Member Info for epiphany121

Hey MO - the commentary below indicates that BUMI had to perform rectification work on AK in order to deliver the revised technical requirements for a commercial consensus. We noted that AK's AIS went offline just over a week ago, and we could speculate that was part of the rectification works being done. These works are possibly already underway and partly delivered as well. They've taken a charge of $25 million in Q2, presumably partly to cover the $15 mill payout and the remaining to cover the rectification charges. Obviously, these are my assumptions...

HK's destination to Scapa and Draught aren't updated yet on her AIS. Wait and watch..

BAB entered into an additional amended agreement with its clients for Armada Kraken (to
be effective from 31 July 2018), which allows the project to progress on a more defined
basis towards final acceptance of the vessel, by achieving commercial consensus on the
technical requirements to complete and rectify certain works on the FPSO to facilitate this.

WEny - this is old news from last year.

HK is done drinking and is making a move out from AK.

Over to MO/Chilts to make the offload assessments...

And finally, here's Jefferies' take on AK from a BUMI viewpoint, but does indicate that the day rates, after final acceptance, would be lower than the circa $500K day rate that was originally agreed in the contract.

First Report Out by Jefferies (TP: 0.95)

We maintain Buy on Bumi Armada (BAB) with a lower fair value of RM0.95, as we
reduced the value of FPSO Armada Kraken in our sum-of-parts valuation. BAB
recorded large one-off losses, largely relating to an impairment on Armada Kraken
following the amended agreement with its clients. This should pave the way in
securing final acceptance for the FPSO, which should strengthen its financials going
forward.

Kitchen sinking on FPSO Armada Kraken to facilitate final acceptance
BAB entered into an additional amended agreement with its clients for Armada Kraken (to
be effective from 31 July 2018), which allows the project to progress on a more defined
basis towards final acceptance of the vessel, by achieving commercial consensus on the
technical requirements to complete and rectify certain works on the FPSO to facilitate this.
Additionally, the parties have agreed to mutually waive their respective rights from certain
claims and events that occurred prior to the effective date of this agreement. As part of
these mutual waivers, BAB has agreed to pay its clients a total sum of USD15mil as
compensation.
BAB estimates a negative financial impact of USD25mil on its P&L for FY18, with ~50% of
the amount being recognised in 2QFY18. Additionally, BAB recognised an impairment loss
of USD119mil (RM477mil), based on the revised terms in the amended agreement.

Maintain Buy; TP reduced to RM0.95
All in all, it appears that BAB’s financial vitality hinges on its ability to secure the final
acceptance for Armada Kraken, which would lead to BAB receiving the full charter rates
from the contract. Management is more confident on achieving this in view of the revised
technical requirements under the amended agreement. Although we believe that the
expected contributions from Armada Kraken may be potentially reduced going forward from
the revised terms in the amended agreement, this would nevertheless create more
certainty in its future cashflow, which should also facilitate the restructuring of the group’s
balance sheet.

Here's another article with additional details of the AA2 Kraken FPSO amendment.

https://klse.i3investor.com/servlets/fdnews/245991.jsp

Obviously, this news leaked yesterday and hence the high volume/front running.

This bounce may or may not last as this is not operationally material news from a production viewpoint, but cash and lower finance lease amounts (on AK) does help net debt.

Look forward to H1 results next week, and even a minor up move to the projected production range for H2 2018.

Here are some snippets from their Q2 Analyst briefing, with regards to AK

--------------------------------------------------------------------------------------------------

 Armada Kraken:
I. Amendment to bareboat charter (AA2) has been signed
II. Now enabling progression towards final acceptance.
III. Mitigates various exposures under the original contract.

http://disclosure.bursamalaysia.com/FileAccess/apbursaweb/download?id=201910&name=EA_FR_ATTACHMENTS

------------------------------------------------------------------------------------

The link above to the KLSE website for BUMI's Q2 annoucement lays out some additional details of Amendment 2 to the AK FPSO agreement. We can only speculate, but it probably modifies terms such as 50k BOEPD plateau, which could've been baked into the acceptance criteria OR just more clear outcomes. Either way, Bumi has taken an additional 450 Mill Ringgit charge on AK, and much of it will lead to reduced operating costs for ENQ on AK, till final acceptance is signed off.

From our monitoring the offloads, we can see it's been up and down in terms of production at AK, but we should be OK with anything around the 40k boepd run rate, at least until DC4 comes online.

Best...

Neither of these..It's the 7th..

http://www.enquest.com/investors/financial-calendar.aspx

This could be down to the adjustment made for the bond interest payment made in cash, for the payment due on the 15th of August???

KrautBaby..just about right...

PMO's down on next to no volume. It'll bounce right back tomorrow..

Large trading blocks going through. Noted 2 blocks of 1.5 million shares each at 15:58. Trading volume for today at 4 PM is 17.5 million shares..Nice.

Hydra - have you looked at your favourite share ENQ today, or in the past few weeks for that matter? Clueless as ever..Lol..

43.5p. If this doesn't get Squif jumping up and down, I don't know what would..;-)

Good volume breakout is always reliable and bodes well for the near future.

GLA...

On a quiet day for the SP, we've seen trading volumes north of 10 million shares so far today. There's some quiet accumulation going on today. Signs and more signs of a breakout soon - maybe after the H1 results..

Enjoy your trip, Spindok. If you do get up all the way north to John O'Groats, you could see Heather Knutsen coming in to Scapa for an offload..;-)

We now sit back and wait for news..H1 update isn't too far away now - 10 days and counting.

Squif - Here's some notes from the BUMI message board that makes it obvious why BUMI badly needs sign-off on AK, and that extends beyond just getting additional revenues (and profits as a consequence). Sign-off reflects better on their balance sheet from a liquidity view-point and they don't have to live in fear of the AK FPSO Loan creditors calling in the loan in the near term. AK sign-off would certainly give a major push to their SP.

-------------------------------------------------------------------------------------------------------------------------------------------------

Armada's (BUMI) net current assets (current assets less current liabilities) is indeed illiquid at -RM3.8bn, as at 31 March 2018 balance sheet date. Technically, this means that they have a RM3.8bn financing gap that they need to plug in the next 12 months.

Current Assets: RM2.85bn (cash, receivables etc.)
Current Liability: RM6.65bn

However, if you look at Note 21 of the Q1 2018 financial statements, about RM2bn of current liabilities is related to Kraken, which the lenders are not calling. Once Kraken gets the final acceptance, this will be reclassified as long term debt, easing liquidity pressure.

"The amount due after one year from the reporting date of RM1,955.1 million remains classified as current liabilities as the project lenders of Armada Kraken Pte Ltd have the right to issue, but have to-date not issued, a cancellation notice for a full prepayment of the loan."

----------------------------------------------------------------------------------------------------------------------------------------------------

Chilts - Yes, agreed. Personally, I think we may see a retracement in both Brent and WTI from these levels. I'm guessing that API and EIA stats will come in weaker than forecast and this is about par for what we've been seeing over the past few weeks - one week up and down the next.

Chilts, did you mean Brent or WTI? Brent should be comfortably above the high, I believe..

MO/Chilts - It looks all hooked up, eh? HK's engines have been stopped for more than an hour now.

Squif - BUMI has a lot riding on the final acceptance of AK, as that has revenue and profit implications for them. Of course this is speculation, but ENQ may want to see this load out before final acceptance, and hence BUMI may be delaying any results announcement pending this..We'll know soon.