By MARK RAO

BUMI Armada Bhd returned to the black in the second-quarter (2Q) of 2017, helped by improved contribution from the floating production and operation (FPO) segment. 

For the quarter ended June 30, 2017, the world’s fifth-largest floating, production, storage and offloading (FPSO) company posted a net profit of RM116.59 million compared to the RM518.32 million loss recorded in the same quarter a year ago. 

The FPO business recorded a 116.9% revenue increase year-on-year (YoY) to RM337.64 million, mainly contributed by the Armada Olombendo FPSO and Armada Liquefied Natural Gas (LNG) Mediterrana Floating Storage Unit (FSU). 

Turnover from the two units also increased 72.4% YoY to RM694.42 million. 

One-off revenue recognition from the completed work on the LukOil project helped Bumi Armada’s turnover for the quarter. 

But the lower utilisation of three offshore support vessels (OSVs) prevented the company from achieving a better result. 

Bumi Armada ED and CEO Leon Harland said the improved 2Q17 performance highlights the group’s ongoing recovery amid subdued market conditions. 

“The FPO business is picking up as our new major projects have come online and are contributing positively,” Harland said. 

“In 2Q17, we had a full quarter of contributions from both the Armada LNG Mediterrana FSU and the Armada Olombendo FPSO in Malta and Angola respectively, while also seeing revenue come in from the Armada Kraken FPSO in the UK towards the end of the quarter.” 

He added that the Indonesia-based Karapan Armada Sterling III FPSO passed its 72-hour test this quarter and started to contribute to group earnings. 

“We will further improve the income streams for the group in the second-half of this year and complete a challenging, but progressive transformation year in our FPO business unit,” he added. 

He said Bumi Armada will bid on new FPO projects and has been putting efforts on selected tenders, with decisions to be announced over the course of next year. 

Due to the depressed oil price environment, the offshore player is bracing for a continued slowdown in new exploration activities — which will negatively impact its offshore marine services (OMS) business. 

The OMS segment recognised higher revenue by 44.3% YoY to RM356.78 million in 2Q17, boosted by higher contribution from the LukOil project and reduced OSV operating cost and depreciation expense. 

However, total revenue for the ongoing financial year is expected to improve, on the back of four major conversion projects to be completed in 2017. 

Bumi Armada did not declare a dividend for 2Q17.