Profits up due to no cukai makmur...shouldn't it already be largely priced in?

Patience my friends, patience.

Any idea when quarterly report out?

Malaysia’s national upstream company Petronas Carigali has kicked off the tender process for a floating production, storage and offloading (FPSO) vessel for the standalone development of its Bestari deep-water oilfield offshore Sabah, East Malaysia.

Petronas has been aiming to develop some of its key deep-water fields on the back of improved oil prices and market fundamentals, but the state giant shied away from taking the final investment decision on crucial projects including Limbayong, for which the process to charter a floater was shelved on multiple occasions.

However, Bestari, which is much smaller in size, provides an opportunity for Petronas to gain hands-on experience with deep-water developments and implement those learning on complex projects which have much higher capital expenditure, sources said.

The Malaysian giant has approached domestic and international floater specialists seeking budgetary quotes for an FPSO with a production capacity of at least 15,000 barrels per day (bpd) for Bestari, multiple people familiar with the development told Upstream.

Some of the key contenders which might queue up include domestic players— MISC, Yinson, MTC and Bumi Armada. India’s Shapoorji Pallonji Energy is also likely to be interested in a groping with Bumi Armada, one person noted.

Another one suggested that international contractors including BW Offshore could also have been approached for Bestari during the initial phase, but this could not be independently confirmed.

More clarity on the potential bidders for Bestari is likely to emerge at a later stage, once the bid process further progresses, industry sources said.

Upstream understands the operator has changed tactics from its earlier stance of developing the Limbayong field via a larger FPSO with the Bestari oilfield as a potential tie-back to benefit the Limbayong economics.

Various studies have been conducted for Limbayong, but Petronas Carigali could make the budget work amid the post-Covid high costs of labour and materials. It now seems that Bestari’s crude will be exploited first with Limbayong put on the — albeit likely temporary — backburner.

“They want to kick off with a relatively smaller project like Bestari at this stage," one source said.

Upstream has contacted Petronas for comment regarding its plans for Bestari.

An industry source pointed out that it might not be an easy task for Petronas to get a relatively smaller floater for Bestari at short notice, considering key international FPSO contractors are dealing with multiple prospects in Brazil and other key American markets.

“It [FPSO] is a very busy market with multiple new prospects coming up. Operators need to be decisive for securing units,” he said.

The conventional oilfield, which lies in a water depth of 4593 feet (approximately 1400 metres) on Block R offshore Sabah, was discovered in 2015 by Japan’s JX Nippon.

The Bestari-1 discovery well in March of that year encountered 67 metres of net oil pay in multiple sand packages within the Miocene-aged primary objectives at depths from 1860 metres to 2702 metres.

Petronas Carigali in March confirmed to Upstream that it pulled the plug on Limbayong, potentially with Bestari as a satellite tie-back, after being unable to make the economics stand up.

Limbayong was expected to produce almost 40,000 bpd of oil however the up-front costs required for a larger capacity FPSO would have been much higher than for Bestari.

In recent years, the operator had conducted at least three tender exercises for the Limbayong floater, much to the frustration of contractors that had invested time and money to bid on several occasions only for the project not to progress.

“The Limbayong development certainly has challenging economics, evident from the several delays and discussions for multiple development concepts. In the event of proceeding solely with Bestari's development, it is expected that the planned floater capacity will see a significant reduction of over 50%. However, it reflects Petronas' commitment to developing these discovered deep-water resources,” Prateek Pandey, Rystad Energy’s vice president E&P research Southeast Asia, told Upstream.

“Nonetheless, the progress made on the deep-water oil project promises to enhance Petronas' portfolio and tap into the immense potential of deep-water Sabah,” said Pandey.

"Limbayong is not [permanently] shelved yet, it could be taken up as a separate project in the future,” another source said.

https://www.upstreamonline.com/exclusive/petronas-kicks-off-chase-for-key-fpso-offshore-sabah/2-1-1454440

US oil company ConocoPhillips is re-engaging with suppliers of floating, production, storage and offloading vessels as it seeks to unlock the development of its Salam-Patawali oil project offshore Sarawak in Malaysian waters.

