Bumi Armada Shares Rise In Early Trade After Securing Contracts

KUALA LUMPUR, March 10 (Bernama) -- Bumi Armada Bhd shares rose in early trade after the group secured two contracts worth a total of RM578.4 million from India's state-owned oil company Oil and Natural Gas Corporation Ltd (ONGC).

As of 10.07 am, Bumi Armada’s stock price edged up one sen to 55 sen with 1.62 million shares traded. 

In a filing with Bursa Malaysia last Friday, the offshore oil and gas services firm said its joint-venture (JV) company Armada C7 Pte Ltd clinched a bareboat charter lease of the Armada Sterling II floating production, storage and offloading vessel (FPSO) without operator for a fixed period of three years with an annual option to extend for up to three additional years. This fixed period charter has an estimated value of RM451.4 million.

In addition, Bumi Armada’s JV company Shapoorji Pallonji Armada Oil and Gas Services Pte Ltd (India) was awarded a contract worth RM127 million for the operation and maintenance (O&M) of the Armada Sterling II FPSO. 

“The O&M is effective from March 8, 2025, for a fixed period of three years, with an annual option to extend the charter for up to three additional years,” it said.

The Armada Sterling II FPSO is deployed at the ONGC Cluster-7 Field, located off the west coast of Mumbai, India. 

In a research note today, Public Investment Bank Bhd viewed the extension positively, saying it ensures the FPSO’s cashflow visibility over the next three years.

“Our estimates suggest the FPSO could contribute about RM47 million annually, accounting for 5.4 per cent of our projected earnings during the firm period.

“However, we are not revising our estimates, as the extension was widely anticipated based on management’s guidance with negligible charter rate variance from the first annual extension in March 2024,” it said. 

Public Investment Bank also said that the contract extension underscores Bumi Armada’s  operational resilience which could have positive impact on the on-going merger exercise between Bumi Armada and MISC Bhd’s offshore units.

“We maintain our ‘outperform’ call and target price (TP) of RM0.67 per share,” it added. 

Meanwhile, Kenanga Investment Bank Bhd stated that the win is positive and deemed within expectation as its model has imputed contract extensions for the asset up to 2030.

“Even so, we wish to note that the margins on the extensions will be higher as the asset might have been largely depreciated as it has completed its long-term firm charter.

“We maintain our forecast with TP held at RM0.60 per share. Market perform call is maintained as well,” it said.

-- BERNAMA