IOI Properties on shopping spree, eyes Tropicana Corp’s retail and hospitality assets

IOI Properties Bhd signed a sale and purchase agreement last week to buy W Kuala Lumpur from Tropicana Corp Bhd for RM270 million. However, the two companies have yet to end talks as two more assets have been put on the negotiating table. IOI Properties is said to be keen on buying Tropicana Gardens Mall in Kota Damansara, Selangor, and Courtyard by Marriott Penang, which together are valued at between RM800 million and RM1 billion.

https://theedgemalaysia.com/node/693558

From checks with my sources, Armada Sterling V is being repaired. One faulty pump is being replaced while another will arrive by the end of this week.

Tentatively, they're looking at attempting first oil in the 2nd week of January 2024.

Take everything with a large pinch of salt (yet keep your fingers crossed at the same time) as the project has been beset with never ending delays.

What do you mean? I've never received any warning of any sort for cancelling unfulfilled orders.

"In Cluster-II, commercial production from one gas field has already commenced from March 2020 and commercial production of crude oil is scheduled for May 2024In Cluster-II, commercial production from one gas field has already commenced from March 2020 and commercial production of crude oil is scheduled for May 2024. The project is likely to achieve full completion by 2024."

Source: https://energy.economictimes.indiatimes.com/news/oil-and-gas/ongc-to-start-commercial-oil-production-from-kg-block-in-may-2024-minister/105726514#:~:text=3%20min%20read-,ONGC%20to%20start%20commercial%20oil%20production%20from%20KG%20block%20in,have%20been%20clubbed%20into%20clusters.

According to my sources, the Dec 2023 first oil date as stated in ONGC LinkedIn is very tight, internally they are looking at mid Jan 2024 to receive the first oil.

I think the minister's statement in Indian Parliament has caused some confusion, not sure why he said proeuction to commence in May 2024.

Yinson is not necessarily a better buy. For starters, it is not "cheap" as there is a lot of expectations baked into the share price already (quite the opposite as Bumi Armada). And there is considerable project execution risk as they are concurrently working on 3-4 FPSOs.

While Yinson may yet turn out to be a decent investment, the "easy money" has been made.

@Dehcomic01

Sometimes things are not as they seem. As things stand, Bumi Armada's ROE and EPS is "high" but if you look into the future based on their firm contracts, this is only temporary. From Y2025 onwards, the ROE will start falling as the TGT, Sterling II and Kraken FPSO contracts expire. The Kraken contract is a key turning point as even if it is extended into the option period, it will be at a significantly lower day rate (though partially mitigated by lower borrowing/depreciation expenses as well).

And Bumi Armada's ROE and EPS will fall off a cliff in 2030 when the Olombendo FPSO firm contract period ends (even if it is extended into the option period, the profitability will be significantly lower).

2 to 3 years ago, when the share price was under 30 sen and the ROE/EPS started recovering strongly, Bumi Armada was a great buy. The Kraken turning point in Y2025 still seemed far away, there seemed to be time to lock-in a large scale FPSO contract in the mean time to replenish the orderbook.

Yet the years have passed and Bumi Armada has pretty much exited the profitable FPSO business due to reputational and skillset issues. Now they have turned the focus to the green space (FSRU, FLNG, FSCIU) but there's nothing to show and the profitability will unlikely be as good as FPSOs.

Add to that, the delays with Armada Sterling V, the one small glimmer of growth. And we have a dud.

Mind you, Bumi Armada is still a decent buy at 50 sen. Heck I'm holding more than half a million shares and haven't sold (in fact I added during the Kraken fiasco). But it's not hard to see why Bumi Armada's valuation is undemanding in the market.

As far as hidden value goes, Bumi Armada doesn't have much of it any longer. So the only thing any of us can do, is hope that they win new contracts (and win them soon!) and their current contracts see lengthy extensions.

TLDR: Ignore the high ROE, low P/B and low P/E ratios. They don't give the full picture, and if you buy into Bumi Armada right now just based on that premise, things may not go so well.

Interestingly, according to my sources, the first oil date remains as January 2024. They've identified the issue and are working to resolve it. Let's wait and see.

