KUALA LUMPUR: RHB Research has maintained its Buy call on Bumi Armada with a fair value of RM4.50, saying that investors should accumulate the stock ahead of potential contract wins for projects that have been long delayed, namely the Madura FPSO vessel charter contract.
“We are also anticipating more details of the Kraken oil field FPSO contract. As such, there is still more upside to our FY14/15 earnings estimates,” it said in a note on Tuesday.
RHB said Bumi Armada announced that Afren Energy Resources Ltd (Afren Energy) has extended its contracts for a bareboat charter with Armada Floating Solutions Ltd as well as the operations and maintenance services with Bumi Armada (Singapore) Pte Ltd in respect of the Armada Perkasa, a floating production, storage and offloading (FPSO) vessel for two more years.
“Both companies are wholly-owned subsidiaries of Bumi Armada. The extension period will commence on Jul 1,2014 and is worth around US$68m (RM221mil) in total.
“The Armada Perkasa, which was deployed to offshore Nigeria in the Okoro-Setu field, has the capacity to store 360,000 barrels of oil,” it said.
It added the original contract was awarded in 2007 and took effect from Jul 1, 2008. It was for a fixed period of five years, with five 1- year extension options.
“The first option period was exercised last year and took effect from Jul 1, 2013. Inclusive of option extension periods, as at October, Bumi Armada’s total orderbook stands at around RM7bil,” it said.
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