Questions regarding Bluestreaks JV:

1) Is this related to the recent licensing round in the UK, where 20 licenses were awarded to 12 companies?

The Bluestreak JV was formed to align with the licensing round of the storage licenses by NSTA.

2) Has the JV secured one of these licenses?

The JV is not a storage company and therefore did not apply for one of the licenses, but is rather a non-pipeline transportation and injection solution with the intention of engaging the awardees of the storage licenses.

3) Is my understanding correct that Navigator will be responsible for the shuttle tankers while the JV partner would be responsible for the floating carbon storage and injection unit?

Yes, Navigator would design, build, and operate the shuttle tankers while Bumi Armada Berhad would handle the floating carbon storage and injection unit.

4) When is / are commercial agreements expected to be signed?

Commercial discussions are still ongoing and involving several stakeholders in the CO2 emitting/capture, transportation, and storage infrastructure process. FID likely later this year/early 2024.

A positive update, the Armada Kraken FPSO is targeted to return to full production in the matter of weeks, not months. We're looking at between the next 2 to 4 weeks.

@MM78 just keep it simple, look at the cost of the 650k shares you're holding.

Realized profits/losses shouldn't be a part of the equation.

@MM78, never sold yet

After the recent purchases, my average is now RM0.295. Prior to that it was RM0.262. I have been forced to "average up" each time. My original buy back in October 2020 was 350k at 22.5 sen.

I personally have no issues with IBs, they are free to give their independent opinion and share sensible/non-sensible target prices. I hold them in low regard, but from time to time, they do have some decent analysis as they have access to senior management, which we minority shareholders obviously lack.

CyrusQ can you share the direct link

I'm interested in the research reports from RHB, CIMB and UOB, if anyone has access to these.

Any new research reports published today?

@alenac, obviously. A step in the right direction nonetheless, and far from the doom and gloom we once thought we were in when the field was fully shut-in.

They need to investigate and understand the root cause of multiple transformers failing, and they will also need to replace the failed transformers. Only then we can go back to 100%. After speaking with multiple people within the industry, I'm confident this can be achieved within the next 2 to 3 months.

All those who've bought in low at under RM0.45, rejoice. We're unlikely to came back down to these levels, perhaps ever.

Bursa Malaysia subsequently reverted and asked for documentary proof, which I duly provided and they acknowledged receipt of today morning.

My email:

Dear Sir/Madam,

I would like to lodge an official complaint against Bumi Armada Berhad for withholding material information from investors, particularly minority shareholders.

I make reference to the announcement titled "Unplanned Kraken Shut-in" dated 2 June 2023 made via Bursa Malaysia.

Here, the statement ended by saying "Further updates will be made from time to time when there are material developments".

I have it on good authority, from xxx, the xxx at Enquest, who operate the Kraken field, that the Armada Kraken FPSO resumed production last week Monday, 12th June 2023, and has been producing oil on a single train at roughly 50% capacity.

Is this not a Material development? Why has Bumi Armada Berhad not issued a further update on the same to Bursa Malaysia? Minority shareholders are disadvantaged, as insiders would have known well in advance that production had resumed in some capacity.

Appreciate if Bursa Malaysia investigates this matter further and enforce transparency in matters such as this.

Thank you!

3 more key announcements to be expected within the next 3-4 months:

1) Cameia FPSO ESPCC award (1 July - 31 July 2023)
2) Armada Kraken return to 100% production (1 July - 30 September 2023)
3) Armada Sterling V first oil (1 August - 31 October 2023)

Not sure if syok sendiri or not, but I sent an email to Bursa Malaysia on this matter yesterday.

Masukkk!!!

This JV might be related to the CCS licenses awarded recently in the UK. Either the JV has secured a license, or they will be servicing companies that have secured a license.

https://www.oedigital.com/news/505199-uk-offers-20-offshore-carbon-storage-licenses-to-12-companies

So this announcement actually has two positive news:

1) 50:50 JV to develop carbon capture, storage, transport and injection solution for clients.
2) Separately, Bumi Armada is engineering a carbon capture injection system for a gas field.

Woah, there is also this hidden nugget:

"The Company is also engineering a carbon capture injection system for a gas field incorporating its experience."