EVEBITDA you are wrong on one count. Not sure where you get the idea that Armada Sterling V will not be contributing any cashflows to Bumi Armada during the initial 9 year firm charter period. The cashflows will come from the dividend or redemption of preference shares (the method used for Armada Sterling 1/2/3).

Yes it won't be scrapped but it might be delayed indefinitely. Just like what's been happening now. Initially due to start Sep 2021 but delayed to May 2022 due to Covid. That is understandable. But then it kept getting pushed back. To Dec 22, then Apr 23, then May 23, then Aug 23, then Oct 23, then Nov 23, then Dec 23 and now May 24.

Such a lengthy delay out of the blue must mean that there are teething or even terminal problems.

This means that the FPSO would be idle from Dec 2022 to May 2024. How would this impact the production systems? Would they corrode or degrade after such a lengthy time of not being used?

I say, be prepared to write-off Armada Sterling V FPSO.

A pump of some sort had failed abroad the FPSO.

Woah what a shit show. It is highly likely the issue is related to the FPSO to some degree. As they were all ready to receive first oil last month and there was equipment failure on the FPSO.

@Rohank regardless, the extended delay is a net negative to Bumi Armada. This new project should be contributing around RM120m in net profits per year for the 30% stake, equivalent to 2 sen per share. This was supposed to be a growth catalyst, albeit a small one, to a record-breaking profit year next year.

If the issue with Armada Sterling V is terminal, then yes Bumi Armada's direct losses may be limited to the US$30mil (which itself is some RM140mil, not an altogether small sum), but it will impact the future profits and the company's reputation adversely.

@i3lurker there is always a possibility the FPSO will never be functional. I hope Bumi Armada doesn't take part in a project with minority stake in the future. Too much as risk when they need to depend on the expertise of others.

@Agreetkumar I suggest to exclude standby DCR as the issue seems to be with the FPSO, so they won't be getting any standby DCR while the delay persists.

I have some very bad news people. Armada Sterling V first oil has been further delayed to 15/01/2024 at the earliest. Possibilities of subsequent delays remain as they're dealing with some teething issues that might take a while to understand and resolve.

With Bumi Armada, expect the unexpected.

Seems like some heavy selling....

There might be an issue with a water injection pump onboard one of the producing FPSOs. Hearing something about it. However, I'm unsure if the impact is material and if that's what's driving the price lower.

By right, if there's any material impact to production arising from equipment failure, Bumi Armada needs to make announcement to Bursa Malaysia.

Beautiful!

Anything can happen. Expect the unexpected. There's also a chance the FPSO might just never produce, the way things are going. Incompetence. These things can only happen in India.

First oil delayed to around Dec 15th

During the ten months to end October 2023, average gross production was 19,108 Boepd (net 13,471 Boepd), which is reflective of high uptime before and after the anomalous failure of hydraulic submersible pump (‘HSP’) transformer units during the first half of the year. Since the efficient return to service of the floating production, storage and offloading vessel (‘FPSO’) restored full production in early August, the Group has overseen a return to top quartile performance, with the FPSO delivering production efficiency and water injection efficiency of 100% for the months of September and October. In addition, delivery and deployment of new HSP transformer units has provided increased resilience to production capacity.

Production in the second half of the year has benefited from the removal of two planned periods of single train operations, with the Group having executed maintenance work while production at the FPSO was shut-in. As a result, no further planned maintenance outages are anticipated during 2023.

Looking ahead, the Group has procured a mobile offshore drilling unit for the proposed drilling of two wells at Kraken during 2025.

https://www.enquest.com/media/press-releases/article/operations-update-17

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Positive update from Enquest. Further drilling in 2025 means that the FPSO's charter will be extended into its option period. Note that the Kraken FPSO's firm charter period ends in 2025.

Quiet day, not even half a mil traded. Calm before the storm perhaps?

Seems like there might be an FSRU award soon. Unknown if this is related to the Mumbai FSRU project or not.

Don't forget, we have so many announcements with zero follow through for now. We best see things moving by Q1/Q2 2024, otherwise we can conclude that Bumi Armada is heading to its sunset.