ConocoPhillips operates offshore Block WL4-00, which is home to the Salam, Patawali and Benum oil discoveries.

The big US independent has been working discreetly on development solutions for the project for a few years, and is currently eyeing the potential for first production by as early as 2026, industry sources told Upstream.

The company recently initiated a process for carrying out technical studies on the project, engaging with leading FPSO contractors in the region, according to sources with direct knowledge of the development.

“They [ConocoPhillips] plan to carry out technical studies for the FPSO, a process which is similar to the project’s pre-front end engineering and design phase,” one well-placed source said.

FPSO contractors in contention include the Malaysians Bumi Armada, MISC and Yinson Holdings while global players such as Bluewater and BW Offshore are also in the running.

FPSO companies with an available floater that can be redeployed are likely to be favoured although, given the shrinking global pool of redeployable FPSOs, the possibility of supplying a new vessel based on a tanker conversion could not be ruled out, sources noted, adding that ConocoPhillips was interested in an aframax-size floater.

ConocoPhillips is expected to opt for a multi-year lease option for the vessel, and will also require an operations and maintenance contractor.

Production capacity for the FPSO has previously been estimated at between 30,000 and 55,000 barrels per day of oil, with a storage requirement of up to 600,000 barrels of oil.

The floater was also expected to handle just over 100 million cubic feet per day of gas.

Upstream has requested comment from ConocoPhillips about the Salam-Patawari development.

The US operator is believed to have awarded an engineering services contract to Genesis last year, with an emphasis on the subsea aspects of ConocoPhillips’ current and future activities in Malaysia, Upstream reported previously.

ConocoPhillips was awarded Block WL4-00 in 2017 when it already hosted the Salam-1 discovery.

In 2018 and 2019, oil discoveries were made at the Salam and Benum fields and, in 2022, two additional appraisal wells and one exploration well were drilled to evaluate those discoveries.

The Gagau-1 exploration well made a sub-commercial gas discovery and was expensed as a dry hole, and ConocoPhillips said all the well information would help optimise future development plans.

ConocoPhillips holds the operatorship of Block WL4-00 along with a 50% stake, with Malaysian state-giant Petronas holding the balance 50% stake.

ConocoPhillips has two more exploration permits offshore Malaysia — SK304 offshore Sarawak and SB405 offshore Sabah.

In SK304, a dry well called Mersing-1 was drilled in 2022, but ConocoPhillips said it is continuing to evaluate the potential of the permit.

In SB405, a 3D seismic survey was acquired in 2022, and processing and evaluation of the seismic data will be ongoing through 2023.

ConocoPhillips also has non-operated interests in four producing assets offshore Malaysia — the Gumusut field, the Malikai field, the Kebabangan field and the Siakap North-Petai project.

It generated net production in 2021 of 35,000 bpd of oil and 66 MMcfd of gas.

FPSO contractors in Southeast Asia are eyeing multiple FPSO projects in the region, but several projects are yet to achieve a final investment decision.

Malaysian state-owned giant Petronas is expected to lead the way with potential floater requirements in the near term for its Kelidang project offshore Brunei Darussalam.

In addition, Petronas might also seek a floater for its Limbayong and Bestari fields offshore Sabah, East Malaysia.

In addition, FPSOs are also required for UK-independent Harbour Energy’s Tuna oil and gas project offshore Indonesia and Chevron’s much-delayed and on-off Ubon gas condensate development in the Gulf of Thailand.

https://www.upstreamonline.com/exclusive/conocophillips-moving-into-the-fast-lane-for-key-fpso-project-offshore-malaysia/2-1-1453215

When is the QR results out?

I believe the share option has been exercised at RM0.7453, which is rather odd. Whichever staff who exercised it (likely CEO) could've just bought 92,800 shares on the market and saved some money.

