KUALA LUMPUR: Bumi Armada Bhd plans to allocate US$600 million to US$800 million (RM2.54 billion) for capital expenditure in FY12 in a bid to increase its asset base in the markets where it is operating currently, said CEO Hassan Basma.
He said the extra spending will be used to expand its operations in the 11 countries it has a presence. The bulk of the expenses will be used for building floating production storage and offloading (FPSO) vessels, Bumi Armada’s main strength.
“Bumi Armada is looking to secure two good FPSO projects annually,” he told reporters after the company’s 3QFY11 results briefing yesterday.
According to Hassan, the company is looking for six to eight prospects at all times to achieve its target of securing two contracts per year.
According to Bernama, the company is currently looking at six prospects to tender. The contracts are in various countries such as India and Indonesia where Bumi Armada has operations.
In a presentation to reporters during the event, Hassan said there is strong demand for FPSO in key markets such as Asia, Africa and Latin America.
For its 3QFY11 ended Sept 30, Bumi Armada posted a 7.5% decline in net profit to RM92.58 million from RM100.08 million a year ago on the back of an increased revenue of 22.8% to RM403.92 million from RM328.9 million previously. The lower profit was due to expenses incurred in the company’s listing on July 21 that amounted to RM20.3 million.
For the nine months ended Sept 30, its revenue increased by 34.8% to RM1.17 billion from RM870.22 million a year ago, while net profit was down by 2.3% to RM234.91 million from RM240.38 million previously.
Hassan said the increase in revenue was generally driven by higher activities across all its business segments, particularly from the FPSO and offshore support vessel (OSV) divisions. Bumi Armada is the largest OSV owner operator in Malaysia and the sixth FPSO operator in the world.
The company’s main revenue driver, its FPSO division, contributed RM177.53 million or 44% of its total revenue in 3QFY11. Its OSV division accounted for 33%, followed by transport and installation (T&I — 12%) and oilfield services (11%).
The revenue increase came mainly from two major FPSO contracts — Apache in Australia for the Balnaves field and and ONGC in India for the D1 field.
Hassan said oil prices are a leading indicator and oil is trading above US$70 (RM221.90) per barrel, which is positive for the long-term development and future investment on oil and gas exploration and production (E&P).
He said analysts are expecting 150 FPSOs in the next five years, which creates a demand of about 30 FPSOs a year. He said the capacity or supply of the industry is about 20 FPSOs a year, which will make demand higher than supply.
Asked if Bumi Armada paid US$20 million for a vessel named Rainbow River, he said the company has not purchased the vessel but has the option to.
Hassan said in October that Bumi Armada had completed the conversion of a floating storage offloading (FSO) vessel and sold it to Petrofac Ltd for its Sepat oilfield located offshore Terengganu. It is expected to produce oil by December. This was the first project that was done in less than 12 months in Malaysia.
CFO Shaharul Rezza Hassan said the quarter-on-quarter contribution from FPSO remains mostly unchanged due to the declining US dollar despite the Apache contract.
On its OSV segment, Shaharul said the fleet utilisation rate has improved throughout the year. It utilisation rate (not including JV vessels) for 3QFY11 improved to 93% compared to 83% in 2QFY11.
Shaharul said leverage improved with net debt-to-earnings before interest, tax, depreciation and amortisation (annualised) ratio declining to 2.1 times in 3QFY11 from 5.1 times in 2009, while its gearing ratio has fallen to 0.8 times in 3QFY11 from four times in 2009.
As at end-September, Bumi Armada had deposits, cash, and bank balances totalling RM992.83 million, while total borrowings amounted to RM2.68 billion.
As at end-September, Shaharul said, Bumi Armada’s firm contract order book stood at RM7.2 billion (which includes 50% share of the ONGC D1 contract), of which 72% was from the FPSO segment, 18% from T&I, and 10% from OSV operations. It had RM3.1 billion worth of contracts with options to extend.
CIMB said in a research note yesterday Bumi Armada is in the running to secure the Belud FPSO contract, which may be awarded in two to three weeks, adding that it is vying for FPSO opportunities in Vietnam, Angola, Nigeria and Brazil.
CIMB said Bumi Armada may not win Vietnam’s Lam Son project but is competing for the Belud and Bunga Kamelia FPSO jobs at home. Bumi Armada currently has FPSO presence in Nigeria, Vietnam, Australia and India, it added.
The research house said that Bumi Armada is keen to take on more direct responsibility as a marginal field producer and developer.
“Management is in talks with international oil companies such as Apache and plans to unveil a new business plan for marginal fields in 1QFY12,” it said.
CIMB expects Bumi Armada’s 4QFY11 to be stronger leading to a record year due to the first full-quarter contribution from the Apache contract and the return of Armada Installer to the Caspian Sea in December.
CIMB retained its “outperform” call on Bumi Armada with a target price of RM4.61, due to new FPSO contracts and marginal field works. Shares of Bumi Armada closed three sen higher to RM3.97 yesterday. Its stock has climbed 31% from its IPO price of RM3.03 on July 21.