1. Mumbai FSRU (JV with Shapoorji)
2. UK FSCIU (JV with Navigator Gas)
3. Madura FLNG (JV with Pertamina)
4. Akia PSC (JV with Pexco)
5. Akia FPSO + FLNG (JV with Pexco)
6. Unknown Indonesian CCS FEED (unknown)
7. Budi Onshore Gas Plant pre-FEED (unannounced)

I think they focus on selling off the Armada Installer / Constructor in Russia and work to pay off the RM1.5bil Sukuk due in September 2024 (instead of refinancing it). There will be sufficient internally generated funds to make the payment since the unsecured term loans have been refinanced to a much later date.

There is also a small but non-zero possibility that Armada TGT is sold off to the field operators. But more likely we will get an announcement of a 2 yr firm + 5 yr optional extension for the FPSO there in the coming months. This extension alone will add around 10 - 15 sen to Bumi Armada's valuation.

@MM78, it's down to orderbook replenishment. Simple enough!

Management has failed to secure any new contracts since 2015(!) with the exception of the Armada Sterling V FPSO project in India, and even that is only with a minority stake of 30%.

People here have made many excuses, but to me they don't fly. We have had a tight FPSO market for 3 years now and have successfully cleaned up the balance sheet, and yet, we've got nothing to show for it.

As it is, the market is valuing Bumi Armada at a discount simply because there is no major growth catalyst.

Yes, the P/E is low, the P/B is low, the ROE is at double digits...all these will continue remaining so only until 2025, cause after that once Kraken FPSO enters the option period, you will start to see profits decline, P/E increasing, P/B increasing and ROE falling.

Delay of at least another week.

I swear, it feels like this FPSO is never coming online!

From what I understand, first oil is yet to be achieved. Will try for today or tomorrow.

Around RM120m per year (equivalent to 2 sen EPS)

Final acceptance usually around 3 days from first oil. Full acceptance will be around 3 to 6 months from the final acceptance date.

In any case, Bumi Armada is notorious for late announcement to Bursa Malaysia.

Case in point - Armada Olombendo achieved first oil on 8 Feb 2017 (and was also reported on Upstreamonline), but Bumi Armada only published the announcement to Bursa Malaysia on 17 Feb 2017. So much time for insiders to buy in and reeks of poor corporate governance. Lets see if they improve this time around.

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Malaysia, 17 February 2017 - Bumi Armada Berhad, Malaysia-based international offshore
energy facilities and services provider is pleased to announce that its floating production storage
and offloading (FPSO) unit, Armada Olombendo, has achieved first oil production in Block 15-06
in Angola, for Eni Angola S.p.A.(“Eni Angola”), on 8 February 2017.

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=2735893

If what CT888 says is true, this means I received conflicting information.

Latest I have on the Armada Sterling V FPSO is that first oil is delayed due to equipment malfunction. Could be as short as a few days to resolve it or longer than that, as the issue is of an unknown severity - it needs to be checked by the supplier.

Still not yet, hang in there and keep your fingers crossed!

Some additional information on the CO2 JV with Navigator Gas: https://i.ibb.co/DDPfnSv/image.png

Still waiting for first oil

CT888

top up full today.
Armada will soon close the gap down fr 62cts (om 2June)

CT888

1st oil is on track.
I can only say this much, believe it or not upto u

@CT888 I wouldn't be so boastful of my trades at the close if I were privy to insider information. Be careful. Bursa Malaysia monitors all transactions.

If my source(s) are to be trusted, first oil is all ready for tomorrow. So lets keep our fingers crossed.

Final/full acceptance will still be around 6 months away. Provisional acceptance will be within 48 - 72 hours.

First oil coming tomorrow

Have a good weekend folks. Hopefully there's some good news to be shared come Monday morning!

https://assets.theedgemarkets.com/pics/2023/20231117Bumi1v2.png

If somebody can share the report by CIMB, that'd be much appreciated. It's usually the most meaty, well-written report.

AmInvest: The group’s 30%-owned FPSO Armada Sterling V is expected to see first oil by 21st November, which will be followed by the vessel acceptance test which may take up to 3 days.

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Kenanga analyst must be sleeping on the job.

From Kenanga report: ARMADA has guided that first oil could be in 1HFY24 but the exact date was not provided.

WTFFF!!!

Next thing they need to do is sell off the Caspian subsea assets.