"By leveraging the expertise and experience of its principal shareholders, it is anticipated that the Bluestreak CO2 Joint Venture will design and implement a value chain of shuttle tankers delivering to a floating carbon storage & injection unit."

My understanding of this (i.e. "leveraging the expertise and experience of its principal shareholders") is that Navigator will be responsible for the shuttle tankers and Bumi Armada will be responsible for the floating carbon storage and injection unit ("FCSIU").

The transaction is subject to the execution of a definitive joint venture agreement, approval by the boards of directors of both Bumi Armada and Navigator, regulatory approvals where applicable and other customary closing conditions. The parties anticipate entering into a definitive joint venture agreement by the end of the fourth quarter of 2023. The commercialisation of the Bluestreak CO2 Joint Venture is subject to sufficient long-term customer commitments.

The Bluestreak CO2 Joint Venture, to be owned 50% by Bumi Armada and 50% by Navigator, aims to provide an end-to-end solution for carbon emitters to capture, transport, sequester and store their carbon dioxide emissions in line with the United Kingdom’s Industrial Decarbonisation Strategy.


By leveraging the expertise and experience of its principal shareholders, it is anticipated that the Bluestreak CO2 Joint Venture will design and implement a value chain of shuttle tankers delivering to a floating carbon storage & injection unit. The complete value chain is expected to safely and reliably transport and provide buffer storage of liquid carbon dioxide. The CO2 is intended to be subsequently injected into offshore storage aquifers and/or depleted oil and gas reservoirs in a controlled manner with full surveillance and management of the permanent storage location. This approach is anticipated to allow the Bluestreak CO2 Joint Venture to serve emitters with no access to pipeline infrastructure, to effectively manage their CO2 emissions.


It is estimated that the potential market in the United Kingdom alone is over 30 million tonnes of CO2 per annum from emitters who are not proximate to existing awarded carbon capture, usage and storage clusters. Bumi Armada and Navigator are in initial discussions with a number of emitters and if successful, the first shipment of CO2 is anticipated by the parties to take place three years after taking final investment decision.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3363281

Nothing concrete yet, just a MOU for now. But a step in the right direction, could be very lucrative once a concrete FID is taken.

@sense maker you talk absolute nonsense. From a shut-in state to 50% production with a single train IS a material development that until now, Bumi Armada has failed to disclose to the market.

I will write a report to Bursa Malaysia later today, and urge all minority shareholders to do the same.

Any recent updated research reports? From CIMB, RHB, UOB etc?

Kudos Robert, you did correctly indicate in your writings that there are other pumps with transformers that can be used as a makeshift replacement / stand-in for the HSP transformers.

Are you an engineer? Have you worked on FPSOs? Any contacts within the industry that can reach someone in the Kraken crew?

Potential Bumi Armada Re-rating catalysts (updated 16 June 2023):

New wins:

1) Award of Cameia FPSO project in Angola from TotalEnergies - This is only an EPC contract and will only sustain earnings for 2-3 years. This is NOT a long-term charter contract
2) 1 Minor FPSO contract win (either a small/medium scale FPSO 100% owned) - Active bids in Tuna field (Indonesia), Palok field (Mexico), Salam-Patawali (Malaysia)
3) 1 Major FPSO contract win (large scale FPSO, likely with a JV partner) - Unlikely to be soon as there are no known large scale bids from Bumi Armada, but possibilities exist in West Africa / South America
4) Finalization of the Mumbai Port FSRU project
5) New contract win for the 2 SC vessels in the Caspian Sea and 1 JV-owned SC vessel in Indonesia. Potential for new wins for the Caspian Sea vessels as flurry of work in the region due to high oil price environment. All 3 vessels as at 31 Dec 2022 are laid up
6) New contract award relating to a floating carbon storage and injection vessel

Green energy:
1) "Green energy" initiatives for future FPSO/non-FPSO wins (e.g. zero flaring or fully electrified FPSO)
2) Decarbonisation for existing fleet of FPSO
3) Diversification into floating CCS and other "green" structures materialise

Business as usual:
1) First oil achievement and then full acceptance of Armada Sterling V FPSO by ONGC at the 98/2 field in India
2) To repair the issues with the Kraken FPSO's HSP transformers so the FPSO can return to full operational capacity (Kraken FPSO presently only running at 50% capacity)

Contract extensions:
1) Confirmation of contract extension for Armada TGT FPSO in Vietnam - Might only be announced in Q4 2024, but it's all but certain the contract will be extended as new wells are still being drilled in the aged TGT field

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

Note: All the above comes from my own research. Let me know if I've missed out on anything. I maintain that the Q4 2022 results, while extremely solid, were wholly "unexciting". We need positive developments that would enhance the long-term wellbeing of the company, only this will ultimately push the share price to higher levels.

