malaysia bumi armada - xinhua08.comupload.xinhua08.com/2012/0306/1331042603952.pdfbumi armada the...

Ki m Eng Hong Kong i s a subsi di ary of M al ayan Banki ng Berhad

6 March 2012 of 60

Malaysia

Initiating Coverage 6 March 2012

PP16832/01/2013 (031128)

Bumi Armada The Armada strikes back

Initiating cov erage with a Buy and RM4.88 target price. Bumi Armada (BA) offers a niche exposure to the Floating Production, Storage and Offloading (FPSO) market. As one of the fastest growing FPSO operators in the world, it has set its sights on being the Top 4 player in terms of FPSO fleet size by 2013. It is also poised to gain traction in Malaysia’s O&G sector, as it leverages on PETRONAS’ capex programme. BA, which is steadfastly building up franchise values, is a steady growth stock with a 3-year net profit CAGR of 25%.

Bigger, bolder, better. BA is today a giant compared to its previous self. The restructured entity is now a powerhouse with a global presence, covering 4 core operations – FPSO, Offshore Supply Vessel (OSV), Transportation & Installation (T&I) and Offshore Field Services (OFS). It commands an armada of 53 vessels: 5 FPSOs, 46 OSVs, 1 pipelay barge and SURF vessel operating across the the world.

In an entrenched position to ride global E&P programmes. We see innumerable opportunities for BA to capitalize on the: (i) 125 potential FPSO projects worldwide, (ii) requirement for new, highly technical OSVs to support global deepwater programmes, (iii) services for the subsea umbilicals, risers and flowlines (SURF), inspection, repair and maintenance (IRM) markets, and (iv) increasing number of offshore development projects in Malaysia (marginal field and Enhanced Oil Recovery (EOR) development) and the Caspian region.

Set to embark on an aggressive asset expansion plan. We see BA prospecting for new assets for growth. BA will l ikely double its FPSO assets, triple its SURF vessels and add 4 new OSV vessels to its fleet by 2015. This is possible as it has the balance sheet to support the heavy capex (estimated RM6.4b) for its expansion programme while keeping its net gearing below the 1.5x threshold.

Strong earnings visibility 3 years out. We project a 3-year net profit CAGR of 25%. All divisions will contribute to growth, fueled by new vessels (FPSO, OSV, pipelay barges) progressively coming onstream and higher utilization (ex-dayrate revision) for the existing vessels.

Bumi Armada – Summary Earnings Table Source: Maybank IB FYE Dec(RM m) FY10A FY11A FY12F FY13F FY14F Revenue 1,241.4 1,543.9 1,800.7 2,220.6 2,504.3 EBITDA 715.6 845.1 1,048.7 1,272.6 1,442.0 Recurring Net Profit 350.8 387.3 532.2 627.5 706.9 Recurring Basic EPS (Sen) 12.0 13.2 18.2 21.4 24.1 EPS growth (%) 26.4 10.4 37.4 17.9 12.6 DPS (Sen) 0.0 2.5 0.0 0.0 0.0

PER 34.5 31.2 22.7 19.3 17.1 EV/EBITDA ( x) 21.3 16.4 13.9 11.8 10.4 Div Yiel d (%) 0.0 0.6 0.0 0.0 0.0 P/BV( x) 13.8 3.4 3.0 2.6 2.3

Net Gearing (%) 359.0 49.9 61.6 63.0 54.4 ROE (%) 40.1 10.9 13.3 13.5 13.2 ROA (%) 10.8 9.3 9.2 9.2 9.1 Consensus Net Profit (RM m) - - 585.0 706.5 794.4

Buy (new)

Share price: RM4.13 Target price: RM4.88 Wong Chew Hann, CA [email protected] (603) 2297 8688

Chong Ooi Ming [email protected] (603) 2297 8676

Stock Information

Description: Integrated Oilfield services provider with 4 core operations: FPSOs, OSVs, T&I vessels and offshore field services. Ticker: BAB MK Shares Issued (m): 2,928.5 Market Cap (RM m): 12,094.5 3-mth Avg Daily Volume (m): 3.73 KLCI: 1,589.22 Free float (% ): 29.6 Major Shareholders: % Objektif Bersatu Sdn Bhd 42.4 Ombak Damai Sdn Bhd 11.6 Wijaya Sinar Sdn Bhd 7.3 Karisma Mesra Sdn Bhd 5.4 Key Indicator s

Net cash (RM m): (1,760.6) NTA/shr (RM): 1.20 Net gearing (x): 0.5

Histor ical Char t

3.0

3.3

3.6

3.9

4.2

4.5

Jul -11 Sep-11 Nov-11 Jan-12

BAB MK Equity

Performance: 52-week High/Low RM4.33/RM3.03 1-mth 3-mth 6-mth 1-yr YTD Absolute (% ) 4.0 11.3 na na 0.7 Relative (% ) 0.8 3.8 na na (3.1)

6 March 2012 of 60

Bumi Armada

Table of contents Page

Key inv estment merits 3

Introduction: Bigger, bolder, better 4

Snapshot of Bumi Armada’s operations

• Floating Production, Storage & Offloading (FPSO) 7

• Offshore Supply Vessel (OSV) 12

• Transport & Installation (T&I) 16

• Offshore Field Serv ices (OFS) 16

• Rev enue and EBIT breakdown 17

Floating, Production, Storage & Offloading (FPSO)

• Fundamentals 20

• Opportunities 26

Offshore Supply Vessel (OSV)

• Fundamentals 29


Transport & Installation (T&I)

• Fundamentals 39


Offshore Field Serv ices (OFS)

• Fundamentals 42


FInancials

• Financial projections 48

Valuation 51

Peers’ v aluations – FPSO operators 52

Peers’ v aluations – OSV operators 52

Risks 53

Financial statements 55

Appendix : Captains & Commanders of the Armada 57

Ki m Eng Hong Kong i s a subsi di ary of M al ayan Banki ng Berhad

6 March 2012 of 60

Bumi Armada

Key investment merits

Introduction. The Bumi Armada of today is a transformed entity. The Group has been restructured and now has four businesse s: (i) FPSO, (i i) OSV, (iii) T&I and (iv) OFS, with a global presence in each segment. The company is driven by a dedicated, experienced and professional management team, comprising talent from multiple nationalities.

Solid business model. We like the FPSO space. It provides steady visibil ity (contracts and earnings) with reasonable IRRs. Competition is limited given the high investment and technical hurdle requirements. Bumi Armada’s OSV operation, relatively new, modern and modulated to the high-end vessel segment is a positive, for it provides respectable utilisation and day rates. Bumi Armada’s stint in the T&I and OFS divisions has been brief so far but has delivered the desired results.

Well-positioned to push for new contracts, locally and globally. Prospects are bright for Bumi Armada to ride on the global O&G capex upcycle, as it capitalises on the growing demand for new FPSO and OSV charters, as well as growing requirements for brownfield developments. In the domestic (i.e. Malaysia) space, the prospect of leveraging on PETRONAS’ deepwater, marginal field and enhanced oil recovery (EOR) field projects is high. It has both the operational foresight and financial structure to leverage and support its expansion programmes.

Powering up - where growth and aspirations meet. We opine that Bumi Armada has the balance sheet to fund 3 new SURF vessels, 5 FPSOs and 8 OSVs over the next three years without straining its cashflow and gearing levels. This is a sensible aspiration, which would propel Bumi Armada to become the fourth largest FPSO operator globally with a competitive edge to boot.

A towering growth stock with rewarding returns. With a 3-year net profit CAGR forecast of 25%, its relentless pursuit of excellence will secure Bumi Armada the status of fastest-growing operator among its global peers. However, given prospects for high growth, we believe that it is unlikely that Bumi Armada will reward shareholders with meaningful dividends in the foreseeable future.

High conviction: v aluations with compelling growth prospects. We value Bumi Armada at RM4.88, using the sum-of-part (SOP) valuation methodology. At our target, Bumi Armada would have a market capitalisation of RM14.3b, a valuation that would see it become the largest FPSO player worldwide by market value (ahead of SBM’s RM10.3b), while outpacing its contemporaries in growth and profit margins.

6 March 2012 of 60

Bumi Armada

Bigger, bolder, better

Bumi Armada – remembering the old days. The Bumi Armada of yesterday was just a shadow of its present incarnation. The previous entity, listed on 25 June 1997 and delisted six years later on 18 April 2003 (with a market capitalization of RM441m), was primarily engaged in just two main business activities:

(i) offshore support vessel (OSV) operations, and

(i i) offshore construction, installation & maintenance services.

Operations then were predominantly domestic-centric, supported by 25 vessels, 2 tanker support vessels and a Floating Production, Storage and Offloading (FPSO) system.

The present day – rejuv enated and ready to ride the waves. The group has since been restructured and the Bumi Armada of today is a much larger and more diversified entity with a global reach. True to its name, it really has burgeoned into an armada, with a fleet of 5 FPSOs (including two undergoing conversion), 46 OSVs, one pipe-laying barge and another SURF vessel, making it the jointly fifth-largest FPSO operator in the world and the third-largest OSV operator in Southeast Asia. Meanwhile, its business has grown to encompass four segments:

(i) FPSO,

(i i) OSV,

(i ii) Transport & Installation (T&I) and

(iv) Offshore Field Services (OFS)

with two support units: Fleet Management Services (FMS), and Engineering, Procurement and Construction (EPC).

Usaha Tegas Group (UT) is the largest shareholder. UT, a privately-owned holding company, presently holds a 42.4% stake, held through Objektif Bersatu Sdn Bhd (OBSB).

The other four substantial shareholders that hold a cumulative 27.5% stake are:

(i) Ombak Damai Sdn Bhd (ODSB) - 11.6%

(i i) Wijaya Sinar Sdn Bhd (WSSB) - 7.3%

(iii) Karisma Mesra Sdn Bhd (KMSB) - 5.4%

(iv) Wijaya Baiduri Sdn Bhd; (WBSB) - 3.2%

A well-managed set-up, driven by experienced management. Bumi Armada is led by an experienced, dedicated and culturally diverse senior management team that presides over an agile organisation. The group has proved it can attract worldwide talent (with over 20 nationalities) to operate across multiple countries while its flat organisational structure gives it the ability to react efficiently and quickly to business threats and opportunities, both domestically and internationally. Hassan Asad Basma, the CEO of Bumi Armada, has an extensive 30 years of experience in the O&G industry with 18 years’ working knowledge in Asia.

6 March 2012 of 60

Bumi Armada

Business model – Pre and post restructuring

Suppo rt Uni ts

Busin ess U nits

Legend

Floating Production Storag e and

Offlo ad ing (FPSO)

Offsho re Sup port Vessel (OSV)

Transport an d In stallation Services

(T&I)

Oilfield Services (OFS)

En gineering, Procurement and

Con struction

Fleet Management Services

BAN Haven

• Offsh ore installation, servicing and maintenance

Restructuring

•Tripled FPSO fleet s ize

•Newer, younger and bigger OSVs

•Disposal of Haven

Own s and leases 5 FPSOs• 2 in Nigeria• 1 in Vietn am• 2 to start o peratio ns in

Baln aves field Australia & D1 field Ind ia

Own s a fleet o f 46 OSVs• 26 AHT/ AHTS• 8 accommodation

barg es/ boats• 12 o thers

Pipelay, heavy lift, subsea installation, flo ater, moo ring in stallation and marine sp read support services• 1 DLB in th e Casp ian• Acquired a SURF

vessel- Armada Hawk

Con verted and so ld an FSO to Petrofac fo r th e Sep at field• Services cover all

asp ects o f the o il field life cycle, from exp loration to develo pment, production and aban donment

So lely in h ouse EPC and project man agemen t• Executed the “Steel

on Water” new build fleet expan sion programme

• Oversaw conversion of FPSOs and co nstruction and re integration of Armada Installer (DLB)

In -h ouse management an d o perations of fleet:• h as access to over

1,300 crew members • Offices an d sh ore

bases in Malaysia, Sin gapore, In dia, Brazil, the Con go, Mexico , Nigeria an d Turkmen istan

OSVs and related logistics; •25 OSVs, •2 tankers •and 1 FPSO

Sources : Company, M aybank-IB

6 March 2012 of 60

Bumi Armada

SECTION 1: EXISTING OPERATIONS

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Bumi Armada

A snapshot of Bumi Armada’s operations

(i) The provision of FPSO services

A growing force in the FPSO world. Bumi Armada, ranked jointly 5th in the world by fleet size (lease units), is the first to own and operate a FPSO in Malaysia and is touted to be the only operator worldwide to-date to have redeployed the same FPSO (Armada Perkasa) three times across two continents (i.e. Asia, Africa).

Building its niche in the segment for small-sized, conversion FPSOs. Bumi Armada owns & operates three FPSOs (Armada Perkasa, Armada Perdana and Armada TGT1) on firm, long-term charters. It is currently outfitting another 2 units, the Armada D1 & Armada Claire (Balnaves), to be deployed in India (4Q 2012) and Australia (1Q 2014) respectively. Type-wise, all of its FPSOs consist of converted units and in terms of processing capacities, fit into the category of small-sized FPSOs (< 80,000 bpd of oil, 0.8m bbls storage).

Snapshot of global independent FPSO operators by fleet size

119

12

7

4 31

4

1 2 2 2 1

6

2

2

1

24

2 1 1

1

4

11

20

3

6

9

12

15

18

SBM Modec BW Teekay Bluewater Bumi Armada OSX Maersk Petrofac Fred Olsen Saipem Sevan Tanker Pac ific Aker F P

(Units) Existing F leet On Orderbook I dle

Sources : Company, M aybank-IB

Existing FPSO contracts

2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026

Armad a Clai re

Armad a D1

Armad a TGT 1

Armada Perdana

Armada Perkasa

Nigeria:Afren 2008 - 2013 (2018)

Nigeria: NAE 2009 - 2019

Vietnam: Hoan g Long JOC 2011 - 2018 (2026)

India:ONGC 2012 - 2019 (2025)

Australia: Apache 2014 - 2017 (2021)

Sources: Company, Maybank-IB

6 March 2012 of 60

Bumi Armada

Arguably one of the fastest growing FPSO players in the field. Bumi Armada’s FPSO fleet has expanded rapidly in recent years, with acquisitions averaging one new FPSO a year between 2007 and 2011. It refurbished the Armada Perkasa for a 3rd contract in 2007 and secured contracts for Armada Perdana and Armada TGT1 in 2009.