What yard?

Here: https://www.linkedin.com/feed/update/urn:li:activity:7060161531572879360/

Armada Tuah 300 sold, last OSV disposed. Another chapter closed.

From that same article:

"Multiple sources told Upstream the negotiations to finalise the FPSO contract are far from settled due to issues around capital costs and access to financing."

Cameia is not a done deal man....quit spreading misinformation. TotalEnergies has been considering other possibilities for a few months now. Bumi Armada still has a chance, but no longer guaranteed to land the contract.

Likely no issue with Enquest, beginning May 2025 they will only pay 1/3rd rate so on a cost basis to Bumi Armada as the firm charter ends. As such, it will be even more attractive to keep leasing the FPSO (as long as they're producing a decent amount of oil, which does seem to be the case).

Now that all loss making parts of the company have been stripped out, we cannot increase profits any further. This year might be the best, at around rm220m/quarter...but going forward it'd only dwindle without any orderbook replenishment. Big drop in 2025 then another big drop in 2030.

For a FPSO company to have only secured one new FPSO project since 2014 and that too only via a 30% stake in an associate, is rather disappointing, no matter which way you slice and dice it.

Operationally, they've straightened all the issues with problems at Kraken. Financially, they've gotten the debt situation in order.

So now, we really need new contract awards to sustain the company.

Yes Yinson may be biting more than they can chew, they've 4 to 5 FPSOs they're working on simultaneously. No one's asking to go crazy like them.

Does anyone know what's going on with the Armada Sterling II FPSO (i.e. Armada C7)?

The following are the figures from the annual reports:

Revenue:

2022 - RM36,567m
2021 - RM87,853m
2020 - RM95,209m
2019 - RM105,397m

Why has the revenue decreased so drastically in 2022? I've tried to research what the issue is, seems like there was no charter revenue for more than half a year.

It makes sense that there is a decreasing trend in revenue due to how revenue is recognised during the contract period, but the sharp drop in 2022 (coupled with more favourable FX rate) seems amiss.

Now that the Armada Claire chapter has been closed, we need further catalysts to drive the growth in the company and consequently, an appreciation in the share price.

First oil at the Armada Sterling V FPSO should be imminent, but there are lots of question marks here and a further delay cannot be discounted.

The award of the Cameia FPSO seemed like a done deal 6 months ago, now here too there are lots of question marks and the project might not even be sanctioned.

The Mumbai Port FSRU project seems to have fallen by the wayside, my research shows that the project has been put on the back burner by Mumbai Port as it no longer made economic sense.

So this now begs the question...the company is in remarkable financial health. We're ready to take on one large scale and one small/medium scale project on our own. But where are the contracts? The FPSO market is incredibly tight, so it is indeed worrisome that Bumi Armada has not been able to make much headway.

Lots of talk about gas solutions and carbon capture/storage in the annual report, but all that's just talk.

This year is going to be an incredibly crucial year - Bumi Armada has got to beef up the orderbook, else this is going to be a company slowly bleeding to death. The company is currently sustaining itself on two major FPSO - Kraken in the UK and Olombendo in Angola. The firm period for the former ends in 2025, for the latter in 2030. Time is ticking.

@Robert since the opening price was RM0.65, all opening bids above RM0.65 were filled at RM0.65. You can use this method to "jump the queue", as the higher bids will get higher priority to be filled at the opening price.

It will work the other way round too...you could place a sell order at RM0.64 but it would've been filled at RM0.65 (with a higher priority).

On 28 February 2023, the Company entered into a sale and purchase agreement for the disposal of its interest in SPBAOPL to Shapoorji Pallonji Energy Private Limited (“SPEPL”) (formerly known as Shapoorji Pallonji Oil and Gas Private Limited). The sale transaction was completed on 2 March 2023.

As a result, the Group and the Company’s investment in SPBAOPL has been reclassified to non-current asset held-for-sale as at 31 December 2022 as disclosed in Note 27.

