Malaysia-based international offshore oilfield services provider, Bumi Armada Berhad, has seen its 1Q 2015 net profit increase by 11.2% over the corresponding 1Q 2014 net profit.
Namely, the company’s net profit increased to RM72 million ($19.8 million) in 1Q 2015 over the RM64.8 million ($17.87 million) reported in 1Q 2014. 1Q 2015 net profit was a significant improvement over the loss of RM52.6 million ($14.5 million) in the preceding quarter, 4Q 2014.
Bumi Armada says that the 4Q 2014 profit was affected by charges related to allowance and impairment for certain trade receivables and available-for-sale financial assets. Net profit for 1Q 2015 includes a charge relating to the staff retrenchment exercise in the quarter, of RM20.6 million.
The company further states that 1Q 2015 saw a 22% increase in revenue, year-on-year, to RM572.2 million from RM468.9 million, due to additional contributions from the Eni 15/06 FPSO conversion project which were not present in 1Q 2014, as well as, higher conversion activities from the Kraken FPSO project and improved utilisation of tankers held as FPSO conversion candidates.
“Despite the ongoing weakness in the global oil and gas sector, we are encouraged by the financial results Bumi Armada has posted in the 1Q 2015,” Chan Chee Beng said.
The quarter-on-quarter (1Q 2015 vs 4Q 2014) reduction in revenue from RM701.8 million, a decrease of 18.5%, was attributable to lower activity recorded in the Transport and Installation (T&I) Business Unit, in particular for the LukOil project in the Caspian Sea, as well as, lower utilisation of Bumi Armada’s Offshore Support Vessel (OSV) fleet.
Commenting on the financial results, Chan Chee Beng, Executive Director and Acting Chief Executive Officer of Bumi Armada said, “Despite the ongoing weakness in the global oil and gas sector, we are encouraged by the financial results Bumi Armada has posted in the 1Q 2015. Recognising that the industry as a whole is going through challenging times, we continue our efforts to reduce cost, seek further ways to enhance efficiency and execute well on our existing projects.
“Our order book of RM38.9 billion (RM25.6 billion on firm contract periods and RM13.3 billion on optional extensions), is amongst the largest order books in Malaysia and provides us with a solid foundation to grow the Company.”
Closure of Oilfield Services Business Unit
“We have already taken significant actions to reduce cost and improve efficiency by reorganising our organisation structure to streamline our business, including the closure of our Oilfield Services Business Unit and downsizing of our T&I Business Unit, via a right-sizing exercise which was carried out across the organisation during 1Q 2015 through to April that is expected to yield an annual cost saving of up to RM 65.0 million going forward,” Chan added.
According to Bumi Armada, work on all three of the FPSOs currently undergoing conversion, the Armada Kraken (for the Kraken Field in the North Sea, for Enquest), the Armada Olombendo (for the Block 15/06 Field off the coast of Angola, for Eni Angola S.p.A) and the Rainbow 1 (yet to be renamed vessel, for the Madura BD Field in Indonesia, for Husky-CNOOC), are progressing well.