In 2011 Bumi Armada won two more contracts, chartering the Armada D1 to ONGC in India while the Armada Claire was contracted to Apache for its Balnaves field in Australia.

Bumi Armada’s present FPSO fleet FPSO Narrative

Armada Per kasa & Armada Perdana

Currently on operation i n Nigeria. Armada Perdana is chartered to ENI’s subsidi ary; NAE for the Oyo field while Armada Perkasa is leased to Afren for the Okor o Setu field with firm 10 year contracts till 2019.

Petroleum consultants Netherland, Sewell & Assoc, Inc. (NSAI), have recentl y certified gross 2P reserves in the Okoro Setu field at 19.5m barrels (bbls) of oil (as at Dec 2010) and 626m-2,200m bbls for Oyo (Apr 2011). To-date, onl y 15.2m and 3.6m bbl have been produced respecti vel y.

Armada TGT1 Chartered to PetroVi etnam for the Te Giac Trang (TGT) field in Vietnam. Production began on 22 Aug 2011; the contract period is till 2018 with the potential for extension up to 2026. A 2nd well is expected to be added in 2012.

Armada D1 On 10 Aug 2011, Bumi Armada signed a charter with ONGC to lease an FPSO for the D1 field in India. The USD620m contract is fi xed for 7 years (2019) with annual extension options for another 6 years (2025). Bumi Armada has a 49.99% stake i n the FPSO with the rest held by Forbes & Company Ltd

Armada Claire Bumi Ar mada has recently signed a contract with Apache Energy Ltd in Sept 2011 to lease Armada Claire to the Balnaves development in Austr alia. With 14m-19m bbls of reserves, expectations ar e for 1st oil before 2014. Contract val ue of USD445m (RM1.46b).

Rainbow River Rainbow River is an Aframax tanker on which Bumi Armada has the option to convert into an FPSO.

Source: Company, IMA, Maybank-IB

Proven and prospered, even during the credit crisis. Operationally, Bumi Armada has proven its technical excellence, track record and execution capabilities in the FPSO business. It has been able to deliver vessels on time, fully funded and within budget even during the global financial crisis in 2008. The Armada Perkasa, Armada Perdana and Armada TGT1 vessels have met all contractual uptime performance requirements to-date.

Arguably among the most efficient FPSO operators in the world. From a financial perspective, Bumi Armada is among the better-run operators in the FPSO circle. Its EBIT margins of 27-32% are the highest vis-à-vis its peers 9-26%. Comparatively, it has the advantage of a lower cost base structure vis-à-vis its European counterparts. This is due to its effective cost management (i.e. firm cost controls, facility to source for funds and tankers at decent rates, close proximity to yards) and ability to execute projects with minimal cost overruns.

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Bumi Armada

Vessel 1: Snapshot of FPSO Armada Perkasa

Vessel details

Terms Details

Area of operation: On contract till 2018, in Okoro Setu field Nigeria

Contract amount (USD m): 150

Duration: 5-plus-5 year fi xed-time charter.

History: Deployed at Bunga Kekwa, (97-04) & Baram, (05-06)

Performance St atistics Ship Dimensions

Production capacit y (bpd ‘000): 30.0 Length (m): 221.2

Storage capacit y (bbl ‘000): 298.4 Breath (m): 32.2

Ave. daily production (bpd): 16.1 Draft (m): 17.5

Dwt (‘000 tonnes) 58.6

Hull age, t ype and conversion yard: 1975, Single hull, Keppel Si ngapore

Sources: Company, Afren, Maybank-IB

Vessel 2: Snapshot of FPSO Armada Perdana

Vessel details

Terms Details

Area of operation: On contract till 2019, in Oyo fiel d Nigeria


Duration: 10 year fi xed-time charter.

History: Petromin’s Histria Crown, sold for USD 22m


Production capacit y (bpd ‘000): 40 Length (m): 308.7

Storage capacit y (bbl ‘000): 1,100 Breath (m): 46.0

Ave. daily production (bpd): na Draft (m): 22.6

Dwt (‘000 tonnes) 156.5

Hull age, t ype and conversion yard: 1984, Single hull with side impact protection,

Keppel Si ngapor e


Vessel 3: Snapshot of FPSO Armada TGT1

Vessel details

Terms Details

Area of operation: On contract till 2026, in TGT fi eld Vi etnam



History: Great Eastern’s Jag Layak, sold for USD 44m



Storage capacit y (bbl ‘000): 620 Breath (m): 47.8


Dwt (‘000 tonnes) 147.0

Hull age, t ype and conversion yard: 1996, Double hull, Keppel Si ngapor e

Sources: Company, Various, Maybank-IB

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Bumi Armada

Vessel 4: Snapshot of FPSO Armada D1 (undergoing conversion)

Vessel details

Terms Details

Area of operation: On contract till 2025, in D1 field India



History: Ondi mar’s Monte Umbe, selling price USD 21m





Dwt (‘000 tonnes) 107.2



Vessel 5: Snapshot of FPSO Armada Claire (Griffin Venture- undergoing conversion)

Vessel details

Terms Details

Area of operation: On contract till 2021, in Balnaves fi eld Australia


Duration: Four-plus-four year fi xed-time charter.

History: BHP’s Griffin Venture, deployed at Griffin field (1994-2009)





Dwt (‘000 tonnes) 102.1



Vessel 6: Aframax Rainbow River: (Purchase option secured, conversion candidate for next FPSO project)

Vessel details

Terms Details

Area of operation: na

Contract amount (USD m): na

Duration: na

History: GNM’s Rainbow Ri ver, purchase price RM68m


Production capacit y (bpd ‘000): na Length (m): 246.0

Storage capacit y (bbl ‘000): na Breath (m): 42.0


Dwt (‘000 tonnes) 107.2

Hull age, t ype and conversion yard: 1999, Double hull, awaiting yard announcement


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Bumi Armada

Bumi Armada: Deployment of its FPSO

Gulf Of MexicoMideast/SW Asia

Australia/ NZ

Brazil

Far East

CanadaNorthernEurope

Africa

South East Asia

Armada Perkasa, OkoroSetu, Nigeria

(2008-2013/18)

Armada Perdana, Oyo Nigeria(2009-2019)

Armada TGT1, Te Giac Trang (TGT),

Vie tnam(2011-2018/26)

Armada Claire , Balnaves, Austra lia

(2014-2017/21)

Armada D1, D1 field India

(2012-2019/21)


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Bumi Armada

(ii) The provision of OSV services

A large and modern fleet. Bumi Armada has a large and modern OSV fleet with cross-border operational capabilities at both green and brownfields. It owns 25 Anchor Handling Towing Support (AHTS) vessels, 8 accommodation workboats workbarges, 3 mooring launch vessels, 3 Straight Supply Vessels (SSVs), 3 platform supply vessels (PSV), 2 util ity vessels, a standby vessel and an oil recovery vessel.

The biggest operator in Malaysia, 3rd in SEA. With a fleet of 46 OSVs, Bumi Armada is the largest fleet operator in Malaysia and 3rd in Southeast Asia, by size and competitiveness. According to Infield Services Limited, Bumi Armada is recognised as a 1st tier OSV player (i.e. a sizeable fleet capable of servicing large operators and projects). Its other accolades include being the first domestic operator to own and operate dynamic positioning (DP) AHTS for deepwater projects (Kikeh).

70% waiver on Malaysia tax due to Section 54A. Bumi Armada is one of a select few OSV operators that enjoys Section 54A status under the Malaysia’s Income Tax Act. This grants the group a 70% waiver on income tax from its Malaysian-flagged vessels.

Has a young fleet; 8 years average. Most of the vessels are deployed in Malaysia (28 units). In the overseas market, 16 of its vessels are deployed in Africa (i.e. Nigeria: 10, Congo: 1), South & Central America (i.e. Venezuela: 1, Mexico: 1, Brazil: 2) and Asia (i.e. Brunei: 1). The fleet is young, with an average age profile of 8 years. 54% of its vessels are 6 years old or less. 2 contracted newbuilds are under construction.

Decent utilization rates. Bumi Armada has successfully chartered its vessels at decent rates and at decent util ization levels over the past three years. In terms of vessel-type, the accommodation workboats/ barges are the most employable, with high utilization rates of 80-91% in 2008-10. Meanwhile, the AHT and AHTS segment is the most volatile, with util ization ranging between 66% and 98%. In 4Q 2011, Bumi Armada’s OSV fleet enjoyed a commendable 96% utilisation rate.

AHTS: Dayrates and utilization level (2008 – 2010) Year DCR range (USD per bhp) Utilization rate (%) No. of OSVs (unit)

2010

3.85 65.7 23 1.32

2009

2.82 86.9 18 1.22

2008 1.15

3.57 95.1 14


Accomodation workboat/ barge: Dayrates and utilization level (2008 – 2010) Year DCR range (USD per bed) Utilization rate (%) No. of OSVs (unit)

2010

257.5 80.0 8 63.9

2009

257.5 91.2 8 63.9

2008 58.4

174.6 91.1 6


Other OSVs: Dayrates and utilization level (2008 – 2010) Year DCR range (USD per bhp) Utilization rate (%) No. of OSVs (unit)*

2010

5,000 73.4 9 1,076

2009

5,628 61.9 19 534

2008 569

6,902 85.2 16

Sources: Company, Maybank-IB; * excl udes Ar mada 5, Ar mada 6 and Ar mada Tugas 1 that are under jointly-controlled entity; Ar mada Century Ltd

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Bumi Armada

OSV: Operators in South East Asia (fleet size)

0 10 20 30 40 50 60 70

SwirePACC

Bumi ArmadaEzra

Alam MaritimRK

SwisscoPacific R ichfield

JayaScomi

SwiberC H Off shore

SealinkEastern Of fshore

Br itOilPet ra Perdana

P. RadiancePelican

Vietsovpet roAnjong

TgoffTr inity O ffshore

Chuan H upMermaid

StratoASLOtto

Nor Offshore

Number of vessels

Bumi Armada

Sources: Company, Infi eld, Maybank-IB

OSV: Competiveness landscape

Great Offshore

RK

Ezra

PACC

Swire

Swissco

Pacific Radiance

T rinity Off shore

Swiber

Sealink

CH Offshore

ASLOtto Marine

Scomi

Brit O il

MermaidNor Offshore

Tanjung Of fshore

Eastern Of fshore Petra Perdana

Pacific Richfield

Greatship

Pelican

AjangChuan Hup

Vietsovpetro

Strato NC

70

60

50

40

30

20

10

0

Siz

e (C

urre

nt+

New

bui

ld fl

eet)

ODS market presen ce score

Jaya

Source: Infield

6 March 2012 of 60

Bumi Armada

Bumi Armada: Overview of OSV fleet No. Vessel Type Built Age bhp beds DP Status charter Location Charterer

1 Armada Tuah 6 AHT 1997 15 4,000 - - Short Labuan 2 Armada Tuah 8 AHT 2002 10 4,840 - - Long Kemaman PTSC, Vietnam 3 Armada Tuah 9 AHT 2002 10 5,040 - - Long Kemaman EMEPMI 4 Armada Tuah 10 AHT 2003 9 4,000 - - Long Kemaman PTSC, Vietnam 5 Armada Tugas 4 AHT 2005 7 5,040 - - Long Nigeria Afren 6 Armada Tuah 20 AHTS 2004 8 5,040 - - Short Kemaman 7 Armada Tuah 21 AHTS 2005 7 5,040 - - Long Labuan Shell 8 Armada Tuah 22 AHTS 2005 7 5,040 - - Long Nigeria Afren 9 Armada Tuah 23 AHTS 2006 6 5,040 - - Long Kemaman EMEPMI

10 Armada Tuah 24 AHTS 2006 6 5,040 - - Unemployed Kemaman 11 Ventures Tuah Satu** AHTS 2007 5 6,000 - DP1 Long Kemaman 12 Ventures Tuah Dua** AHTS 2007 5 5,000 - DP1 Long Kemaman 13 Armada Tuah 25 AHTS 2007 5 5,040 - DP1 Long Kemaman Petrofac 14 Armada Tuah 26 AHTS 2007 5 5,040 - DP1 Long Labuan Murphy Oil 15 Armada Tuah 80 AHTS 2008 4 8,000 - DP1 Short Labuan 16 Armada Tuah 82 AHTS 2009 3 8,000 - DP1 Short Labuan Murphy Oil 17 Armada Tuah 81 AHTS 2010 2 8,000 - DP1 Long Nigeria Afren 18 Armada Tuah 83 AHTS 2010 2 8,000 - DP1 Unemployed Tj. Langsat 19 Armada Tuah 84 AHTS 2010 2 8,000 - DP1 Unemployed Tj. Langsat 20 Armada Tuah 85 AHTS 2010 2 8,000 - DP1 Short Kemaman 21 Armada Tuah 100 AHTS 2006 6 9,000 - DP2 Long Labuan Murphy Oil 22 Armada Tuah 101 AHTS 2007 5 9,000 - DP2 Short Nigeria 23 Armada Tuah 102 AHTS 2008 4 12,000 - DP2 Long Brazil Petrobras 24 Armada Tuah 104^ AHTS 2009 3 12,000 - DP2 Short Nigeria 25 Armada Tuah 105 AHTS 2009 3 12,000 - DP2 Short Venezuela Petromin/ PDVSA 26 Armada Goodman Accom. wor kboat 1991 21 n.a 95 - Short Labuan DESB 27 Armada Topman Accom. wor kboat 1991 21 n.a 95 - Short Labuan 28 Armada Iman Accom. wor kboat 1998 14 n.a 140 - Long Labuan Inoilco 29 Armada Salman Accom. wor kboat 2002 10 n.a 132 - Long Labuan Nauti ka 30 Armada Firman Accom. wor kboat 2004 8 n.a 200 - Long Kemaman Talisman 31 Armada Firman 2 Accom. wor kboat 2008 4 n.a 200 DP2 Short Nigeria Superior Energy, USA 32 Armada Firman 3 Accom. wor kboat 2008 4 n.a 200 DP2 Long Mexico Trese, Mexico 33 Mahakam Accom. wor kbarge 2004 8 n.a 300 - Long Congo Diamond 34 Armada Mutiara 2 Mooring launch 2008 4 750 - - Long Labuan Shell 35 Armada Mutiara 3 Mooring launch 2009 3 750 - - Long Miri Shell 36 Armada Mutiara 4 Mooring launch 2009 3 800 - - Long Miri Shell 37 Armada Aman Standby vessel 1996 16 3,600 - - Long Kemaman PETRONAS Maritime 38 Armada 5*** SSV 1984 28 2,600 - - Unemployed Nigeria 39 Armada 6*** SSV 1984 28 2,600 - - Long Nigeria 40 Armada Tugas 1*** Utility vessel 2003 9 2,500 - - Unemployed Nigeria 41 Armada Tugas 3 Utility vessel 2005 7 3,200 - - Short Kemaman 42 Armada Tugas 2 Oil recover y vessel 2003 9 3,000 - - Long Brunei Nauti ka 43 Armada Hydr o*** SSV 1988 24 1,060 - - Unemployed Nigeria 44 PSV 1 PSV 2012 1 n.a - - Long Brazil Petrobras 45 PSV 2# PSV 2012 1 n.a - - nm nm nm 46 MPSV 1# MPSV 2012 1 n.a - - nm nm nm Note: ** Owned by Bumi Ar mada’s JV, Offshore Marine Ventures Sdn. Bhd, *** Owned by Bumi Ar mada’s JV,Ar mada Century Ltd. # Under construction Sources: Company, Maybank-IB

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Bumi Armada: Deployment of OSVs

Gulf Of Mexico

Brazil

Africa

South East Asia

Legend

Number of OSVs in the region

Venezuela

1

1

2

10

Mahakam, Cong o

1 29

Sources: Company, Maybank-IB * 1 PSV and 1 MPSV under construction

Bumi Armada: AHTS’ capacity (by bhp) Bumi Armada: Accommodation vessel capacity (by bed)

14 vessels

18 vessels

23 vessels

2008 2009 2010

76,200

120, 200

160,200

Averagebhp /AHTS 5,443 bhp 6,678 bhp 6,965 bhp

6 vessels

8 vessels

8 vessels

2008 2009 2010

962

1,362 1,362

Sources: Company, Maybank-IB Note: Excludes JVs (2 vessels) Sources: Company, Maybank-IB

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(iii) Transportation & Installation (T&I) services

Bumi Armada ventured into this segment in 2009. This division primarily provides pipelay, heavy lift, subsea installation, floater and mooring installation and marine spread support services.

