Malaysia's Bumi Armada 2015 Revenue Down 9% to $516M, Posts $56M Net Loss

Malaysia's offshore energy facilities and services provider Bumi Armada Berhad posted a net loss of $55.5 million (MYR 234.6 million) for financial year 2015 (FY 2015) ending Dec. 31, 2015, compared to a net profit of $51.7 million (MYR 218.7 million) in the previous year, the company said when releasing its financial results Friday.

Revenue during this period reached $515.5 million (MYR 2.179 billion), down 9.1 percent from $694.6 million (MYR 2.937 billion) in 2014, with the decline attributed to lower contributions by the company's offshore support vessel (OSV) and transport and installation (T&I) business, which recorded a decline of 17.8 percent and 57.7 percent, respectively.

Meanwhile, Bumi Armada's floating production storage and offloading (FPSO) and floating gas solutions (FGS) segments made a 37.6 percent gain in revenue in FY 2015 over the previous year due to higher activities in the two business segments.

Turnover in the fourth quarter of 2015 (4Q 2015) fell 16.1 percent from the corresponding period last year to $139.3 million (MYR 589 million), while its net loss widened to $20.1 million (MYR 85.1 million) mainly due to non-cash charges.

“The market remains extremely challenging in the services segment of the offshore O&G (oil and gas) business, highlighted by the decline in both utilization and newchartering and contract activities in both the OSV and T&I segments. In 4Q 2015, the Company made allowances for certain overdue accounts, but we will nonetheless seek to recover these amounts, as we have done in the past. Excluding the non-cash charges, the Group would have reported a profit of approximately $33.6 million (MYR 142 million) for the quarter," Chan Chee Beng, acting chief executive of Bumi Armada said in the press release.

Given the continuing volatility in oil prices, Bumi Armada will continue to focus on cost management and operational efficiency in order to successfully operate through this difficult period, with the firm making some significant reductions in its selling and distribution costs, as well as administrative expenses in FY 2015.

"2016 will continue to be a very busy year as we look to deliver four large projects – three FPSOs and one LNG FSU (liquefied natural gas floating storage unit) -- which are all scheduled to be operational in 2017, significantly increasing the cash flows and profitability of the Group. The expected revenue from these new projects forms a large part of our current firm order-book of $6.5 billion or MYR 27.5 billion (with potential extension options of $3.6 billion or MYR 15.3 billion)," Chan commented.

Globally, industry players expected the FPSO sector, which has been negatively impacted by the cutbacks in capital spending by oil companies in the current downturn, to see few new orders this year.

Meantime, more existing FPSOs -- now without contracts -- are available for work. The number of such FPSOs rose to 17 after BW Offshore -- one of the world's largest FPSO player -- said in January that it had reached an agreement with Ithaca Energy Inc. to mutually terminate the contract for FPSO BW Athena in February, Energy Maritime Associates Managing Director David Boggs told an industry forum last month.

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