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Bumi Armada slumps to $22m Q3 loss

Bumi Armada slumps to $22m Q3 loss
Malaysian oil and gas player Bumi Armada continues to struggle, turning in a MYR96.7m ($21.8m) third quarter loss from a MYR70m profit in the previous corresponding period as revenue fell due to a 68% fall in FPSO and FGS revenue to just MYR116m.

The earnings were however dampened by a MYRMYR4.2m charge made for available-for-sale financial assets and a MYR79.6m charge made for doubtful debts. Net losses would have been lower at MYR12.9m without these impairments.

Revenue fell by a third to MYR377.5m from MYR559.5m previously due to the completion of conversion activities on the Eni 1506 and Kraken FPSO projects and reduced contributions from Armada Claire, Armada Perdana and Armada Perkasa, Bumi Armada said in a stock market announcement.

The only bright spot was in the offshore marine services (OMS) segment where revenue increased 35% to MYR261.5m due to work related to the LukOil project in the Caspian Sea.

"The third quarter of 2016 continued to be challenging as the outlook for global growth, as well as geopolitical uncertainty, continued to undermine oil prices, which in turn limited new activities by oil companies," said Bumi Armada ceo Leon Harland.

He noted that while the OMS segment overall, which incorporates Bumi Armada's offshore vessel and servicing revenue has done well due to activities in the Caspian Sea, the OSV niche continues to be challenging, with rates under pressure due to the low demand and over supply of available vessels.

In particular, utilisation rates remained stagnant compared to the preceding quarter at 55%.

There were also bright spots ahead, he said. "While we have reported lower revenue from our FPSO and FGS segment in the third quarter of 2016 as projects completed their conversion activities, the positive is that these projects are now moving towards their operational locations," Harland said.

 For example, the Armada LNG Mediteranna, Armada Olombendo and Armada Kraken have all mobilised for their respective operational locations in Malta, Angola and the North Sea  and Bumi Armada now looks forward to entering the hook-up and commissioning stages to bring these new units on-line next year, which will in turn start to generate steady cash flow going forward.

"On a positive note, we have seen an improvement in FPSO project tendering and pre-qualification activities as oil companies start to look at bringing selected new fields into production," Harland noted.

"While we do not expect award decisions for new projects in the short-term, we remain optimistic on the long-term outlook," he concluded.