Asset-wise, Bumi Armada owns and operates a derrick lay barge (DLB), namely Armada Installer, which is currently leased to Petronas Carigali Sdn Bhd (PCSB) in the Caspian Sea, off Turkmenistan on an 8-year contract since 2010. Armada Installer is one of only two DLB currently operating in the Caspian region.

Track record with proven capabilities. Armada Installer, built in 2009, is capable of laying 4”-48” diameter pipes with 800 tonnes of lifting capability. The vessel, which can operate in water depths of between 8-300m was commissioned and has been in operation since 2Q 2010. It has concluded her maiden work, completing the laying of:

(i) 2 lengths of 12” diameter pipe of 7 km each,

(i i) 72 km of 12” diameter pipe and 4” diameter piggy back pipe, and

(i ii) 72 km of 26” diameter pipe.

New asset acquisition. Bumi Armada has also acquired the Armada Hawk, a 2nd generation dynamic positioning (DP2) subsea installation vessel, which allows it to offer subsea umbilicals, risers and flowline (SURF) capabilities and services. Armada Hawk recently completed the Sepat field installation work and will be deployed to the D1 field in 2012-13.

Expanding coverage. In addition to SURF installation, the vessel will also allow Bumi Armada to bid for inspection, repair and maintenance (IRM) projects. We expect Bumi Armada to acquire a pipelay vessel to expand its services in Brazil, West Africa and India.

(iv) Offshore Field Services (OFS)

This is Bumi Armada’s most recent venture, and is a key part of its strategic focus for the Malaysia market. It leverages on PETRONAS’ domestic programmes to: (i) develop marginal fields through innovative solutions, and (ii) rejuvenate existing fields through Enhanced Oil Recovery (EOR) to optimize production and arrest the declining state of the existing fields.

Recurring opportunities. OFS entails the provision of various specialized services required in the offshore mature/brownfield, EOR and the risk-based services contracts (RSC) markets. Bumi Armada currently offers services, either directly or through partnerships or alliances in the exploration (survey), development (facilities and installation), production (FPSO) and abandonment (T&I) phases of the marginal oil field, and brownfield projects.

First project – Sepat field. Bumi Armada’s initiation in this segment came from the conversion and sale of an FSO to Petrofac for the Sepat field, off Terengganu in 2011. The project management work was completed on schedule in Oct 2011 in a record 8 months. Bumi Armada recognized about RM21m in EBIT from this project alone, based on a 10% margin.

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Snapshot of revenue and EBIT breakdown

FPSO division is the largest contributor to group earnings, having overtaken the OSV division in 2010. It has generated 39-45% of group revenue and 32-38% of group EBIT over the past 3 years.

The influence of OSV operations has been on a steady decline. Contribution to group revenue and EBIT fell from 55% and 52% in 2009 to 31% and 26% respectively in 2011.

The reduction in contribution from the OSV division to group earnings has been more pronounced with the emergence of the more lucrative T&I division, which made its maiden contribution in 2010. T&I reported RM268m in revenue and RM149m in EBIT for the year, accounting for 22% and 36% of Group revenue and EBIT.

For 2011, Bumi Armada has taken on an even more diversified earnings profile with maiden contribution from the new OFS segment which undertook the conversion of the FSO Sepat. OFS contributed RM211m in revenue and RM21m in EBIT accounting for 14% of total revenue and 5% of EBIT respectively.

Bumi Armada: Revenue breakdown (by division)

FPSO45%

OSV55%

FY 2009 Revenue: RM732.1m

FPSO44%

OSV34%

T&I22%

FY 2010 Revenue: RM1,241.4m

FPSO39%

OSV31%

T&I16%

OFS14%

FY 2011 Revenue: RM1,543.9m


Bumi Armada: EBIT breakdown (by division)

FPSO48%OSV

52%

FY 200 EBIT: RM294 .4m

FPSO43%

OSV21%

T&I36%

FY 2010 EBIT: RM467.1m

FPSO43%

OSV26%

T&I26%

OFS5%

FY 2011 EBIT: RM518.3m


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Steady EBIT margins trend. On a blended basis, Bumi Armada’s EBIT margin has been consistent, averaging around 34-40% over the past 3 years. Its 2011 EBIT was negatively impacted by a confluence of one-off items: (i) the Armada Installer was dry docked in 3Q for upgrading, (i i) an estimated RM22m in l isting expenses, (ii i) RM6m in fair value changes of call options and (iv) higher depreciation (RM78m) due to additional vessels (i.e. FPSO and OSV).

Operationally, the FPSO division had consistently delivered reasonable EBIT margins of 28-33% in 2009-11. The EBIT margin for OSV typically mirrors that of its FPSO operations, albeit with a lower 21-25% range. The T&I division commands the highest EBIT margin among the three core operations. Despite Armada Installer being dry docked, the segment stil l generated 48% EBIT margins in 2011.

Bumi Armada: EBIT by division Bumi Armada: EBIT margin by division

53.6 92.8179.2 200.289.4

99.6

88.9116.8

148.5117.2

21.0

0

10

20

30

40

50

0

100

200

300

400

500

2008 2009 2010 2011

FPSO (LHS) OSVs (LHS)T&I (LHS) OFS (LHS)Bl end ed EBIT marg in (RHS)

( %)

27.1% 28.3% 32.4% 32.9%

27.7% 24.6% 21.2% 24.2%

55.3% 48.4%

10.0%

2008 2009 2010 2011

FPSO OSVs T&I OFS

Sources: Company, Maybank-IB Sources: Company, Maybank-IB

Earnings breakdown by geography. Bumi Armada operates across 4 continents, from the rich offshore oil fields in the Gulf of Mexico, Brazil and Venezuela, to West Africa (Angola, Nigeria and the Congo), the land locked Caspian Sea, Vietnam and resource rich Australia.

Asia and Africa anchor earnings. Geographically, Asia (ex-Malaysia) and Africa were the 2 major contributors to group revenue in 2010 at 43% and 35% respectively. Malaysian operations came in third with a 15% share, followed by Latin America (7%). No geographical breakdown was provided in 2011.

Bumi Armada: Revenue breakdown – by region

M'sia41%

Asia17%

Africa42%

F Y 2008 Revenue:RM519.8m

M'sia30%

Asia17%

Africa47%

FY 2009 Revenue:RM732.1m

Americas6%

M'sia15%

Asia43%

Americas

7%

Af rica35%

FY 2010 Reven ue:RM1,241.1m

Amer icas7%


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SECTION 2: OPPORTUNITIES

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FPSO: Fundamentals and prospects

1. Industry’s fundamentals

The fundamentals for the FPSO sector are favourable. Activities are returning to more normalised levels after a dismal 2009, underlying the positive macro (i.e. oil price rebound, higher E&P spending) and micro drivers (i.e. increased drilling activities).

Fleet utilization has been robust. The number of idle FPSOs has fallen considerably and field developments have been pacing up.

Africa, Asia and the Americas are the epicenter of FPSO activ ity. These three regions play host to 62% of the world wide FPSO fleet, and we believe they will remain the frontiers for FPSO operators.

Key drivers. Growth in these regions will be driven by a combination of geological bounty, security concerns and domestic consumption factors which will render the development of offshore fields the inevitable trend.

FPSO: Fleet utilization rate and idle units

80

85

90

95

100

0

2

4

6

8

10

12

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

Idle units (LHS) U til isat ion rates (RHS)(Unit s)

Ave. Uti lisation - 94%

(%)

Source: ODS-Petrodata

FPSO contracts awarded since 2009 Company Field Oil major Country Type Award date SBM Aseng Total Guinea Leased 2009 Petrobras Papa-Terra Petrobras Brazil Owned 2009 Bumi Armada TGT Hoang Long Joint Operati ng Co (HLJOC) Vietnam Leased 2009 EOC Chim Sao Premier Oil Vietnam Leased 2009 Saipem Aquila ENI Ital y Leased 2009 Bluewater Nan Hai CNOOC China Leased 2009 SBM Baleia Azul Petrobras Brazil Leased 2009 Bluewater Kitan ENI Timor Leste Leased 2010 Modec Guara Petrobras Brazil Leased 2010 BW Offshore Athena Ithaca UK Leased 2010 SBM Tupi NE Petrobras Brazil Leased 2010 Hyundai Goliat ENI Norway Owned 2010 Sevan Huntington E. ON UK Leased 2010 BLT Pagerungan Kangean Indonesi a Leased 2010 Petrofac Cendor Phase 2 Petrofac Malaysi a Owned 2010 Daewoo CLOV Total Angola Owned 2010 Petrobras Tupi x8 Petrobras Brazil Owned 2010 OSX-2 Waimea OGX Brazil Leased 2011 Petrofac Berantai Petro/Petronas Malaysi a Owned 2011 BP Quad 204 BP UK Owned 2011 SBM Offshore Block 15/06 ENI/ Sonangol Angola Leased 2011 Teekay Knarr BG Norway Leased 2011 Bumi Armada Balnaves Apache Australia Leased 2011 Bumi Armada D1 ONGC India Leased 2011

Source: Pareto Research

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The current global supply and demand outlook is promising, and offers new opportunities for growth in the industry. The chart below summarises the current supply and demand picture. The supply side consists of all producing and ordered units while the demand side is calculated on the basis of outstanding projects, i.e. firm tenders, planned and possible.

FPSO: Supply and demand – based on existing projects only

20161998 2000 2004 20122006 20142008 20102002

250

200

150

100

50

199619941990 1992

(Units)

250

200

150

100

50

Producing FPSOs Idle units re employed H igh demand Base Low demand

Source: ODS-Petrodata

Choice between leased and owned FPSOs among oil companies

191

190

31

33

11

62

10

41111

43

2222

1

2414

139

76

54

33

2222

11111

Pet robrasCNOOC

Ot herTotal

ExxonMobilBP

C hevronShell

WoodsidePetroVietnam

EN IStatoil

HessMaersk O&G

PetronasBHP

C onocoPhillipsPremierPTTEP

CNRTalisman

AddaxKangeanMurphySantos

AfrenLeased FPSOs Ow ned FPSOs

Sources: International Mariti me Associates Inc, Maybank-IB

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2. Snapshot of FPSOs currently deployed

There are 160 FPSOs in the world now. Of the total inventory, 149 units are currently in service or available worldwide while 11 units are currently off field, and available for reuse.

Utilization rate is high, at 93%. The Asia Pacific region (Asia and Oceania) has the largest count, with 47 FPSOs in operation. This is followed by America: North, Central & Latin (39), Africa (37), Europe (22) and the Mediterranean & Middle East (4).

12 new FPSOs ordered since a year ago, March 2011. According to International Maritime Associates, Inc (IMA), 12 units of new FPSOs have been ordered since March 2011 and these vessels are scheduled to hit the market from 2013-2015.

Current deployment of global FPSO fleet: 149 units in the field

Legend

Number of FPSOs deployed in the region

Gulf Of Mexico

Mideast/SW Asia

Australia/NZ

Brazil

Far EastMediterranean5

2

1

14

20

3

32 37

13

Canada

NorthernEurope

22

Africa

South East Asia


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3. Outlook

Current order backlog for FPSOs worldwide stands at 40 units, comprising 16 newbuilds and 24 conversions. Of the 40 units, 3 units are on speculative orders without field contracts. Brazil currently dominates orders for 21 FPSOs, which include 8 serial pre-salt units. The underlying growth in Brazil is largely due to:

i) Petrobras’ plans to develop a new pre-salt province entail ing at least 40 large scale FPSOs and

ii) compliance with local content clauses for FPSOs (up to 65%)

FPSOs in the pipeline – 40 units on order

Legend

Australia/NZ

Brazil

Mediterranean

2

1

214

2

NorthernEurope

5

Africa

South East Asia

Number of FPSOs to be deployed per region

3 Speculative units without contracts in hand

Gulf Of M exico

1

Mideast/SW Asia

1


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The medium-term outlook. Projection-wise, 200-250 new orders for FPSOs are expected to enter the market over the next 5 years. The orders are categorized into 2 core groups for: (i) visible and (ii) future emerging projects.

(i) Visible projects: In the planning pipeline are 125 firm projects that potentially require FPSOs should the projects go to development. FPSO is the only l ikely production solution for 100 of these projects. The remaining 25 projects could require either FPSOs or other types of production solutions (i.e. tension-legged platform (TLP), semi-submersibles, SPAR). With a few exceptions, all the projects are declared discoveries, some of which will require multiple FPSOs for development.