This article appeared in The Edge Financial Daily, November 22, 2011.
He said the extra spending will be used to expand its operations in the 11 countries it has a presence. The bulk of the expenses will be used for building floating production storage and offloading (FPSO) vessels, Bumi Armada’s main strength.
“Bumi Armada is looking to secure two good FPSO projects annually,” he told reporters after the company’s 3QFY11 results briefing yesterday.
According to Hassan, the company is looking for six to eight prospects at all times to achieve its target of securing two contracts per year.
According to Bernama, the company is currently looking at six prospects to tender. The contracts are in various countries such as India and Indonesia where Bumi Armada has operations.
In a presentation to reporters during the event, Hassan said there is strong demand for FPSO in key markets such as Asia, Africa and Latin America.
For its 3QFY11 ended Sept 30, Bumi Armada posted a 7.5% decline in net profit to RM92.58 million from RM100.08 million a year ago on the back of an increased revenue of 22.8% to RM403.92 million from RM328.9 million previously. The lower profit was due to expenses incurred in the company’s listing on July 21 that amounted to RM20.3 million.
For the nine months ended Sept 30, its revenue increased by 34.8% to RM1.17 billion from RM870.22 million a year ago, while net profit was down by 2.3% to RM234.91 million from RM240.38 million previously.
Hassan said the increase in revenue was generally driven by higher activities across all its business segments, particularly from the FPSO and offshore support vessel (OSV) divisions. Bumi Armada is the largest OSV owner operator in Malaysia and the sixth FPSO operator in the world.
The company’s main revenue driver, its FPSO division, contributed RM177.53 million or 44% of its total revenue in 3QFY11. Its OSV division accounted for 33%, followed by transport and installation (T&I — 12%) and oilfield services (11%).
The revenue increase came mainly from two major FPSO contracts — Apache in Australia for the Balnaves field and and ONGC in India for the D1 field.
Hassan said oil prices are a leading indicator and oil is trading above US$70 (RM221.90) per barrel, which is positive for the long-term development and future investment on oil and gas exploration and production (E&P).
He said analysts are expecting 150 FPSOs in the next five years, which creates a demand of about 30 FPSOs a year. He said the capacity or supply of the industry is about 20 FPSOs a year, which will make demand higher than supply.
Asked if Bumi Armada paid US$20 million for a vessel named Rainbow River, he said the company has not purchased the vessel but has the option to.
Hassan said in October that Bumi Armada had completed the conversion of a floating storage offloading (FSO) vessel and sold it to Petrofac Ltd for its Sepat oilfield located offshore Terengganu. It is expected to produce oil by December. This was the first project that was done in less than 12 months in Malaysia.
CFO Shaharul Rezza Hassan said the quarter-on-quarter contribution from FPSO remains mostly unchanged due to the declining US dollar despite the Apache contract.
On its OSV segment, Shaharul said the fleet utilisation rate has improved throughout the year. It utilisation rate (not including JV vessels) for 3QFY11 improved to 93% compared to 83% in 2QFY11.
Shaharul said leverage improved with net debt-to-earnings before interest, tax, depreciation and amortisation (annualised) ratio declining to 2.1 times in 3QFY11 from 5.1 times in 2009, while its gearing ratio has fallen to 0.8 times in 3QFY11 from four times in 2009.
As at end-September, Bumi Armada had deposits, cash, and bank balances totalling RM992.83 million, while total borrowings amounted to RM2.68 billion.
As at end-September, Shaharul said, Bumi Armada’s firm contract order book stood at RM7.2 billion (which includes 50% share of the ONGC D1 contract), of which 72% was from the FPSO segment, 18% from T&I, and 10% from OSV operations. It had RM3.1 billion worth of contracts with options to extend.
CIMB said in a research note yesterday Bumi Armada is in the running to secure the Belud FPSO contract, which may be awarded in two to three weeks, adding that it is vying for FPSO opportunities in Vietnam, Angola, Nigeria and Brazil.
CIMB said Bumi Armada may not win Vietnam’s Lam Son project but is competing for the Belud and Bunga Kamelia FPSO jobs at home. Bumi Armada currently has FPSO presence in Nigeria, Vietnam, Australia and India, it added.
The research house said that Bumi Armada is keen to take on more direct responsibility as a marginal field producer and developer.
“Management is in talks with international oil companies such as Apache and plans to unveil a new business plan for marginal fields in 1QFY12,” it said.
CIMB expects Bumi Armada’s 4QFY11 to be stronger leading to a record year due to the first full-quarter contribution from the Apache contract and the return of Armada Installer to the Caspian Sea in December.
CIMB retained its “outperform” call on Bumi Armada with a target price of RM4.61, due to new FPSO contracts and marginal field works. Shares of Bumi Armada closed three sen higher to RM3.97 yesterday. Its stock has climbed 31% from its IPO price of RM3.03 on July 21.
This article appeared in The Edge Financial Daily, November 22, 2011.
