairment was the difference between the carrying net book value (NBV) of the FPSO Kraken on its balance sheet, vs. the lower ‘Value in Use’ (VIU) which is calculated by reference to the discounted present value of the Kraken’s future cashflows. With the VIU likely to be below NBV again on 31 Dec 2024F (because the Kraken’s firm charter period ends on 31 Mar 2025F and the option period rates are a significant 70% lower), another impairment is likely although we think the size of the impairment should be lower than for 4Q23. We are not concerned about the impairment as the contracted cashflows for the FPSO Kraken remain unchanged and therefore, our DCF value of the FPSO Kraken charter contract is not affected by any accounting, non-cash impairment.

Bumi Armada Berhad ("BAB") refers to the unrated Sukuk Issuance programme established in 2014 by Bumi Armada Capital Malaysia Sdn Bhd ("BACM"), its wholly owned subsidiary, involving the issuance of RM1.5 billion nominal value Sukuk by BACM ("Sukuk"). The Sukuk has a final redemption date of 4 September 2024.



BAB wishes to announce that its wholly owned subsidiary, Bumi Armada Holdings Labuan Ltd ("BAHLL"), has secured syndicated facilities with 6-year tenor at an aggregate principal amount of up to USD400 million. These comprise a USD135 million conventional syndicated term loan and a USD265 million Islamic syndicated commodity Murabahah facility (collectively, "Facilities"), the proceeds of which are to be applied inter alia, towards the full redemption of the Sukuk and its related cross currency and interest rate hedge liabilities. The Facilities, which are guaranteed by BAB, were arranged by Maybank Investment Bank Berhad, RHB Bank (L) Ltd, AmInvestment Bank Berhad and Affin Islamic Bank Berhad as mandated lead arrangers ("Arrangers") and made available to BAHLL by 8 participating banks ("Financiers").



On 15 August 2024, BAHLL entered into the relevant Facilities documentation with, inter alia, the Arrangers and the Financiers. Utilisation of the Facilities, and the Sukuk redemption, are expected to occur immediately prior to 4 September 2024. BAB notes that the Facilities were oversubscribed.



The announcement is dated 16 August 2024.

Who will benefit from this

https://www.upstreamonline.com/field-development/offshore-feast-global-subsea-spending-to-exceed-42-billion-by-2027-says-rystad-energy/2-1-1691445

Strong ringgit

Strong ringgit

Strong ringgit...

NICK. If BAB can conclude some deal this year, chances for MISC to acquire BAB's from TSA high right?

Bumi Armada and Navigator Gas anticipate entering into definitive documentation for the Bluestreak CO2 joint venture by the end of the fourth quarter of 2024. The joint venture is subject to the execution of such definitive documentation, approvals by the respective boards of directors of Bumi Armada and Navigator Gas, applicable regulatory approvals and other customary closing conditions.

Can you share the report?

Nick. Would there be any charter rate to re-nego for the contract under option to extend

BMI, a subsidiary of Fitch Solutions, expects that as Petronas actively invests in overseas liquefied natural gas (LNG) projects and expands its global LNG portfolio, it will promote further expansion of LNG transactions in the country.

According to a BMI statement, Petronas has invested in the Gladstone project in Australia and the LNG project in Canada, and recently participated in the production sharing contract (PSC) of the Masela oil field with a 15% stake, including the Abadi LNG project in Indonesia.

It is understood that the Indonesian government approved the development plan of Masela in December last year, and Petronas and its partners have not yet made a final investment decision on the Abadi project.

There was also an agreement signed last year with Bumi Armada (ARMADA, 5210, Main Board Energy Stock) and PT Davenergy Mulia Perkasa, the natural gas subsidiary of Indonesia's National Petroleum Corporation (Pertamina), to develop a floating LNG project using feed gas from Madura and surrounding oil fields.

However, BMI said that these investment plans are still in the early stages and have not been further promoted.