----------

The book value of the above disposal is RM6.6m.

Does anyone have access to CIMB or UOB reports? Did they publish any "update" today? If yes, appreciate if you could share.

Armada Claire sale completed for USD20m. I posted a few weeks back that anything above USD20m would be a bonus, I guess we've just missed the threshold but still on the upper side of a satisfactory sale price.

Gain on disposal of USD12m (approx RM54m).

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3346652

I'm down for a Public Bank + Hong Leong Bank merger. Will help Public Bank get on with the times digitally. HLB digital experience leaps and bounds better than Public Bank.

Public Bank has a golden goose though that is not a part of its core banking operations...Public Mutual. Very profitable. Although sometimes I wonder how come their business so good despite the high fees and mediocre returns.

In any case, no one buys a company like Public Bank for high double digits returns. It's more slow and steady returns though capital appreciation and dividend accumulation.

I'm penciling in a dividend of 20 sen for FY2023, so that would be a dividend yield of some 5.0% at current price levels. Not sure how that's bad. Even if you forecast a lower dividend (18 sen = 4.5% yield, 16 sen = 4.0% yield etc), still pretty respectable.

Bought in at 3.93. Not sure where the weakness is coming from, but seems unwarranted.

1. Armada Sterling V first oil / commencement of charter
2. Sale of Armada Claire
3. Cameia FPSO contract award

All 3 "good news" are well overdue. They should be announced within the next 3 months (feels like I've been saying this for ages now). And with that, the fundamentals will improve, bit by bit. Any other positive major announcement other than these in the coming 3 months should be considered a bonus.

Chill fellas, the net profit will be around rm80m. Remember, Bumi Armada only owns 30% of the project.

How strange - stuck fishing nets! The salvage operations took nearly a month. I wonder how much this'd contribute to a further delay in the production of first oil.

India’s state-owned Oil & Natural Gas Corporation (ONGC) has taken to social media including Twitter to express its thanks to the Indian Navy for getting operations back on track at its Cluster 2 development on Block KG-DWN 98/2 off India’s east coast.

Operations at the operator’s first domestic deep-water project had been halted after the floating production, storage and offloading vessel Armada Sterling V became stranded due to large fishing nets getting entangled in its fuel extracting mechanism, the operator said.

ONGC via LinkedIn expressed its “immense gratitude” to the Indian Navy “for extending timely support in restoring the operation of KG-DWN 98/2 project off Kakinada”.

“Timely action by [the] Indian Navy has completely restored operations enabling considerable savings to the exchequer.”

ONGC added that the Indian Navy had responded quickly to the incident with their team of “highly professional” divers successfully clearing the nets despite extremely challenging underwater conditions - on account of which the salvage efforts took nearly a month.

The FPSO is owned by Shapoorji Pallonji Oil & Gas' 70:30 joint venture with Malaysia's Bumi Armada. Armada Sterling V is Indian contractor Shapoorji Pallonji's fourth FPSO and its third such unit for Indian waters.

The Armada Sterling V in late December was hooked up on ONGC's Cluster 2 asset and had been expected to start up in the first quarter this year. It is not known whether any hydrocarbons were produced before the above incident. The FPSO has processing capacity of about 60,000 barrels per day of liquids and 3 million cubic metres per day of gas.

ONGC is investing more than $5 billion on developing the Cluster 2 region of the flagship deep-water Block KG-DWN 98/2 asset, which is expected to produce up to 16.6 MMcmd of gas and 78,000 bpd of oil.

https://www.upstreamonline.com/field-development/fpso-woes-halt-operations-at-ongcs-flagship-deep-water-project/2-1-1432508

Something ought to be brewing...

Just an update, Pharos Energy had their investor meet recently, it was confirmed that the charter extension for the Armada TGT FPSO was secured until the end of 2026 (at similar rates to the current official extension to the end of 2024). The field operators are looking to get a license extension from 2026 to 2031, and thus the lease of the FPSO could be extended all the way to 2031 (at re-negotiated rates). My understanding is that the extension to 2026 was secured, and the potential extension to 2031 would be negotiated separately at some point in time in the future.