Update to my post dated 2023-02-27 11:51

Catalysts achieved:

- Confirmation of sale or scrapping of Armada Claire FPSO (sold for USD20m)
- Full divestment of the remaining offshore vessel (sold for ~USD15m)
- Contract extension of Armada Sterling II (1-year extension worth USD43m secured)

New catalyst:

- To repair the issues with the Kraken FPSO's HSP transformers so the FPSO can return to full operational capacity (Kraken FPSO presently only running at 50% capacity)

This is quite a minor "win", each one-year extension for the Armada Sterling II is worth roughly 0.5 - 0.6 sen / share. But I'll take this win, hopefully a smaller win leading to larger wins in the near future (wink offshore carbon storage and injection award, wink Cameia FPSO award)

@Felix, my bad and I have corrected my calculations.

"The contract is for a fixed period of nine years with an extension option of an additional seven years on yearly basis. The contract is valued at approximately USD 740 million with an additional USD 340 million for the optional extension period."

https://www.offshore-energy.biz/ongc-bumi-armada-in-740-mln-fpso-charter-deal/#:~:text=The%20contract%20is%20valued%20at,western%20coast%20of%20Mumbai%2C%20India.

The $43mil for one year extension is slightly lower than the original extension option of $340mil for 7 years (i.e. $48mil per year). Might be due to the exchange rate fluctuations since 2013, as the contract award by ONGC s usually based on Indian Rupees.

This is a mildly positive development. Question remains why just one year, why not 7 years. Perhaps it is risk management from ONGC to protect itself from low oil prices.

Regardless, anything above the firm charter period is usually a bonus. But at $43mil per annum, the effective apportionment to Bumi Armada will be around $21mil (49% stake in the JV) but there will be no impact to topline as JV revenue is not consolidated at the Group level.

Extensions usually have a profit margin >30% as the vessel would be almost fully depreciated and the financing fully paid off, so conservatively this would contribute around 1/3 * $21mil = $7mil to Bumi Armada's bottomline for that one year extension period (roughly RM32mil at today's exchange rate).

Also, Bumi Armada will get a better rate for yearly extensions. There is usually a discount provided for a multi-year extension. The latter however is "safer" as it provides a longer-term earnings visibility.

umi Armada Berhad (“Bumi Armada” or the “Company”) wishes to announce that its jointly controlled entity, SP Armada Oil Exploration Private Limited (“SPAOEPL”) recently received notification from Oil and Natural Gas Corporation Limited ("ONGC") of India, about its intention to extend the charter hire of a Floating Production, Storage and Offloading Vessel ("Armada Sterling II FPSO") for one year from the expiry of the present firm time-charter. The value of the contract extension is approximately US$43m.



Under the original contract signed between ONGC and SPAOEPL on 13 March 2013, Armada Sterling II FPSO was chartered by ONGC to operate in the ONGC Cluster-7 field located about 210km off the west coast of Mumbai, India under a nine-year firm time-charter, with seven annual extension options. The original nine-year firm time-charter will expire on 7 March 2024.



SPAOEPL is a 49% less 1 share: 51% plus 1 share joint venture between Bumi Armada and Shapoorji Pallonji Energy Private Limited (formerly known as Shapoorji Pallonji Oil and Gas Private Limited) of India. ONGC is India's state-owned oil company listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd (NSE).



Financial Effects



The contract extension is expected to contribute positively to the future earnings of Bumi Armada Group.



Risks Associated with the Contract



The risks associated with the contract extension are normal operational risks which can be mitigated through Bumi Armada's system of asset management and business controls.



Directors' and Major Shareholders' Interest



None of the Directors and/or major shareholders of the Company or persons connected with them have any interest, direct or indirect in the said contract extension.



This announcement is dated 16 June 2023.

Load up while the price permits.

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

@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."

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.

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.

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.

@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.

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.

