FPSO’s Final Acceptance To Mitigate Default Risks On Loans
Malaysia-based Bumi Armada Berhad said Sept. 12 that it expects acceptance of its Armada Kraken FPSO to help mitigate the group’s default risks on its related borrowings and improve earnings and cash flow visibility.
Lenders could have demanded full repayment if final acceptance was not achieved, said Kenanga Research, putting the company at risk of default on borrowings of $459 million.
Bumi Armada anticipates receiving full charter rates for the FPSO post-final acceptance by charterers EnQuest and Cairn, which will lead to improved earnings visibility and cash flows. Kenanga has bumped its fiscal year 2018-2019 by 12% after modeling in the higher chart rate assumption.
Earlier in September, Bumi Armada said the Armada Kraken FPSO had received final acceptance from the charterers EnQuest and Cairn, in accordance with the requirements set out in the original bareboat charter contract in December 2013, and supplemented by two amendment agreements.
Reliance Orders FPSO To Cease Production
Reliance Industries ordered the FPSO Dhirubhai-1 to shut down production when its contract expires on Sept. 19.
Dhirubhai-1 is operated by Aker Floating Production AS. The 10-year contract with Reliance for the MA field offshore eastern India was set to expire on Sept. 19. Reliance gave its shutdown order on Sept. 17.
Reliance’s purchase option on the FPSO remains valid until the contract expires.
—Staff Reports
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