(i) Future emerging projects: A reasonable estimate is that 75 to 125 FPSO projects will emerge over the next 5 years that are not now visible. This estimate is based on an asse ssment of the number of projects in the current planning list and was not visible a few years ago.

4. Sensitivities of projects

Insensitive

Based on the analysis of the 125 potential FPSO projects, it is estimated that about 30% are relatively insensitive to short-term market conditions.

The decision to proceed will be based on long-term oil price assumptions and potential of the project to build reserves.

The need to replace reserves and the opportunity to exploit large hydrocarbon complexes provide continuous momentum for project development.

This grouping comprises big projects involving large reservoirs offshore Brazil and West Africa.

Sensitive

40% of the 125 projects are considered opportunistic projects, which require a robust oil price environment to proceed.

They generally involve projects with relatively small reserves and non-major oil operators.

These groupings are projects located in South East Asia.

Somewhat sensitive: 50/50

30% of the visible 125 FPSO projects are considered somewhat sensitive to short term market conditions, where to some degree, underlying short to mid-term crude oil prices are taken into account in making an investment decision.

These projects are spread over a wide spectrum of geographical areas and generally involve fields with mid-size recoverable reserves, heavy oil or difficult access.

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Most likely scenario: 100-140 units by 2015. In our view, we see orders for 100 to 140 FPSOs over the next 5 years, averaging 20-28 new units p.a. from 2012-2015. This includes new units and redeployments, which will generate capital expenditure (capex) of USD65b-85b over this period. The bulk of the variation between the 3 scenarios is in the small- to mid-size FPSO orders.

An 80:20 ratio for newbuild and conversion vs. redeployments. We opine that 80% will be satisfied via newly built or converted units while the remaining 20% of the FPSO projects will be on redeployment basis. All redeployment will be of small- to mid-sized FPSOs.

Forecasted FPSO new orders over the next 5 years – 3 scenarios Low case

Oil price: USD70-90/ bbl

Reasonable case

Oil price: USD90-110/ bbl

High case

Oil price: > USD110/ bbl Types of FPSO Capex

(USD’b) Unit Capex



(USD’b) Large FPSOs

New converted units with 150-250,000 bpd 1.20 26 31.2 28 33.6 30 36.0 Topsides pre-salt hulls 0.80 8 6.4 8 6.4 8 6.4

Midsize FPSOs

New converted units with 80-150,000 bpd 0.60 24 14.4 29 17.4 34 20.4 Topside spec hulls 0.25 3 0.8 3 0.8 3 0.8 Modified r edeployed FPSOs 0.30 3 0.9 4 1.2 5 1.5

Small FPSOs

New converted units below 80,000 bpd 0.40 25 10.0 34 13.6 42 16.8 Modified r edeployed FPSOs 0.15 11 1.7 14 2.1 18 2.7

Total 100 65.4 120 75.1 140 84.6

Sources: International Mariti me Associates, Inc, Maybank-IB

28-80% growth on the horizon. The next 5 years’ forecast (2011-15) of 100-140 units new FPSO order is a 28-80% increase when compared against actual orders over the past 5 years (2006-10). The strong growth rate may partly be attributed to the: (i) depressed global financial and commodity markets in 2008-09 and (ii) FPSO market at the pre-inflection stage, with growth accelerating YoY. Our expectation is that FPSO orders will grow at an increasing rate as the need for new oil supply sources grows and major deepwater finds continue.

Forecasts of FPSO orders over the next 5 years – by size

34 36 38

3036 42

36

48

60

78

100

120

140

0

40

80

120

160

Past f ive years Low scenario: USD 70-90 oil

Base scenario: U SD 90-110 oil

High: scenario: U SD 110-150 oil

(Units) Large FPSOs Midsize FPSOs Small FPSOs Series4


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5. Opportunities for Bumi Armada

A promising roadmap – aiming for Top 4. Bumi Armada targets to be the fourth-largest FPSO operator by end-2013. In order to achieve this feat, it needs to have a minimum of 8-9 FPSOs in its armada, which implies the addition of 3-4 units to its existing fleet over the next 24 months.

A major force by 2013. This is a reasonable target, in our view considering the myriad prospects in the FPSO market. Growing its FPSO fleet by 3-4 units would only:

- meet 2-4% of the needs of 100-140 new projects expected to come onstream over the next 5 years,

- account for 5-11% of the global forecasted small-sized FPSO orders by 2015 (based on 36 to 60 projects),

- account for 27-36% of global FPSO orders, on a base case scenario (low scenario, 30% sensitivity on small FPSOs; 11 units).

Target, focus and criteria. Based on the set criteria, we opine that Bumi Armada will most likely focus on:

(i) small-sized FPSO projects,

(i i) converted FPSOs,

(i ii) Asia Pacific (i.e. Asia and Oceania) and Africa markets, and

(iv) Oil companies that typically lease FPSOs.

25 potential projects identified. Based on our screening criteria listed above, we have identified 25 potential projects, located in 12 countries: Angola (1), Australia (1), Cameroon (1), Gabon (1), India (3), Indonesia (4), Malaysia (5), Nigeria (2), Thailand (1), The Philippines (1), Tunisia (1) and Vietnam (4). In terms of time-line:

25 potential projects oncoming projects that fit Bumi Armada Year Country Field

2012 (8 projects) India Cluster 7 oil field (C 7)

Indonesi a Madura BD, Bukit Tua (2 units)

Malaysi a Gumusut-Kakap (temporar y)

Malaysi a PM301/PM325 (Kamelia)

Malaysi a PM302 (Bunga Dahlia and Ter atai)

Malaysi a SB 302 (Belud)

Vietnam Dong Do/ Thang Long

2013 (5 projects) Angola Block 15/06

Indonesi a Badi k

Thailand B6/27

Vietnam Blk 102/106, Lac Da Vang (2units)

2014 (12 proj ects) Australia Lady Nora

Cameroon Etinde IE/IF

India Dhirubhai, KG-DWN-98/2 ( 2 units)

Indonesi a Ande Ande Lumut Gabon Dussafu Ruches

Nigeria Aje, Bilabri/Orobiri (2 units)

Vietnam Dai Nga

Malaysi a N3/Spaoh

The Philippines West Linapucau

Tunisia Cosmos

Source: IMA

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Snapshot of projects that pass Maybank-IB’s selection screening criteria Status Country Field Operator W ater depth

(m) First oil possible

Bidding/ fi nal design India C7 ONGC 85-90 2013 Bidding/ fi nal design Indonesi a Madura BD Husky/CNOOC 55 2014 Bidding/ fi nal design Indonesi a Bukit Tua Petronas 100 2014 Planned or being studied Malaysi a Kamelia Petronas/ Hess <200 2014

Planned or being studied Malaysi a Bunga Dahlia and Teratai Petronas 65-70 2014

Bidding/ fi nal design Malaysi a Belud Hess 155 2014

Bidding/ fi nal design Vietnam Dong Do/ Thang Long PetroVi etnam/Petronas 65 2013

Planned or being studied Indonesi a Badi k Anadar ko 70 2013 Planned or being studied Thailand B6/27 PTTEP/Nippon Oil 35 2013 Planned or being studied Vietnam Blk 102/106 Petronas 25-30 2013 Planned or being studied Vietnam Lac Da Vang PetroVi etnam 48 2013 Planned or being studied Australia Lady Nora Woodside 80 2014 Planned or being studied India Dhirubhai Reliance 1194 2014 Planned or being studied India KG-DWN-98 ONGC 225 2014 Planned or being studied Indonesi a Ande Ande Lumut Genti ng O&G 100 2014 Planned or being studied Gabon Dussafu Ruches Harvest Natural Resources 115 2014 Planned or being studied Nigeria Aje Chevron/ Yinka 90 2014 Planned or being studied Nigeria Bilabri/ Orobiri Peak 40-300 2014 Planned or being studied Vietnam Dai Nga Idemitsu 120 2014 Planned or being studied Malaysi a N3/ Spaoh Petronas 80 2014 Planned or being studied Tunisia Cosmos Chinook Energy 120 2013 Sources: International Mariti me Associates, Inc, Maybank-IB

The FPSO tenders that we gauge Bumi Armada has entered into to date are in India, Indonesia, Vietnam, Malaysia, Angola and Nigeria.

FPSO tenders that Bumi Armada could have a high prospect of winning Country Operator Description

India Oil & Natural Gas Corporation (ONGC)

• We do not rule out Bumi Ar mada expandi ng further into the Indian FPSO mar ket. ONGC’s Cluster7 FPSO tender is a likely project, which is at the ‘bidding/ final design stage’ stage.

• ONGC requires an FPSO that can handle 30,000 bpd of oil and 63mmscfd of gas with storage

capacity of 0.5m bbl and operate up to 100m water depth. • It is no secret that 8- 10 prospecti ve contractors took part in a pre-bid meeti ng by ONGC. The

notable names apart from Bumi are: (i) Malaysia- based M3Nergy, (ii) Singapore-based Tanker Pacific, (iii) India’s ABG Shipyard, (i v) Pipavav Shipyard and (v) Mercator.

• ONGC has another project in India, KG-DWN-98/ 2, a marginal field offshore Andhra Pradesh on

India’s East Coast, that requires an FPSO. Pr oduction is slated for 2014/16. However, the project had sever al false starts i n the past. This project is at the ‘planned or bei ng studi ed’ stage.

• W e rate Bumi Armada’s chances for the Cluster 7 FPSO project as high.

Indonesi a Husky/CNOOC • Bumi Ar mada could penetrate Indonesia’s FPSO mar ket this year via Husky Energy’s tender for an FPSO to devel op its Madura BD fi eld off East Java.

• Husky requires an FPSO that can handl e 8,000 bpd of condensates and 110 mmscfd gas with

storage capacity of 370,000 barrels. The FPSO is required to handle sour gas while operators face strict bidding requirements in terms of both l ocal cabotage laws and financial performance bonds. The charter period offered is a firm 10- year ter m with up to 5 annual extensions.

• It has been reported that Bumi Armada’s competitors are BW Offshor e, M3nerg y, Tanker Pacific

and EMAS. W e gauge Bumi Armada’s chances to be fair for this project.


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FPSO tenders that Bumi Armada could have potentially participated in to-date (continued) Country Operator Description

Vietnam PetroVi etnam/ PETRONAS

• We expect the Lam Son Joi nt Operati ng Company FPSO contr act to be awarded i n 2012. The FPSO will develop 2 oilfields in the Cuu Long basin fi eld.

• This project is in the ‘ bidding/ fi nal design’ stage. The field, co-owned by PetroVietnam and

PETRONAS, requires a FPSO with up to 18,000 bpd of oil processing capacity and storage space for 350,000 barrels. The FPSO will initially process oil from the Thang Long fiel ds, followed by the Dong Do field.

• This is a 7- year fi xed-term contract with the option to extend for 3 years. We understand that

Fred Olsen Production is the favoured bidder. It has recei ved a Letter of Intent due to its competiti vel y-priced bi d. However the contract has not yet been fi nalised.

• There are 3 other projects in Vietnam; (i) Dai Nga, (ii) Blk 102/106 and (iii) Lac Da Vang, which

require FPSO, MOPU/ FSO or fi xed platform as producti on solutions. These pr ojects ar e scheduled to hit first oil in 2013-2015. These projects are at the ‘ planned or being studied’ stage.

Angola ENI • There are 5 projects in Angola, which are at the biddi ng or final design stage. They are: (i) Block 14 – Negage, Lucapa, (ii) Block 18 – Plati na, Chumbo, Cesi o, (iii) Block 31 – Ceres, Heve, Urano, Titani a, Terra, Miranda, Cordelia, Portia, Dione,

Leda, Oberon, Tebe, (iv) Block 15/ 06 hubs – Ngoma/ Sangos/ Cabaca Norte/ Nzanza/ Cinguvu/ Mpungi/

Cabaca Southeast and (v) Block 16 – Chisonga.

• These projects are at the ‘bidding/ final design stage’ stage. Based on Bumi Armada’s technical

track record li mits, we opi ne that the Bl ock 15/ 06 hubs appear to be the most likely target for Bumi Armada due to the shallow water depth (470-1,420m); the other fields are in ultra-deep waters (1,300- 2,220m).

• For this particular fi eld, the chances of a wi n ar e higher, in our opinion, as 2- 3 FPSOs ar e likel y to

be utilised. W e are optimistic of Bumi Armada’s chances in clinch ing this contract. • We have identified 4 other projects in Angola, which are at the planning stage and which ar e

currentl y being studied. They are the: (i) Bl ock 32. (ii) Block 17/ 06, (iii) Block 18/ 06 and (i v) Block 33. Still, Block 15/ 06 remains the most likel y target due to the favourable environment (easy to moor), water depth (470-1,420m) and existing relationshi p with ENI. The project is expected to kick in by 2013 (earliest).

Nigeria Chevron/ Yinka, Peak • Bumi Ar mada’s prospects in Nigeria are likel y to be most favourable for the Aje fiel d, owned by Chevron/ Yi nka. This field however is still at the planning stage. The water depth is favourable at 90m with the fi eld targeted to achieve first oil by 2014. Apart from Aje, there are 10 other fi elds i n Nigeria, which are currentl y being studied.

Malaysi a PETRONAS/ Hess/ Shell

• Up to 4 FPSO pr ojects could be awar ded this year in Malaysia. They are: (i) SB 302 (Belud),

(ii) PM301/PM325 (Kamelia), (iii) PM302 (Bunga Dahlia and Ter atai) and (iv) Gumusut-Kakap (a temporary FPSO with short-midterm charter)

• The first 3 are “fast-tracked” projects brought forward to boost Malaysian gas suppl y needs; first

gas/oil is targeted for 2014 while the l ast would be a short-term contract. • Belud FPSO - It has been reported that the M3nergy and EMAS consortium submitted the lowest

bid in a recent tender for the Belud FPSO, offering the FPSO Lewek Arunothai whose charter was prematurel y ter minated in Thailand’s Arthit fiel d in 4Q2011. However, considering the FPSO Arunothai’s chequered operating history, Hess is reported to have offered Bumi and MISC a second chance to match the consortium’s bid.

• Kamelia and Bunga Dahlia & Teratai FPSOs - Both the Kamelia and Bunga Dahlia/Teratai

projects will require floating solutions for field devel opment. With both fields targeted to achieve first gas by 2014, we expect contr act awards by this year. Should M3Nergy win the Belud job, we reckon either Bumi or MISC coul d win one of these.

