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Bumi Armada hit by Woodside Balnaves field FPSO contract termination

Bumi Armada hit by Woodside Balnaves field FPSO contract termination
Malaysian floating production storage and offloading (FPSO) vessel specialist Bumi Armada has been hit with a contract termination from Woodside Petroleum for its Armada Claire FPSO operating in the Balnaves Field offshore northwest Australia.

However, Bumi Armada believes the termination is illegal and will be pursuing legal means to enforce its rights, the company said in a stock market announcement.

The vessel has been operating in the Balnaves Field, off north-western Australia since delivering first oil in August 2014.

"Bumi Armada’s position is that the purported Notice of Termination is not valid, and in fact tantamount to a cancellation for convenience or alternatively, is a repudiation of the Contract by Woodside, pursuant to which the Company is entitled to compensation from Woodside," the company said.

It added that it intends to fully enforce its rights under the Contract, including initiating legal proceedings against Woodside for its unlawful purported termination of the Contract.

There is however expected to be a financial impact from the contract termination on the full-year 2016 financial results, Bumi Armada said, however added that the extent of this cannot be conclusively ascertained at this point as it will depend on the outcome of the company’s legal action against Woodside.

The contract would have been worth $593m on a four plus four years charter. The termination is seen as a major setback to Bumi Armada's operations and financials, although it is expected that the company will be compensated according to the legal contractual framework.