Malaysia-based offshore oilfield services provider Bumi Armada Berhad raised approximately $525.23 million (MYR 1.979 billion) through a rights issue last October, with the firm approving changes to the utilization of funds Tuesday to provide more capital expenditure for the floating production, storage and offloading (FPSO) and the new floating gas solutions (FGS) business units, the company said in a filing with local stock exchange Bursa Malaysia Wednesday.
Bumi Armada increased funding for its core FPSO and FGS business units by 8.6 percent to $403.40 million (MYR 1.52 billion) from $371.6 million (MYR 1.4 billion).
"Capital expenditure will encompass FPSOs of any liquid or gas production capacity (previously capacity of 70,000 barrels per day or more) in any location (previously in locations in Asia, Africa or Latin America), as well as capital expenditure in gas related vessels such as floating liquefied natural gas units, floating storage and regasification units and floating storage units, under the FGS business unit," the firm said.
A part of the funds channeled to the FPSO and FGS segments came from the Transport and Installation (T&I) buiness units, which sees its previous allocation of $53.08 million (MYR 200 million) reduced to $21.23 million (MYR 80 million), while the remaining $31.85 million (MYR 120 million) were re-allocated to the former. Bumi Armada added that the reduced sum budgeted for the T&I sector will be used to cover capital expenditure in work barges and pipe-lay and trenching equipment.
Meanwhile, the Offshore Support Vessel (OSV) unit has benefited from the dissolution of the Oilfield Services business unit as $21.23 million (MYR 80 million) intended for use by the latter has been re-allocated to the OSV segment.
"The reallocation of the Rights Proceeds reflects the Bumi Armada Group’s overall strategy of focusing on its core FPSO business and enhancing its OSV and FGS capabilities. The Board believes this is an appropriate strategy to weather the current challenges in the offshore oil and gas sector, brought about by the decline in oil prices since the second half of 2014," the company commented.
Crude oil prices are currently down around 40 to 50 percent from a year ago, having fallen from the psychologically significant $100 a barrel mark. Benchmark Brent crude oil futures and U.S. West Texas Intermediate crude oil futures closed Wednesday at $62.01 a barrel and $56.96 a barrel, respectively.
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