• Spaoh FPSO. The Spaoh fi eld aka NC3 will likely use an FPSO or fi xed platfor m. Further

appraisal is being planned. This field will hit first oil by 2014/16. Sources: International Mariti me Associates, Inc, Maybank-IB

6 March 2012 of 60

Bumi Armada

OSV: Fundamentals and prospects


OSV market currently going through an overbuilt period. Vessel supply for now outstrips demand by 1.6x and the overhang situation was at its crest in 2010, owing largely to the influx of orders for AHTS and platform supply vessels (PSV) during the 2005-2007 period.

Fueled by the arrival of new vessels entering the market. 1,193 newbuilds comprising AHTS and PSVs entered the market in 2006-10, exacerbated largely by the AHTS segment (707 units), which outstripped the PSV (486 units) market by 1.45x.

The 5,000bhp AHTS market was the hardest hit. The oversupply state in the AHTS market is more prevalent in the small vessel segment (5,000bhp) and less on the higher specs (8,000-12,000bhp). The PSV segment is slightly better off than the AHTS market, owing to the higher investment requirement and lower volume.

Increasing number of vessels lying idle; utilisation rate at its lowest in 2010. The number of idle vessels reached its zenith in 2010, doubling its immobilized fleet YoY. The prevalent situation has brought down utilization rates for AHTS and PSVs from a peak of 86-88% in 2006 to 70-72% in 2010. Old vessels (>15 years) experienced lower utilization (40-55%) compared to newer builds (<10 years; >60%).

OSV: Global AHTS demand, supply & utilization OSV: Global PSV demand, supply & utilization

50

60

70

80

90

100

0

400

800

1200

1600

2005 2006 2007 2008 2009 2010Demand (LHS) Supply (LHS)Util isation (RHS) Malaysia Flag (RHS)

(%)(Units )

50

60

70

80

90

100

0

200

400

600

800

1000

1200

2005 2006 2007 2008 2009 2010Demand (LHS) Supply (LHS)Util isation (RHS) Malaysia F lag (RHS)

(Units) (%)

Sources: ODS-Petrodata, Maybank-IB Sources: ODS-Petrodata, Maybank-IB

OSV: Supply overhang in the AHTS segment OSV: Supply overhang in the PSV segment

400

600

800

1,000

1,200

1,400

1,600

1,800

2001 2003 2005 2007 2009 2011 2013 2015 2017Demand Total supplyEffective supply Ef fective supply ex 30 ex y.o.s

(U nits)

400500

600

700800

900

1,0001,100

1,200

1,300

2001 2003 2005 2007 2009 2011 2013 2015 2017Demand T otal supplyEffective supply Effective supply ex 30 ex y.o.s

(Units )


6 March 2012 of 60

Bumi Armada

OSV: Increasing numbers of vessels idle OSV: Utilisation rates (old vs new)

0

30

60

90

120

150

1Q06 1Q07 1Q08 1Q09 1Q10 1Q11

AHTS PSV(Units)

50

60

70

80

90

100

1Q06 3Q06 1Q07 3Q07 1Q08 3Q08 1Q09 3Q09 1Q10 3Q10 1Q11

Built in/ before 1991 Built on/ af ter 2005(Ut il isat ion)


2. Outlook

Positive trends over the next 18-24 months. The vessel market for the 5,000bhp AHTS segment remains weak and oversupplied but the 8,000-12,000 bhp AHTS segment is seeing moderate progress in rates as several recent contracts have secured decent charter rates.

Newbuilds tailing off. 338 orders committed in the past few years will enter the market in 2011-14. Overall, newbuild deliveries are tailing off as the pace of orders has significantly slowed down.

PSVs are in demand. Newbuilding activities so far are nominal, largely confined to the larger specification vessels (i.e. 8,000-12,000bhp AHTS) and PSVs with higher DWT (>3,000t dwt).

OSV: Snapshot of newbuild for AHTS OSV: Snapshot of newbuild for PSV

-

5

10

15

20

25

0

50

100

150

200

250

2001 2003 2005 2007 2009 2011 2013

Under 9,999 10,000-14,999 15,000-17,99918,000+ bhp' 000/unit

(Units ) (bhp)

0

1

2

3

4

5

6

0

20

40

60

80

100

120

2001 2003 2005 2007 2009 2011 2013

<3, 000 3,000-3,9994,000+ dwt' 000/unit

(Units ) (bhp)


6 March 2012 of 60

Bumi Armada

OSV: Global OSV newbuild by order to-date OSV: Newbuilds (2006 – 2014)

0

50

100

150

200

250

300

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

AHTS PSVM'sia AHTS M'sia PSV

(Units)

166 164

224

327312

291

104

36 40

50

100

150

200

250

300

350

2006 2007 2008 2009 2010 2011 2012 2013 2014

AHTS (Del ivered) PSV (Delivered)PSV (On coming) AHT S (On coming)

Newbui ld vessels


Dayrates have stabilized. Dayrates after going through the floor have stabil ized, as the market gradually absorbs the overbuilt situation. The low orderbook/fleet ratio of less than 20% supports our view that the current momentum will continue into 2012. We expect day rates to trade sideways and only improve over the next 18 months.

A cyclical recovery in motion. We expect a cyclical recovery in demand for offshore vessels. The strength in oil prices is a key secular driver for OSV demand for it encourages further offshore exploration and drill ing activities. OSVs will be required to support growth. Our house economist forecasts oil price to average USD100/bbl in 2011 (WTI) and USD110/bbl in 2012. WTI crude ended last Friday at USD106/bbl after touching a year high of USD109/bbl the week before.

All good things come to those who wait. Putting things into perspective, the demand and supply disconnect for offshore vessels should normalize in the later part of 2012. Util isation rates are on the rise, with the steepness of the increase depending on the type of vessels.

OSV: Global AHTS term fixtures OSV: Global PSV term fixtures

2001 2003 2004 2005 2006 2007 2008 2009 20102002

(USD ‘000/day)4,000-9, 999 bhp10,000-14,999 bhp15,000 bhp

70

60

50

40

30

20

10

50(USD ‘000/day)

45

40

35

30

25

20

15

10

5

2001 2003 2004 2005 2006 2007 2008 2009 20102002

3,000- 3,999 dwt4,000+ dwt


6 March 2012 of 60

Bumi Armada

OSV: AHTS 4,000 – 6,000bhp dayrates vs. utilisation OSV: PSV 3,000 – 3,999 t dwt dayrates vs. utilisation

(USD ‘000/day) U tili sationDay rate

2001 2003 2004 2005 2006 2007 2008 2009 20102002

60

50

40

30

20

10

70

90

80

10025

20

15

10

5

(%)

60

50

40

30

20

10

70

2001 2003 2004 2005 2006 2007 2008 2009 20102002

60

50

40

30

20

10

70

90

80

100

(USD ‘000/day) U tili sationDay rate (%)


OSV: AHTS – average age profile (13.9 years) OSV: AHTS – average age of idle vessels (21.7 years)

64%

21%

15% 0‐19 yrs

20‐29 yrs

30 yrs+

34%

35%

31%0‐19 yrs

20‐29 yrs

30 yrs+


OSV: PSV – average age profile (12.6 years) OSV: PSV – average age of idle vessels (25.0 years)

73%

14%

13% 0‐19 yrs

20‐29 yrs

30 yrs+

29%

31%

40%0‐19 yrs

20‐29 yrs

30 yrs+


6 March 2012 of 60

Bumi Armada

OSV: Global market share by vessel demand OSV: Global market share by vessel supply AHT6%

AHTS55%

PSV39%

AH T7%

AHTS54%

PSV39%


OSV: Global supply & construction OSV fleet

Supply Ves sels

83%

Construction

Vessels17%

AHT7%

AHT S54%

PSV39%

Ac comodation17%

Derrick8%

D iving Support

15%

Others7%

Pi pelay/D erri ck Pipel ay

25%

R OV Support

28%

Sources: ODS-Petrodata,, Maybank-IB

OSV: Global demand – construction vessels by type

Supply Vess els

88%

Cons truction

Ves sels12%

AHT3%

AHTS84%

PSV13%

Accom odation31%

Diving Support

19%

Pipelay/Derric k Pipelay

37%

ROV Support

13%


OSV: Global demand for AHTS, PSV and construction vessels – by region

41%

4%4%

3%

11%

25%

12%As ia Pac

Europe

N. America

Cas pian & CIS

C&S America

Med & M id East

West A fric a

1,003 AHTS

13%

22%

22%

21%

11%

11% Asia Pac

Europe

N. America

C&S Americ a

Med & Mid East

Wes t Afric a

716 PSVs

29%

21%13%1%

10%

11%

15%Asia Pac

Europe

N. America

Caspian & CIS

C&S America

Med & M id East

Wes t Af rica


6 March 2012 of 60

Bumi Armada

a) South East Asia’s OSV outlook

Malaysia, Indonesia and Vietnam are most likely to provide the most opportunity for PSVs in the region as the number of operational platform installations in the region is expected to increase incrementally over the next five years.

Although the majority of installations are currently in shallow water locations offshore these countries, the region is reflective of the global offshore industry in that it is moving increasingly towards deep and ultra-deepwater fields particularly offshore Malaysia.

South East Asia platform capex by region (2011 – 15)

Malaysia27%

Cambodia1%

Vietnam21%

Thailand12%Phillipines

5%

Indonesia26%

Myammar5%

Brunei3%

Sources: Infield Systems Li mited, Maybank-IB

b) Malaysia’s OSV outlook

Malaysia is well-positioned as a regional deepwater centre. Malaysia’s deepwater activities, actively promoted by PETRONAS, are expected to feature prominently in the industry’s exploration and production (E&P) development as it is one of the most effective ways to increase reserves and production.

Deepwater to contribute 1/3 of Malaysia’s production. PETRONAS expects the deepwater sector to contribute 30-40% of Malaysia’s O&G production over the next 10 years, in l ine with the growing trend in the region. A total of 17 deepwater production sharing contracts (PSC) have been awarded to-date, covering 119,000sq km. At present, only one is at the production stage.

Deepwater blueprint offers visible roadmap. We gather that 8 deepwater projects will be implemented. The Kikeh field is Malaysia’s first deepwater production field, which was successfully commissioned on 17 Aug 2007 with an oil production rate of 120,000 bpd presently. The Gumusut-Kakap field is up next, by 2013.

PSVs to support deepwater projects. With the Gumusut-Kakap and Malikai deepwater projects projected to come onstream soon, there will be a need for PSVs to support the field production activities.

6 March 2012 of 60

Bumi Armada

As well as upcoming shallow water projects. Deepwater projects aside, 65-70 new platform structures are required for shallow waters in 5 years. 22 new open shallow water blocks, covering over 240,000 sq km are open and available for data review. Based on PETRONAS’ announcement, there is a need to construct 65-70 (small and large) fixed structures and platforms for its domestic operations over the next 10 years.

Malaysia’s deepwater reserves potential

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Gumusut-Kakap650 m bbl

Metres below sea level

Jangas81 m bbl

Malikai108 m bbl

Ubah Crest215 m bbl

Kamunsu401 m bbl

Pi san gan56 m bbl

Sources: PETRONAS, Maybank-IB

Malaysia’s implementation of deepwater projects

2007 Future development field projects

Kikeh

Gumusut/Kakap

Malikai

Kebabangan

Jangas

Ubah Crest

Pisangan

Kamunsu

Indicative F irst Oil

Appraisal & Reservoir Evaluation

Project Implement ation

Field D evelopment Studies

Exploration

Exploration St rategy

Preliminary Engineering

Source: PETRONAS

6 March 2012 of 60

Bumi Armada

Malaysia’s planned oil production: Shallow and deepwater fields

0%

20%

40%

60%

80%

100%

2010A 2011F 2012F 2013F 2014F2015F

2016F2017F

2018F2019F

2020F

Deepwater f ields Shal low water f ields

Source: PETRONAS

PETRONAS’ deepwater blocks worldwide

OBO (Mauritania)

1 block

CBO (Mauritania)

2 blo cks

CBO ( Cuba)

4 blocks

OBO (Cameroon)

2 blocks

COB (Mozambique)

3 blocks

OBO (Malaysia)

11 blo cks

COB (Myanmar)

3 blo cks

OBO (Indonesia)

3 blo cks

COB ( Malaysia)

7 blocks

OBO (Greenland)

2 blocks

OBO (Egypt )

2 blo cks

OBO (Mozambique)

1 block

OBO (Vietnam)

1 blo ck

JOB (Malaysia)

1 cluster

●

●

●●

●●

●

Deep water ho tspot

Emerging h otspot

Carig ali operated block (COB)

Operated by o thers (OBO)

Join t operated block (JOB)

●

●

●

North Sea

Offshore Brazil

Gulf of Mexico●

West Africa●

● ●●

Source: PETRONAS

6 March 2012 of 60

Bumi Armada

c) West Africa’s OSV sector outlook

Positive. The West African market will hold a great deal of positive news for OSV players, in particular companies with high class AHTS.

New platform-driven growth. This is attributable to the rise in platform projects over the next 5 years through new platform installations, primarily in offshore major countries such as Angola, Nigeria as well as emerging countries like Gabon and Ghana.

West Africa platform capex by region (2011 – 15)

Cameroon6%

C ongo6%

Eq. Guinea6%

Gabon3% Angola

35%

Ghana4%

Ivory C oast1%

Nigeria36%

Sierre Leone3%


d) Latin America’s OSV sector outlook

Brazil to anchor growth. There is expected growth in O&G investment for platforms and subsea assets in Latin America over the next 5 years. Majority of the capex will be concentrated in Brazil, taking up 68% of the capex in the region.

As well as Mexico and Venezuela. Mexico and Venezuela will also see increasing demand for PSVs with new platform installations as well as increase in the cumulative base of existing operational platforms as PDVSA and PEMEX increase shallow water platform investments.

Latin America platform capex by region (2011 – 15)

Argentina

1%

Brazil68%

Chile1%

Mexico11%

Peru1%

Trinidad5%

Venezuela13%


6 March 2012 of 60

Bumi Armada

e) Offshore accommodation market outlook

Growing demand to support brownfield projects. The bulk of accommodation services will be required in the shallow waters and demand here is benign due to intermediate environmental conditions, driven by aging infrastructure. However, high-end vessels capable of working in intermediate and harsh conditions should see some growth in demand in later years.

