Yinson jumps nearly 7% after bagging RM22b contracts

By SHAZNI ONG / Pic By BLOOMBERG

SHARES of Yinson Holdings Bhd jumped nearly 7% after the company said it had secured two long-term contracts worth US$5.4 billion (RM22.63 billion) from Petróleo Brasileiro SA (Petrobras) yesterday.

At 9.59 am, the stock was up 6.9% at RM7.31, the most in over four months.

Shares of the upstream oil and gas (O&G) support service provider closed the day 2.19% higher at RM6.99, while the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 0.6%.

Trading of Yinson shares resumed at 10am yesterday, after having been suspended on Monday and Tuesday, pending the announcement. The stock was last traded last Friday at RM6.84.

The group has been awarded two letters of intent (LoIs) by Petrobras for the charter, operations and maintenance of a floating, production, storage and offloading (FPSO) Marlim 2, an FPSO vessel for the Marlim revitalisation project in Brazil, Yinson said in an exchange filing yesterday.

The LoIs were issued to Yinson Production Pte Ltd, an indirect wholly owned subsidiary of the group.

Following the LoIs, the charter contract will be entered into by Yinson’s Netherlands-incorporated indirect subsidiary, Yinson Boronia Production BV (YBP), while the operation and maintenance (O&M) contract will be undertaken by YBP’s Brazil-incorporated subsidiary Yinson Boronia Serviços de Operação Ltda.

The contract period is for 25 years from the date of final acceptance.

FPSO Marlim 2 will be Yinson’s first vessel to operate in Brazil waters, and is one of several bids in the region that the group has entered into.

It will also be Yinson’s largest project to date, CEO Lim Chern Yuan said, adding that the group has been focusing on building its resources, capacity and expertise to meet the project’s delivery and timeline.

Much of the required groundwork and preparations in order to swing into high gear upon project award have already been completed, Yinson CEO of offshore production Eirik Barclay said.

“We are committed to giving our very best towards this project in order to contribute to the advancement of the energy industry in Brazil,” he added.

In March, Yinson and Sumitomo Corp announced their intention to collaborate on the Marlim revitalisation project, in which Sumitomo would participate with an effective interest of at least 20% in the event of a successful bid by Yinson.

Yinson said the shareholder agreement pertaining to this collaboration is expected to be announced in due course.

Going forward, the upstream O&G support service provider is optimistic on the upstream energy sector’s ability to replenish production capacity with the new FPSO awards in the current financial year to counter the lagging investment effects from past years.

Last month, the group’s US$1 billion charter contract in Vietnam, valid for 15 years, was terminated due to disputes on overlapping claims in the South China Sea between Vietnam and China.

It was also reported that the group is currently at an advanced stage of discussion with certain lenders to obtain a 70% stake in Singapore-based loss-making offshore asset supplier Ezion Holdings Ltd by acquiring and converting up to US$916 million of Ezion’s existing loans.