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Home > Business > Business News

Monday, 7 March 2016 | MYT 10:59 AM

Abrupt FPSO cancellation a major

setback for Bumi Armada, says
Maybank IB

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KUALA LUMPUR : Maybank IB Research is reviewing its

earnings forecast for Bumi Armada Bhd following the surprising
cancellation of its floating production storage and offloading
(FPSO) contract in the Balnaves field in northwestern Australia.
In a note today, the research house said that the contract was
worth USD593mil on a 4+4 years charter.
Based on our preliminary assessment, which is based on
limited information, this news is a major setback to Bumi

Armada's operations and financials. Typically, when an FPSO contract is terminated midway,
our understanding is that the the FPSO operator would be compensated accordingly based on
the legal contractual framework, it explained.
In a filing to the exchange on Mar 4, Bumi Armada announced that it had received a notice of
termination from Woodside Energy Julimar Pte Ltd in relation to the charter of the Armada
Claire FPSO vessel which has been operating since the Balnaves field delivered first oil in Aug
2014.
On the other hand, the oil and gas firm added in its filing that the purported notice of
termination is not valid. It also intends to fully enforce its rights under the contract, which may
include the initiation of legal proceedings against Woodside.

The cancellation will bring a negative knee-jerk reaction on Bumi Armada's stock, and the
matter is unlikely to be resolved anytime soon, said Maybank IB.
Shares of the company fell steeply in early trading today. The stock hit an intraday low of 75
sen before staging a rebound.
As at 11AM, the stock was last traded at 83 sen. It closed at RM1 on Mar 4.
Pending a review of Bumi Armada's contract situation, Maybank IB currently has a 'buy' call for
the stock with a target price of RM1.45.
TAGS / KEYWORDS:
Bumi Armada , Oil and Gas , Markets

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Market Summary
Updated: 07 Mar 2016 | 6:50 PM
Quotes are delayed by at least 15 mins

FBM KLCI

1697.93

Vol ('00)
5.44

24,365,739

0.32%

FBMKLCI

Day's Range

52 Weeks Range
1694.09
1710.2

Low
High

Low
High

1503.68
1868

Gainers

317

Losers

594

Unchanged

283

Untraded

539

Go to Market Watch

Market Movers
Active

Gainers

Losers

Symbol

Last

Chg

Vol ('00)

AAX-WA

0.185

0.035

1,985,706

AAX

0.315

0.015

1,557,284

ARMADA

0.790

-0.210

1,533,986

XOX-WA

0.055

0.005

906,738

XOX

0.170

0.020

810,298
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