I wonder what the deal is today, it opened gap up +5%. Surely we are long due a positive announcement from Bumi Armada on Bursa Malaysia.

https://www.upstreamonline.com/exclusive/plans-afoot-for-ageing-fpsos-under-new-ownership/2-1-1427618

According to UpstreamOnline, a sale agreement has been reached (but not completed) for Armada Claire.

That's good news, this chapter is finally nearly closed. I wonder what price Bumi Armada manages to fetch, anything above USD20mil will be a bonus.

Any reason banking sector down today?

Is it easy to subscribe to RHB's DRP? Can be done online?

So even this is no longer confirmed. Not a good look for Bumi Armada

https://www.upstreamonline.com/exclusive/totalenergies-to-sanction-6bn-angolan-project-in-june/2-1-1419539?zephr_sso_ott=FBm2eu

That first oil / full acceptance must be coming near: https://www.linkedin.com/posts/ongc_ongc-on-board-engineering-marvel-activity-7039081149708578816-0-Fz

Bloodbath after recent high. Oh well, such is life. These market gyrations should have no bearing on long-term investors.

Just to share my thought process:

In the absence of any new developments, I will consider start to consider selling at RM0.80 level, strongly consider at RM0.90 level, and definitely cash in at RM0.95 level.

As and when further developments come to light, I'll adjust my price target view accordingly.

One thing I've missed out on and just realised is that there is a high likelihood of an extension in the firm charter period upon the expiry of the initial firm charter period for Armada Sterling II in Q2 2024.

From ONGC 2022 annual report:
Production of Cluster-7 & 8 fields of Mumbai High Asset increased from 5,700 bopd on 1 April 2021 to 16,800 bopd on 28 January 2022.

Cluster-7 and Cluster-8 are both tied to the Armada Sterling II FPSO. This augurs well for the long-term viability of the FPSO.

Why always remove my posts?

https://www.upstreamonline.com/exclusive/malaysian-floater-player-pins-down-strategy-for-african-fpso/2-1-1407761

The above is a bearish news, so I now doubt if a potential Cameia win is driving the share price movement.

Post removed.Why?

Happy to be proven wrong but the price movement seems very "unnatural", I'm gonna double down and say "good news" is imminent (though it make take days/weeks to materialise as insiders can sometimes possess this information far in advance from the public).

Everytime there's spikes like this, my thought process always goes to if "good news" is imminent. I would expect that there would be a spike like this in advance of the "good news", since insiders would be buying.

The "good news" here is either one of:
1) Award of Cameia FPSO contract
2) First oil for Armada Sterling V
3) Sale of Armada Claire FPSO

Hopefully Yinson take a chill pill soon. Give Bumi Armada some chance also lah!

Bon888, by 2025 Yinson is gonna be a powerhouse generating RM1bil++ of net profits per annum, and things will only get better from then on. They have long-term visibility on all their contracts.

Heck, they just won the Agogo FPSO with aggregate value of RM20.3bil. Just ONE of their project exceeds Bumi Armada's ENTIRE order backlog. Try to understand that.

Yinson is already on the next level. The higher P/E for Yinson simply implies that expectations of future profits are elevated (which is wholly warranted), while on the other hand, the lower P/E for Bumi Armada simply implies that expectations of future profits are muted (again, wholly warranted).

Bumi Armada is a sunset company if it cannot secure any new contracts. In this tight FPSO market with demand surpassing supply, it is tough to fathom how Bumi Armada still has nothing to show. Time is ticking, every day I check the news to see if Bumi Armada has secured a new contract.

For now, Bumi Armada is almost fairly valued, in the absence of any new contract wins.

No there is no immediate risk of rights issue. In fact, even if there is one more large scale FPSO fully owned by Buni Armada, I expect no issue to finance.