KUALA LUMPUR: Bumi Armada Bhd shares jumped almost 10% in early trade Tuesday after the company secured RM8.8bil nine-year floating production, storage and offloading (FPSO) contract.
The offshore oilfield services provider, which is the most active counter, gained 9.52%, or two sen to 23 sen with 178 million shares done.
Bumi Armada said its joint venture (JV) company Shapoorji Pallonji Bumi Armada Godavari Pte Ltd (SPBAG) has been awarded with the nine-year charter contract worth US$2.1bil.
Bumi Armada owns 30% of the JV company while Shapoorji Pallonji Oil & Gas.
The company said the contract was awarded by India’s Oil and Natural Gas Corp Ltd, for the charter hire and operations of one FPSO.
The contract is for a fixed period of nine years, valued at US$2.1bil, with an option to extend for an additional seven years on a yearly basis, at an aggregate contract value of some US$655mil if all extension options are exercised.
Affin Hwang Capital research maintained its buy call on Bumi Armada with a slightly higher target price of 31 sen on the back of the announcement that it had secured the KG-DWN98/2 FPSO contract from India ONGC.
"We have yet to factor in any earnings contribution from this contract pending further clarity on the undisclosed capex value and the funding approach.
"By our estimate, this ONGC contract could lift our valuation by another RM0.05/share, factoring only in the firm period," it said.