However, BMI added that Petronas is looking to enter China and other emerging markets to reduce its reliance on the Japanese market as these emerging markets become increasingly important for it to maintain LNG exports.

"China is now generally considered a fast-growing LNG market, but it still offers significant LNG export opportunities."

As of the end of April, Malaysia's share of China's LNG market is limited, accounting for 11.5% of China's LNG imports, far lower than (32.5%) and Qatar (25.9%).

In addition to China, Petronas has a 15-year long-term contract with Thailand's PTT to supply 1.2 million tonnes of LNG per year.

"As Thailand's demand for LNG grows and PTT is expanding its LNG regasification capacity, this will hopefully increase Petronas' exports to Thailand."

In addition, BMI pointed out that Petronas also exports spot LNG to Taiwan, Bangladesh, Singapore and Pakistan, and Vietnam may become the next target market.

https://www.klsescreener.com/v2/news/view/1358043

UOB analyst is against BAB.

Bumi Armada is pleased to announce that the Armada Sterling V FPSO has completed the necessary acceptance tests and successfully achieved Final Acceptance effective 1 July 2024. The achievement of Final Acceptance signifies the commencement of the firm charter period for the Armada Sterling V FPSO.



As previously announced on 6 May 2019, the vessel charter is for a firm period of nine (9) years, with ONGC having the option to extend for an additional seven (7) years, on a yearly basis.

If its acquire by MISC bcos its means value accretion to them

The offer if any to shareholders likely to be at the range of 85 to 90c

Nik. This above is the key take away. Other written in the edge paper merely on bab info.

https://www.klsescreener.com/v2/news/view/1354143

Accroding to the edge misc could take a substantial stake of armada

Nik. May I know the prospect in Almaty?

For UOB Kay Hian, Yinson’s new projects are coming into FY2025 earnings horizon, including two Brazil floating production storage and offloading vessels and the Matarani Solar project at its non-oil-and-gas segment.

However, “accounting distortion is growing alongside its leverage, and both may confuse investors and prolong the stock’s hefty trading discount,” the research house said, flagging “messy and confusing” finance lease disclosure to its true financial and leverage ratios.

Yinson’s measure of leverage in terms of net debt to cash flow was four times, though the ratio would rise to seven times based on the International Financial Reporting Standards disclosure, UOB Kay Hian noted. “For this to work, in our view, Yinson must adopt directional reporting,” the house said.

Their FYE in March

20K by Dec 2024 and 45K by March 2025

https://youtu.be/xCxZii17Xzw?si=c8TzBny2_3cwfcbb

Thanks nik. Looking forward of ur input. I hold quite substantial of bab shares

Transition stratergy also under deveopment

Yes. The biz part has been down in last 2 weeks. Infos not available

He just exercise the shares approved by the Board including PNB. So nothing to bother.

Nik. What would be the contract value for this type oF PROJECT

Iccsc membership for indo ccs market

Opportunities in 2024 are excellent. Multiple fpso projects are available but we prudent and projects need strong commercial fundamental.

True.

Bab did not reach a final agreement on the cameia fpso contract despite being chosen as the preferred bidder
Disappointed but prudent not to move forward on the project because costs and risks were high and potential returns low

I think is a good move

https://www.ogv.energy/news-item/ongc-awards-contracts-for-flagship-block-in-the-krishna-godavari-basin

https://www.upstreamonline.com/field-development/mcdermott-completes-float-over-installation-for-huge-asian-offshore-facility/2-1-1633476

https://www.bfm.my/podcast/morning-run/the-breakfast-grille/mynews-profitable-growth-first-second-quarter-earnings

https://www.energyvoice.com/oilandgas/551730/waldorf-prodution-no-comment-on-liquidity-woes/

https://www.energyvoice.com/oilandgas/551730/waldorf-prodution-no-comment-on-liquidity-woes/

Nik. I think its still managable given that the JV only 1/4 even if the field is to be liquidated