Yes, a few good things in favour:

1. Weather conditions - summer time (imagine if winter, will be a disaster)
2. Proximity to HSP expertise

Holy crap!!! It's back online!

Enquest's investor relations team replied to my email with the following:

"I can confirm that the HSP was restarted on Sunday evening, with single train production resuming yesterday. We will look to ramp up towards full production in the coming weeks".

Also, something I would like to add is that the Cameia FPSO preparations are already in full swing. Bumi Armada has been incurring significant expenses to get the team ready and everything in place. For now, these are "hidden losses". Expect a handy gain (i.e. reversal of the hidden losses" when the revenue starts coming in) once the Cameia FPSO is official awarded to Bumi Armada.

So if we take Bumi Armada's "steady" core net profit per quarter to be RM200mil, then the net profit will reduce by around RM185mil (USD450,000 * 4.6 * 90 days) for that quarter, wiping out pretty much all other profits. This is excluding cost of repairs and associated costs.

Hence this is an extremely material event for Bumi Armada.

@Ravi Kumar

3. USD450,000 is referring to the bareboat charter per day, it is Bumi Armada's "topline revenue" for the Kraken FPSO. Since the costs are relatively fixed in nature, we can assume that all of the loss in revenue will result in a corresponding decrease in profit. Assuming net margin of 30%, the net profit would typically be USD135,000 but due to a loss of revenue, the net loss would now be USD315,000.

5. No idea. Some analysts have said RM50m but they're plucking it from their behind. Might be a lot higher, or significantly lower as well.

If you know people working in Bumi Armada, they will tell you that Bumi Armada had been awarded a Conditional Letter of Award (CLOA) for the ESPCC of the Cameia FPSO from Total Energies back in September 2022.

It is unfair that they did not announce to Bursa Malaysia. I recall asking this question in the AGM but the CEO says they do not comment on "rumours". A CLOA is not a rumour. This creates an uneven playing field where the insiders know far in advance of an award materializing before an official announcement is made to Bursa Malaysia.

My honest opinion, IF AND ONLY IF Bumi Armada is able to repair the transformer and the Kraken FPSO is back to full production in 6 months time (i.e. November 2023), then buying in at these price levels is a complete no brainer.

To make matters sweeter, the Cameia FPSO award will be officially completed within the next 4 to 6 weeks, and Bumi Armada will be announcing a FCSIU win within the next 2 weeks. The Mumbai FSRU is also a go, but I am unsure when the official award will be signed/announced.

Debt has been aggressively repaid, so there will be lots of interest savings moving forward. The Fed rate hikes are slowing down, so the "finance costs" per quarter should start going down appreciable here on out. This will only be strengthened further in Q2 2023 with the sale of the Armada Claire FPSO and the final OSV, i.e. Armada Tuah 300.

Unofficially, the TGT FPSO has also secured a contract extension to December 2026 (from December 2024).

A lot to be excited about, the future looks bright, and now is the time to accumulate IF AND ONLY you believe the Kraken FPSO will be back to full production within 6 months time. If however, the Kraken issue turns out to be terminal (highly unlikely, but you never know), then maybe, just maybe, it is game over for Bumi Armada. Or at least, game over in terms of the stock going on to be a multi-bagger.

I am actually rather disappointed in the Bumi Armada management. They issued a vague update to Bursa Malaysia on 2nd June, and radio silence since then. They ought to appraise minority shareholders of what's going on. Plus my emails to their Investor Relations team go unanswered. It's sad that I have to reach out to Enquest's investor relations team instead to find out what the heck is going on.

To recap what we know about the Kraken shut-in:

1. The shut-in was initiated on 20th May 2023 due to the transformer for the HSP failing
2. A restart was attempted within 48 hours but failed
3. Bumi Armada is losing USD450,000 in revenue each passing day the FPSO remains shut-in
4. Bumi Armada is not paying Enquest any compensation for the lack of production
5. The financial burden of repairing the transformers and alternative solutions to overcome the issue will be fully borne by Bumi Armada
6. There was a second attempt of a restart on 11 June 2023 - thus far, with no news and with heavy selling yesterday, we can only presume this failed
7. Even when the FPSO comes back online, it will be on a phased basis. Initially at 50% capacity (i.e. single train operations), and gradually over weeks to full production