Vessels with DP hardware will be preferred. It is anticipated that more and more DP2 and DP3 high-end vessels will enter the market looking to capture the niche market. Region-wise, Brazil will require high-end accommodation vessels for its ultra-deepwater works. In North Asia, development at the South China Sea and Bohai Bay by Chinese NOCs and the international partners will likely underpin accommodation activities. In South East Asia (Malaysia, Indonesia, Thailand), majority of the forecasted demand is targeted for IRM services. Notwithstanding that, platform installations are also expected to drive demand for this type of vessel.


We v iew the PSV and accommodation workbarge/boat markets as a compelling opportunity for Bumi Armada. Africa and Latin America (notably Brazil) wil l likely be its key markets for its future fleet expansion programme.

8-10 new vessels planned. We expect Bumi Armada to add 8-10 new vessels, a balanced combination of PSVs, MPSVs and accommodation units over the next 2 years to capitalize on the strong demand for higher spec OSVs.

Prospects for securing good charters are high. One of the PSV (to be built by Nam Cheong for USD30m with an end-2012 delivery date) will be contracted for the Gumusut-Kakap deepwater project on a long term basis, which is expected to come onstream in 2013. This initial win establishes Bumi Armada as a deep water PSV vessel operator and bodes well for its prospects for further deepwater jobs.

Expecting high utilization for newbuilds. We opine that util ization rates for the newbuilds (PSV and accommodation workbarges) will be high and contracted on long-term charters.

Utilisation set to improve for the existing vessels too. Util isation rates for its existing fleet of vessels are also expected to improve in 2012, in our view, as demand picks up. Util isation rates, in our view are expected to increase by 0.5-1.0% per month throughout 2012 with a target utilization rate of around 80% from 70% presently.

6 March 2012 of 60

Bumi Armada

T&I: Fundamentals and prospects


The Caspian region offers robust potential. The region, accounting for 20% and 45% of the world’s oil and gas reserve s re spectively, is one of the most important drivers of O&G production growth.

O&G developments in Russia (notably the Vladimir Filanovsky development) and Kazakhstan (Kashagan field) are expected to drive these regions to become big buyers of topsides in the near future. Turkmenistan, bordering Kazakhstan in the north and Iran in the south, also offers potential.

Majority of the demand is expected to be for pipelay vessels (derrick lay barges (DLB), in particular for the interlinking cluster developments in Kazakhstan and Azerbaijan (Kashagan and Azeri projects) as well as Turkmenistan and Russia.

Key Caspian Sea development projects Project Country Reserves

(mmboe) Start-up

date Est. Peak

Production ('000 bpd)

Est. Peak Date

Operator Production facilities

Kashagan Kazakhstan 10,285 2013 1,500 2023 NCOC Artificial Island ACG Azerbaijan 4,367 1997 1,030 2011 BP Fixed platfor m Shah Deniz (gas) Azerbaijan 2,930 2006 510 2018 BP Fixed platfor m Severnyi Russia 2,608 2010 370 2024 LuKoil Fixed platfor m Livanov Turkmenistan 1,664 2006 250 2021 PETRONAS FPSO/ fi xed platform SOCAR Assets* Azerbaijan 1,190 1949 410 1981 SOCAR Fixed platfor m Khval ynskoye (gas) Kazakhstan-Russia 898 2016 90 2018 LuKoil Fixed platfor m Cheleken Turkmenistan 833 1972 125 2015 Dragon oil Fixed platfor m Kalamkas Mor e Kazakhstan 720 2018 160 2021 NCOC Fixed platfor m Pearls Kazakhstan 463 2018 100 2023 CMOC Fixed platfor m Sources: Wood Mackenzie, Maybank IB; * State Oil Company of Azerbaijan

DLB vessel demand in the Caspian region

Azerbaijan

54%

Kazakhstan11%

R ussia22%

Turkemenistan13%


6 March 2012 of 60

Bumi Armada

A duopoly market; with good day rates and long-term charters. With the Caspian Sea almost a closed off market, as harsh winters, render the region landlocked for much of the year, having a vessel within the market is a key competitive advantage for operators. Only two pipelay vessels are currently available in the region, one operated by Momentum Group (Israfi l Huseynov) and another by Bumi Armada (Armada Installer). Given the limited number of players, dayrates and utilization rates are expected to remain healthy over the next five years.

Caspian Sea heavy lift demand & supply Caspian Sea pipelay demand & supply

0

2

4

6

8

10

12

14

16

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Lay demand Lay supply(Vessel Days)

0

100

200

300

400

500

600

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Heavy Lift Demand Heavy Lift Suppy(Vessel D ays)

Source: Infield Systems Li mited Source: Infield Systems Li mited


Armada Installer is on a firm 8-year charter to PCSB on attractive terms. Petronas Carigali Sdn Bhd (PCSB) has guaranteed a minimum number of hire days for the vessel. We estimate 60-70% utilization of the vessel for the duration of the contract. This makes ve ssel cost payback likely. We note that the guaranteed minimum hire days clause kicks-in only in the fourth quarter of each final year (Oct-Dec).

Armada Installer can also bid for other jobs simultaneously. More importantly, Bumi Armada is free to bid the vessel for works from the other operators, i.e., Dragon Oil, BP, Lukoil etc., during the remaining days ex- maintenance time. 7 projects are in various stages of completion and another 3 major projects have been lined up in the immediate future, providing Armada Installer great earnings visibility.

Enter the Dragon. Of particular interest to investors would be the Cheleken field where Dragon Oil plans to spend USD1b from 2012 to 2015. Its upcoming projects encompass multiple jack-up platforms, at Zhdanov A & B and Lam D, E, F and G, and this greatly solidifies the visibil ity of the Armada Installer’s order flow.

Anticipating higher utilization rates for the Armada Installer. There could be much opportunity for Bumi Armada in the Dragon Oil T&I projects as the Armada Installer (which is 2 years old) is arguably a better candidate, being a younger and more modern vessel compared to its rival; Israfi l Huseynov – a 20-year old pipelay barge.

With elevated earnings. We estimate that clinching such jobs would lift Armada Installer’s utilization up beyond the 90% threshold (from 70% currently), effectively raising revenue by RM9m p.a., based on an average rate of USD70,000/day for 62 operating days.

6 March 2012 of 60

Bumi Armada

New assets to drive T&I earnings. Bumi Armada acquired the Acergy Hawk (now named Armada Hawk) in June 2011. Thus far the vessel has worked on riser installations for the FSO Sepat and will spearhead bids for SURF installation and IRM projects in Asia. We expect Bumi Armada to add a third vessel, similar to the Armada Hawk in 2012, which would contribute about RM60m-90m in revenue p.a., assuming USD70,000 dayrates. Moreover, Bumi Armada can fit an existing AHTS – Tuah 104 with an A-frame to undertake T&I works.

Major projects worldwide SURF contracts 2010 2011 2012 2013 Contract Value

(USD m) Contract Value



(USD m)

1 Block 17-CLOV 1,300 Greater Gorgon 945 Egina 1,300 Wahoo 928

2 Roncador 3 520 Lula Nordeste 650 Caricoa 960 Block 31 South East 920

3 Laggan Tor more 250 Liwan 585 Tweneboa 850 Browse LNG 783

4 Mars B 230 Block 15-06 460 Cernambi 656 Leviathan 750

5 Tamar 420 Guara-Phase 2 544 Wheatstone LNG 657

6 Guara-Phase 1 416 Gehem 450 Franco-FPSO 2 592

7 Barzan Phase 1 400 Ichthys 450 Iara-FPSO 1 496

8 Jack/St. Malo 300 Franco-FPSO 1 448 Moho Bilondo 2 320

9 Big Foot 230 Gendalo 360 Florim 288

10 Lucius 220 Shtokman 300 Rosebank 240

11 Prelude 180 Nsiko 300 Shenandoah 230

12 Papa Terra 150 Baleia Azul 288 Jubilee FPSO 1 220

13 Clair Ridge 90 Freedom 160 Pluto LNG 2 198

14 Waimea –OSX 1 68 Myammar M-9 131 Vito 190

15 West Nile Delta 125 Abadi LNG 126

16 Pipeline 100

17 Mad dog 100

18 Waimea 68

Total 2,300 5,114 7,197 6,812 Sources: Instok, Maybank-IB

Major subsea markets world wide Malaysia’s subsea market by definition

-

2,000

4,000

6,000

8,000

10, 000

12, 000

2010 2011 2012 2013 2014

Angola Aust ralia Brazil

Nigeria U K GOM

(USD' m)

111157

276 254 243166

404

559

1, 093

0

200

400

600

800

1, 000

1, 200

2004 2005 2006 2007 2008 2009 2010F 2011F 2012F

SUR F Subsea Equipment(U SD' m)

Source: Instok Source: Instok

6 March 2012 of 60

Bumi Armada

OFS: Fundamentals and prospects


PETRONAS’ capex blueprint denotes growth. PETRONAS is projected to spend about RM250b in capex over the next 5 years (2011-15). This equates to an average investment of RM50b p.a., which is 25% higher than its 2010’s spending. The bulk of its capex spending will be redirected to domestic field development as it intensifies exploration and development activities in the deepwater, shallow, brown and marginal fields to lift production.

PETRONAS’ domestic strategy. On its E&P efforts, PETRONAS will focus on:

(i) unlocking stranded resources by fast-tracking the development of marginal fields projects,

(i i) improving enhanced oil recovery (EOR) efforts to optimise existing fields’ resources, and

(i ii) intensifying exploration efforts to further grow its hydrocarbon resources.

PETRONAS’ 3-prong strategy

Source: PETRONAS

PETRONAS’ targeted fields

Source: PETRONAS

6 March 2012 of 60

Bumi Armada

2. Outlook: Marginal field developments

Positive outlook. The countries in Asia Pacific, such as Malaysia, Indonesia, Thailand, Vietnam and India offer the most promising prospects, in terms of marginal field development. The growth is driven by Government incentives.

Marginal field development plans in Asia Pacific Country Marginal fields Outlook Malaysi a 90 hotspots identified, 25

to be devel oped Positi ve outl ook. Several proj ects have been announced (Sepat, Berantai). More to follow.

Indonesi a 160 O&G fields i dentified Positi ve outl ook. Government has identified 100 oil fiel ds and 60 gas fields for devel opment.

Thailand 40 O&G fi elds identifi ed Positi ve outl ook. Marginal fields are attracti ng more investors.

Vietnam 20 O&G fi elds identifi ed Positi ve outlook. The government is developing marginal fiel ds in Cuu Long basin i n an effort to boost producti on.

Australia 10 O&G fi elds identifi ed Positi ve outlook. New i nnovati ve concepts have been devel oped to explore marginal fi elds, which are economicall y viable.

New Zealand 165 new marginal fields identifi ed

Positi ve outlook. Government is keen on r apid development of smaller, economically marginal fiel ds to meet countr y’s energ y deficit.

India 165 new marginal fields identifi ed

Positi ve outl ook. 44 fields have been monetized. 90 fiel ds are in the process of being put to production.

China 30 O&G fi elds identifi ed Moderate outlook. Progress on marginal fields has been restricted due to unfavourable PSC conditi ons and tight government controls.

Sources: Origin Business Engi neering B.V., Maybank-IB

Marginal field development to see rapid progress in Malaysia. PETRONAS will adopt the fast track approach to execute its marginal field projects, as it aims to secure 1st oil and/or gas as fast as possible (within a 12-month period) with minimal capex and infrastructure requirement. Development will be through innovative solutions.

PETRONAS will develop 25 domestic marginal fields as it seeks to reverse declining output of Malaysia’s existing reserves. The marginal oil fields have 30m barrels of oil reserves and unlocking these fields is expected to raise Malaysia’s crude oil production by 55,000 bpd (+10%). The capex required to develop a marginal field is around USD800m and the breakeven cost is estimated at USD70/ bbl.

Marginal fields to be developed via the RSC model. The marginal field programmes will be developed via Risk Sharing Contracts (RSC) and not the conventional Production Sharing Contracts (PSC) accorded to oil majors participating in Malaysia’s major O&G fields. The RSC is aimed at making the project viable and attractive for smaller independent oil companies (IOCs).

PETRONAS has kicked off marginal field development, more to emerge. The first two pilot projects, Berantai and Sepat, have been rolled out and we anticipate 2 more (Balai and Bentara) to be awarded soon. It is understood that at least 5 more hydrocarbon discoveries are being looked at. The fields under consideration are said to include the Cenang and Tembikai gas discoveries near Talisman Energy operated Block PM 314. The other finds – Diwangsa, Rabung, Korbu, Desaru and Jambu could also be on the table.

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3. Outlook: Enhanced Oil Recovery (EOR) projects

Enormous potential. Existing brownfields also offer an abundance of opportunities. EOR potential in Malaysia is massive and is estimated to be approximately 1b stock tank barrels. Existing fields will be rejuvenated through enhanced oil recovery (EOR).

166,000 bpd, 1,000 idle wells, 955m bbls, 37 fields... Malaysia aims to boost brownfield production by 166,000 bpd (+30% increase to current total production) come 2020 using new EOR technologies. There is an est. 955mboe trapped in 37 brownfields with 1,000 idle wells. 60% of total EOR potentials in Malaysia reside in 6 reservoirs. They are the Tapis, Guntong Upper, Guntong Lower, St Joseph, Tiong, and Dulang fields. The crucial factor would be boosting the average recovery factor to 45-55% from the current average of 36%.

Snapshot of Enhanced Oil Recovery (EOR)

Tapis Lower J

Guntong Upper I

St. Joseph B/G

Tiong J - 20/21

Guntong Lower I

Dulang E-12/3 (pil ot stage)

Dulang E - 14 (pilot stage)

0

50

100

150

200Total potential: 955 MMstbNumber of reservoirs: 37Average size: 26 MMstb

CO2 miscible

Water Flood

HC miscible

Others

Group 1:570 MMSTB (60.4%)

Other potential reservoirs:374 MMSTB (39.6%)

Source: PETRONAS

...3x times larger than marginal field plans...The ultimate goal, according to PEMANDU, is to add 220,000 bpd of oil from EOR initiatives and marginal fields – accounting for 1/3 of domestic production. The greater emphasis on brownfields stems from the “relatively” easier, faster and lower incremental cost per barrel of increased production. The ultimate winner we feel will be the company able to deliver executable, cost effective and quick to deploy solutions.

...with RM45.9b capex committed. Petronas & Shell’s EOR projects for St. Joseph, South Furious (SF30), Barton and the Baram Delta Operations (BDO) call for USD12b (RM36b) in investments to develop the 9 fields of Sarawak and 4 fields in Northern Sabah. Meanwhile, Exxon will be rehabilitating the Tapis (RM3.2b), Guntong, Tabu, Palas, Seligi, Irong Barat and Semangkok fields (RM3.6b) and 2 mature gas fields, Jerneh & Lawit Bintang (RM3.1b) off the peninsular.

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(i) Angsi EOR project. This is a fast-track project. PETRONAS has set a target to commence operations by Sept 2013. It requires a vessel-based sea-water reverse osmosis (SWRO) plant (CEOR floater) with the capacity to desalinate 150,000bpd of seawater to increase oil recovery rates by another 20%.

Water Standard to team up with local operator(s). US-based Water Standard won the oilfield desalination project and will likely partner an FPSO operator for this job. Conversion work is expected to take 16 months to complete.

Potential winners. Bumi Armada, SapCrest Kencana Petroleum, Uzma and Deleum are the names mentioned. We think Water Standard could team up with one to two local partners due to the massive capex and job scope.

Angsi: An immediate target for PETRONAS’s CEOR vessel

Sources: PETRONAS, Maybank-IB

(ii) St Joseph EOR. This is a similar project to Angsi but requires a smaller SWRO unit. The project requires the vessel to handle an initial 10,000bpd water and chemical injection during the pilot phase (12 months). If this is successful, the vessel will undergo modification to triple its injection capacity to 30,000bpd.

Requires a 30,000bpd SWRO now with an Angsi size unit to follow. Unlike the Angsi field, the main asset (i.e. vessel) will be owned by Shell with the winner earning project management fees. However Shell intends to source a larger vessel when the economic viability of the project has been ascertained, to support the full field injection of 15,000bpd.

Relocation from Angsi to Sabah? We understand from discussions with O&G service providers that chemical alkaline surfactant polymer treatments are normally carried over a 3-4 year period. Based on the 150,000bpd processing capacity required for the ‘Angsi SWRO unit’, we estimate the vessel hull size could at least be an aframax tanker (market price RM60m-70m per unit). Considering the modifications and quantity of topside equipment required we think it likely the same floater

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will be utilised at both fields, consecutively, allowing the capex to be depreciated gradually.

Bidders and potential winners. Bumi Armada and six other operators (BW Offshore, MISC, M3nergy, SapuraCrest, Deleum and Tanjung Offshore) have been invited by Shell to bid for an EPCIC contract to supply a CEOR vessel for the St Joseph pilot project off Sabah. However, only two bidders remain – Bumi Armada and Deleum.

Snapshot of 13 BDO & North Sabah oilfields to be developed

Sabah

Sarawak

EOR Project1. USD12b inv estment over 30 y ears2. To develop 9 fie lds in the Baram Delta, S arawak

and 4 fields in North Sabah3. To recover 756m bbl of oil or 90-100k bopd4. To impr ove av erage rec overy factor to 50%5. To extend fields’ productive l ife to beyond 2040

St. Joseph

South Fu rious 30

Barton

So uth Fu rious

Bakau

West Lutong

BaroniaBaroniaBarat

BettyBokor

Tukau

Sikau

Siwa

Source: Maybank IB

(iii) Tanjung Baram. Meanwhile, the Tanjung Baram EPS project, awarded to a foreign party, is running into complications and will likely miss the first oil production target (1,000-3,000bpd) set for Jul 2012. A re-tender could recur should the issue remain unresolved.

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SECTION 3: FINANCIALS, VALUATION, RISKS

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Financials

Registered robust profits in the past. Bumi Armada delivered a RM277m net profit in 2009 (+85% YoY), RM351m in 2010 (+25% YoY) and RM387m in 2011 (+10% YoY). These translate to a robust 3-year historical net profit CAGR of 37% (2009-11).

Poised to break new ground. Looking ahead, we expect the earnings trajectory to continue its climb, at least over the next 3 years, on the back of stronger profits from all core divisions, namely FPSO, OSV and T&I operations.

Set to enjoy strong and sustained growth. We project a strong 3-year net profit CAGR of 25%, forecasting that Bumi Armada will deliver a net profit of RM532m in 2012 (+37% YoY), RM628m in 2013 (+18% YoY) and RM707m in 2014 (+13% YoY).

Growth will be driven by:

(i) 3 new FPSOs progressively coming onstream. We expect Bumi Armada to secure 3 FPSO contracts in 2012-13 (i.e. Malaysia, India and Angola). We expect the group to own a fleet of 8 FPSOs by end-2013, elevating it to becoming the fourth-largest FPSO operator worldwide by then.

(i i) OSV expansion and higher utilisation rates. We project Bumi Armada will take delivery of 2 PSVs in 2012 and another 4 newbuilds in 2013-14. Expectation is for these new vessels to generate revenue of RM29m-RM213m p.a. in total, li fting OSV’s topline by 6-28% respectively in 2012-13.

In terms of util isation rates, we expect a progressive step-up, from 79% in 2012 (+7-ppt YoY) to 83% in 2013 (+4-ppt YoY). Growth will largely be driven by higher charter days for its 8,000-12,000 bhp AHTS and PSVs.

(i ii) T&I’s Dragon Oil contract and contributions from new vessels. In the T&I segment, we have assumed Bumi Armada will secure the Dragon Oil T&I contract in the Caspian Sea. Bagging this project will elevate util isation of Armada Installer from 70% to above 90%.

With Bumi Armada taking delivery of Armada Hawk in 2H 2011 and another SURF vessel by 2012 to participate in the IRM projects in Asia, we project growth of the T&I EBIT at RM184m-RM190m p.a. in 2012-14 respectively, and at RM117m in 2011 to

(iv) OFS div ision is the wild card. With the delivery of the one-off Sepat FSO project, Bumi Armada aims to move to a recurring income business model via the Angsi SWRO vessel projects. We expect this project, to be awarded by 1H12, to generate EBIT of RM56m p.a..

Optimised earnings impact from 2015. Putting things into perspective, we expect Bumi Armada to enjoy the full effect of its underlying strong earnings-generating assets in 2015. This will notably come from the 3 new FPSOs, as the O&M charter rates kick in.

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Snapshot of assets growth FYE Dec (RM m) 2010A 2011A 2012F 2013F 2014F Assets (unit)

- FPSO (contract signed) 3 5 7 8 8 - OSV 37 46 48 50 50

- T& I 1 2 3 3 3 Total 41 53 56 61 61

Utilisation rat e (%) OSV

- AHT 87 87 73 77 77 - 5,000 bhp AHTS 70 83 85 85 85

- 8,000 – 10,000bhp AHTS 50 45 73 83 83 - 12,000 bhp AHTS 100 100 100 100 100

- Wor kbarge/ boat 80 74 88 95 95 - PSV - 90 90 90 90

- Others 73 83 80 80 80 T&I

- Armada Installer 70 75 92 92 92 - Newbuild (2) - 95 95 95 95


Not ruling out further upside potential. We do not discount the possibil ity of Bumi Armada adding another new small-to medium-sized FPSO beyond the projected 3 units, which would effectively lift its FPSO fleet size to above 8 units. In our modeling, we have also not imputed the expectation of any other production floaters (i.e. FSO). Overall, we opine Bumi Armada has the balance sheet, skil l sets and appetite to undertake this.

Has the ability for growth. Our forecasts suggest that Bumi Armada’s net gearing level will range between 0.5x and 0.6x in 2012-14. This is below the internal threshold of 1.5x set by management. Hypothetically gearing up to 1.5x in 2012 could effectively lift borrowings by RM3.5b (i.e. 3-4 FPSOs).

Has the balance sheet to take up another FPSO. We estimate that taking on the extra debt will still be sufficient for Bumi Armada to fund the expansion for a small-sized FPSO. As a benchmark, the capex to construct/convert a small-sized FPSO from a tanker (<80,000 bpd capacity) would range between USD300m-USD500m. The cost to modify an existing smaller unit is estimated at USD100m-USD250m.

Segmental breakdown FYE Dec (RM m) 2010A 2011A 2012F 2013F 2014F

Revenue 1,241.4 1,543.9 1,800.7 2,220.6 2,504.3 - FPSO 553.4 609.2 743.9 965.4 1,097.4

- OSV 419.7 481.9 622.6 686.1 688.4 - T& I 268.3 242.3 334.2 334.0 344.8

- OFS 0.0 210.5 100.0 235.0 373.8

EBIT 467.1 518.3 621.8 745.7 835.2 - FPSO 179.2 200.2 227.5 260.6 330.2

- OSV 88.9 116.8 175.0 207.2 221.0 - T& I 148.5 117.2 183.8 183.7 189.6

- OFS 22.7 21.0 13.0 40.8 69.3


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Significant capex going forward. Bumi Armada will spend heavily on capex (RM6.7b in total, in 2011-15) to fund its expansion programmes. As such, we do not expect significant dividend payout in the near term.

Bumi Armada: Capex profile

0.50.7 0. 8

0.50.3 0. 1

0.20.4

0. 2

1.2 1.4 1. 1

-0.1

0. 1

0. 3

0. 5

0. 7

0. 9

1. 1

1. 3

1. 5

2008 2009 2010 2011-14

FPSO OSVs T&I Others(RM b) RM6.7b


Progressive div idend policy. Management intends to adopt a progressive dividend policy in determining the level of dividend payment, with the level of cash, gearing, debt profile, retained earnings, capex and investment plans to be taken into consideration.

Projected capex for FPSO orders: Capex to build/convert FPSOs varies widely, depending on unit size, complexity and application.

Large FPSOs:

A large 150,000+ bpd FPSO intended f or use offshore Africa or Brazil can cost USD1b to USD2.2b.

As benchmarks, capex for the Clov FPSO is USD1.8b, Usan USD1.6b, Pazf lor USD2.1b and the P62 and P63 FPSOs are around USD1b.

Given the expected mix of future orders of large FPSOs, the notional capex of USD1.2b is a reasonable average cost to build such a unit.

Mid-size FPSOs:

An 80,000-150,000 bpd unit can range f rom USD0.4b to USD1.4b.

As benchmarks, capex for the P.C. de Itajai conversion is estimated around USD400m. Goliat, designed f or harsh environment is USD1.1b, Quad 204 is USD1.3b.

The notional capex of USD0.6b to build or convert or convert a unit and USD0.3b to modify/upgrade an existing v essel is representative of the av erage capex for midsize FPSOs.

Small-size FPSOs:

A >8,000 bpd unit can range f rom USD300m to USD500m.

As benchmarks, the Chim Sao capex was USD400m. Cost to modify a smaller unit is around USD100m - USD200m.

The cost to modify/ upgrade East Fortune for Berantai is about USD345m. Modifying/ upgrading Glas Dowr for Kitan is around USD120m-USD150m, the OSX1: USD200m.

The notional capex of USD0.4b to build or convert a small FPSO and USD0.2b to modify/ upgrade an existing vessel.

Source: International Mariti m Associ ates, Inc

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Valuations

Target price: RM4.88. Our target price is based on a sum-of-parts (SOP) valuation.

The FPSO, OSV, T&I and OFS (i.e. SWRO unit) operations are valued based on discounted cash flows (DCF), using a WACC of 4.5%. DCF is a reasonable method, in our view, considering that FPSO contracts are typically chartered out on a long-term basis (7 years + option period) while the OSVs, T&I and OFS vessels tend to see 1-8 year contracts.

We value the OFS’ EPCC operations on price-earnings multiples.

We ascribe a scrap value to their assets (i.e. FPSO, OSV, T&I and OFS) based on an estimated scrap steel tonnage.

At our RM4.88 target price, Bumi Armada would be trading at 26.8x 2012 PER which is not excessive in our view, considering we are expecting a strong 3-year net profit CAGR of 25%.

SOP valuations

Terminal growth rate

Division Value

(RM’m) Value

(RM/share) Methodology

FPSO 6,585 2.25 DCF

OSV 4,871 1.66 DCF

T & I 3,528 1.20 DCF

OFS 385 0.13 DCF on SWRO unit and 10x PER on EPCC

Scrap value 638 0.22 FPSOs, OSVs, T&Is

Net debt (1,760) (0.60) 2011

Total 14,291 4.88

Source: Maybank-IB

Key assumptions to our WACC estimate are laid out in the table below, where we have applied a 4.0% risk-free rate, 6.5% market risk premium and 1.0 beta. We have assumed a long-term: (i) 80:20 debt-to-equity structure and (ii) cost of debt of 3.0%

Assumptions and basis used for WACC discount rate

Risk free rate Rf 4.0% 10- year government bond yield

Long-term cost of debt Kd 3.0% Average 3.0% effecti ve i nter est rate (Maybank IB’s forecast)

Market risk Rm 10.5% Maybank IB’s in- house assumpti on

Beta β 1.0

Target capital ratio

- Debt / (debt + equity) Wd 80% Target gearing

- Equity / (debt + equity) We 20% 1 – target gearing

Cost of equity Ke 10.5% = Rf + (Rm – Rf) β

W ACC W c 4.5% = Kd (1-tax) (W d) + Ke (W e)

Source: Maybank IB

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Peers valuations: FPSOs

FPSO operator peer comparison (Calenderised)

Company Market Cap 3- yr EPS 3- yr EBITD A EV/ EBITD A EV/ EBIT PER Div yield Gearing ROE P/ BV (USD m) CAGR (%) CAGR (%) (x) (x) (x) (%) (x) (%) (x)

2011 2012 2013 2011 2012 2013 2011 2012 2013

SBM Offshore 3,446.6 25.0 11.8 6.7 6.3 5.7 68.4 9.9 9.1 8.1 7.6 6.7 6.2 0.9 21.1 1.9

BW Offshore 985.0 76.0 37.9 8.7 6.2 5.2 21.0 14.3 11.3 nm 9.1 7.1 8.7 1.1 8.5 1.2

Modec Inc 868.4 28.6 nm 18.7 16.5 11.4 nm 29.3 24.4 22.7 16.0 11.9 1.8 0.4 8.5 1.0

Fred Olsen 143.8 nm nm 5.5 4.8 4.3 17.2 18.6 16.7 nm nm nm 7.4 0.0 0.5 0.8

Sevan 127.5 nm nm 22.3 12.8 nm nm 12.6 nm nm nm nm - 1.5 0.9 0.7

EOC 117.5 8.7 4.2 7.3 6.3 6.5 12.6 10.1 11.0 4.9 3.2 3.4 - 1.9 11.0 0.2

Simple Average 11.5 8.9 6.6 29.8 15.8 14.5 11.9 9.0 7.3

Selected peers average ( weighted) 7.7 6.3 5.4 44.7 12.1 10.2 8.1 8.3 6.9 Sources: Bloomberg, Maybank-IB Note: *Acquired Prosafe Productions in Dec 2010, 2011- 13 net profit CAGR: 20%

Peers valuations: T&I and OSV operators FPSO operator peer comparison (Calenderised)

Company Market Cap 3- yr EPS 3- yr EBITD A EV/ EBITD A EV/ EBIT PER Div yield Gearing ROE P/ BV (USD m) CAGR (%) CAGR (%) (x) (x) (x) (%) (x) (%) (x)

2011 2012 2013 2011 2012 2013 2011 2012 2013

Saipem (T&I) 22,212.53 13.2 12.5 8.9 8.4 7.1 12.7 12.1 10.2 18.2 16.3 13.9 2.2 1.0 21.06 3.6

Technip (T&I) 11,908.49 19.3 17.4 8.7 8.2 6.3 10.8 10.4 7.9 17.2 17.2 13.6 1.0 1.0 21.06 2.5

Subsea 7 (T&I)* 8,176.78 148.6 160.4 8.9 7.1 5.0 13.6 10.0 6.9 18.7 16.3 11.8 0.8 0.1 8.47 1.4

Farstad (OSV) 1,149.6 19.2 9.4 7.6 7.4 6.9 11.9 11.4 10.7 11.5 10.3 8.7 3.0 0.8 8.57 1.0

Ezra (OSV) 889.6 20.9 41.1 18.3 13.5 11.3 25.5 17.6 14.6 16.7 10.8 8.0 0.4 1.1 8.50 1.0

Solstad (OSV) 723.8 110.9 20.6 10.9 7.7 6.8 27.0 15.1 12.9 11.6 9.0 3.1 1.9 7.41 0.9

T&I average 8.8 7.9 6.2 12.4 10.8 8.4 18.1 16.6 13.1

OSV average 12.3 9.6 8.3 21.5 14.7 12.8 14.1 10.9 8.6

Sources: Bloomberg, Maybank-IB Note: *Acquired Acergy

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Risk factors

Bumi Armada’s wide ranging business profile opens the group to a broad spectrum of operational, geographical and environmental risk. Operating in multiple countries and compliance with additional local regulations may hamper operations and increase operating costs. Below is a non exhaustive list of the major risk factors confronting Bumi Armada.

Oil price levels affect long-term investment plans. Oil majors’ investment plans are dependent on long-term oil price expectations, which can be affected by low and/or volatile oil price levels. We have seen oil field exploration/developments shelved when the oil price fell below USD50/bbl (average) in 2008, and there is no certainty this will not recur. Our economics team projects an average USD100/bbl crude oil price (WTI) in 2012 (2011: USD95/bbl).

Currency fluctuations. Revenue from customer contracts, capex and operating cost is largely denominated in USD which do provide for some form of a hedge (but not in full). In addition, Bumi Armada reports results in RM, which leaves the group open to foreign currency movements especially fluctuations of the USD against the RM. We estimate that a 1 sen strengthening or weakening of the RM against the USD to impact bottomline by RM2m (with 0.4% of its earnings in RM).

Financial leverage. Bumi Armada has and will maintain a significant level of leverage in line with the industry norm. Refurbishments are made before each redeployment of FPSOs and the vessels will require extensive repairs at regular intervals to meet the operating certification needed. High debt service and other contractual obligations will render Bumi Armada highly sensitive to any interruption in cashflows.

Contractual requirements. FPSO contracts can encompass turnkey contracts for the vessel’s construction, conversion and refurbishment.

Turnkey: FPSO conversions and refurbishment projects involve significant procurement of equipment, supplies and equipment. Risk include lack of supply of, or higher than expected cost of materials, equipment and manpower.

Delivery: FPSO contracts have strict delivery schedules and failure to adhere to set dates could result in lower daily charter fees or even late penalties.

Dependence on external parties: FPSO operators can be heavily dependent on vendors throughout the process, from equipment and manpower to even yard space.

Cost overruns: Historical FPSO projects’ cost overruns were often tied to increases in price or requirements of manpower, fabrication materials (e.g. steel) or additional requirements or changes in orders from clients (VO). Unless protected by a price escalation clause, Bumi Armada may face reduced earnings or even losse s.

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Performance: Post deployment, the FPSO would be required to maintain a pre-agreed commercial uptime, technically possible operating days less allowance for maintenance and emergencies. Failure to meet the set targets could result in reduced charter fees, su spension of charter fees or even penalties being imposed.

Early termination: Lease contracts are st ructured to provide the lessor with flexibility. Firm contracts are only offered for the estimated time required to exploit reserves but vessels have to be configured with the potential full period in mind. Should the termination of the contract occur and Bumi fail to redeploy the vessels on time, Bumi could suffer both reduced income and even impairment charges on its FPSOs

External factors/events: This comprises weather and natural hazards (typhoons, tsunamis, etc), pirate attacks (more likely kidnap of crew and shutdowns versus hijacks) and policy changes of governments.

Regulatory risks. As Bumi Armada operates worldwide, it must adhere to the offshore O&G industry regulations across multiple areas:

Local content: Several emerging countries are attempting to boost local industries i.e. fabrication, process equipment, etc. by introducing local content clauses. This includes Nigeria, Angola, Brazil and Malaysia, which require portions of the system to be fabricated at the local facilities.

Environment: Bumi Armada’s single hull FPSOs cannot operate in a number of regions (North America and Europe) and the number of areas are set to increase. Aside from hull requirements, rules relating to waste storage and discharge, carbon emissions, etc. will have an impact on Bumi Armada’s operating expenses.

Cabotage: Bumi Armada’s vessels (FPSOs and OSV) must comply with each country’s l icences, permits and certifications. Failure to comply could result in fines or vessel seizure. For example, Nigeria requires annual renewal of all l icense and imposes fines of up RM300,000 per OSV.

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Financial statements

INCOME STATEMENT (RM m) BALANCE SHEET (RM m)

FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F Turnover 1,543.9 1,800.7 2,220.6 2,504.3 Net Fixed Assets 4,201.2 5,274.3 6,247.5 6,840.7 Cost of goods sold (883.1) (984.8) (1,226.2) (1,383.6) Invts in Assocs & JVs 151.3 207.6 264.3 332.0 Gross profit 660.8 815.9 994.4 1,120.7 Other LT Assets 423.3 423.3 423.3 423.3 Other operating (exp)/inc. (142.5) (194.1) (248.7) (285.6) Cash & ST Invts 1,248.5 990.5 1,539.2 1,554.1 EBIT 518.3 621.8 745.7 835.2 Other Current Assets 912.0 965.5 1,053.2 1,112.4 Net int (exp)/ Inc (109.2) (113.0) (138.2) (155.7) Total Assets 6,936.2 7,861.3 9,527.5 10,262.5 Associates & JV 26.8 56.3 56.7 67.7 Exceptional gain/ (loss) (27.7) 0.0 0.0 0.0 ST Debt 447.4 447.4 447.4 447.4 Pretax profit 435.9 565.2 664.3 747.2 Other Current Liab 353.1 373.1 405.7 427.8 Tax (70.6) (27.0) (30.8) (34.3) LT Debt 2,559.8 3,000.0 4,000.0 4,000.0 Minority interest (5.7) (6.0) (6.0) (6.0) Other LT Liab 33.2 33.2 33.2 33.2 Net profit 359.7 532.2 627.5 706.9 Shareholders Equity 3,528.0 3,987.0 4,614.5 5,321.4 Net profit ex EI 387.3 532.2 627.5 706.9 Minority Interest 14.7 20.7 26.7 32.7 Total Cap. & Liab 6,936.2 7,861.3 9,527.5 10,262.5 EBITDA 845.1 1,048.7 1,272.6 1,442.0 Sales Growth (% ) 24.4 16.6 23.3 12.8 Share capital 2,928.5 2,928.5 2,928.5 2,928.5 EBITDA Growth (% ) 18.1 24.1 21.4 13.3 Net Debt 1,758.7 2,456.9 2,908.2 2,893.3 EBIT Growth (% ) 10.9 20.0 19.9 12.0 Working capital 1,360.0 1,135.6 1,739.3 1,791.2 Effective Tax Rate (% ) 16.2 4.8 4.6 4.6 Gross gearing 85.2 86.5 96.4 83.6

CASH FLOW (RM m) RATES & RATIOS

FY Dec 2011A 2012F 2013F 2014F FY Dec 2011A 2012F 2013F 2014F Net profit 387.3 532.2 627.5 706.9 Gross Margin (% ) 42.8 45.3 44.8 44.8 Dep. & amortization 326.8 426.8 526.8 607.8 EBITDA Margin (% ) 54.7 58.2 57.3 57.6 Chg. In working capital (596.6) (33.6) (55.0) (37.1) EBIT Margin (% ) 33.6 34.5 33.6 33.3 Other operating CF 212.6 (50.3) (50.7) (61.7) Net Profit Margin (% ) 25.1 29.6 28.3 28.2 Operating CF 330.2 875.1 1,048.7 1,215.8 ROAE (% ) 17.6 14.2 14.6 14.2 Net capex (1,058.7) (1,500.0) (1,500.0) (1,200.0) ROA (% ) 9.3 9.2 9.2 9.1 Chg in LT investment 0.0 0.0 0.0 0.0 ROCE (% ) 9.7 10.2 10.2 10.2 Chg in other assets (1,058.7) (1,500.0) (1,500.0) (1,200.0) Div Payout Ratio (% ) 17.9 0.0 0.0 0.0 Investment CF (1,167.6) (1,500.0) (1,500.0) (1,200.0) Interest Cover (x) 4.7 5.5 5.4 5.4 Net chg in debt (410.4) 440.2 1,000.0 0.0 Debtors Turn (days) 60.3 70.4 68.6 71.5 Chg in other LT liab. 2,218.5 (73.2) 0.0 0.0 Creditors Turn (days) 90.7 63.1 60.2 63.1 Other financing CF 0.0 0.0 0.0 0.0 Inventory Turn (days) 0.6 0.6 0.6 0.6 Financing cash flow 1,808.1 367.0 1,000.0 0.0 Current Ratio (x) 2.7 2.4 3.0 3.0 Net cash flow 970.7 (258.0) 548.7 15.8 Quick Ratio (x) 2.7 2.4 3.0 3.0 Net Debt/Equity (x) 0.5 0.6 0.6 0.5 Capex to Debt (% ) 0.4 0.4 0.3 0.3 N.Cash/(Debt)PS (sen) (60.1) (83.9) (99.3) (98.8) Opg CFPS (sen) 31.6 31.0 37.7 42.8 Free CFPS (sen) (24.9) (21.3) (15.4) 0.5


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SECTION 4: APPENDICES

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Appendix : Directors & Management

Board of Directors

Name Designation Remarks

Dato’ Sri Mahamad Fathil bin Dato’ Mahmood

Non-Independent Non Executi ve Chairman

Entrepreneurial experience across multipl e sectors

Directorships in numerous companies

Diploma, Institute of Management Specialist, fellow, British Institute of Management, UK

Dato’ Ahmad Fuad bi n Md Ali Non-Independent Non Executi ve Deputy Chairman

Over 20 years experience in fi nance, accounting auditing & consultancy

Invol ved in the O&G industr y since 2000

ACCA, Member of MICPA, Public Accountant in MIA

Saiful Aznir bin Shahabudin Independent Non Executi ve Director

Over 10 years experience in general management, corporate finance & privatization

CEO of Sharikat Permodal an Kebangsaan Berhad

MBA, Chicago University, BBA, Western Michigan Uni versity, USA

Alexandra Elisabeth Johanna

Maria Schaapveld

Independent Non Executi ve Director

16 years in Corporate Banki ng and Investment Banki ng at ABNAMRO Bank

Head of Europe for RBS during 2008

Degree, Politics, Philosophy & Economics , Oxford University, UK and Masters in Development Economics ,Erasmus Uni versity, Netherlands

Andrew Philip Whittl e Independent Non Executi ve Director

40 years of technical and managerial experience i n the petrol eum explorati on and production industry worldwi de focusi ng on South East Asia/Austr alia

Member of the American Association of Petroleum Geologists, the Society of Professional Well Log Anal ysts and the Petroleum Expl oration Society of Australia

Bachelor of Science, First Class Honours in Geology, Uni versity of Adelai de, Australia

Chan Chee Beng Non-Independent Non Executi ve Director

30 years experience in investment banking, fi nanci al management and accounting

Joined Usaha Tegas in 1992, serves as executi ve director and sits on the Board of Directors of Usaha Tegas related companies

Degree, Economics & Accounti ng, Newcastl e, ICAEW, UK

Farah Suhanah Ahmad Sarji Non-Independent Non Executi ve Director

Legal experience in both the government service and private sector

Managing partner of own law firm since 2003

BA in Law, Kent Uni versity, Barrister at Law Middl e Temple, UK

Lim Ghee Keong Non-Independent Non Executi ve Director

Over 20 years experience in treasury and credit management

Group Treasurer of Usaha Tegas Degree, Busi ness Administrati on, Hawaii Uni versity, USA

Hassan Assad Basma Chief Executi ve Officer Over 30 years of experience in the O&G sector, 17 years in Asi a

Previ ousl y at Kvaerner E&C Singapore & Far East Si ngle Buoy Mooring B. Sc, Engineering, Manchester Institute of Science & Technology Uni versity, UK

Shahrul Rezza Hassan Chief Financial Officer Over 15 years of corporate finance/ fund r aising and financial management experience

Joined Bumi Armada i n 2005, was previousl y with Usaha Tegas

B. Sc, Economics, Bristol Uni versity, UK

Source: Company

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Senior Management Name Designation Remarks

Hassan Assad Basma Chief Executi ve Officer Over 30 years of experience in the O&G sector, 17 years in Asi a

Previ ousl y at Kvaerner E&C Singapore & Far East Si ngle Buoy Mooring

Shahrul Rezza Hassan Chief Financial Officer Over 15 years of corporate finance/ fund r aising and financial management experience

Joined Bumi Armada i n 2005, was previousl y with Usaha Tegas

Andrew Day Lamshed Sr. VP, Floati ng production systems

Over 25 years of experience in the O&G sector MBA, Monash Univesity, Bachelor of Engineering, Ballarat College, Australia

Wee Yam Khoon Sr. VP, OSV Co-founder of Bumi Armada Navigation, 33 year veteran of Bumi Armada

One the most experienced Malaysi ans regardi ng OSVs

Massimiliano Bellotti, Sr. VP, T&I Over 14 years of experience in O&G management, engineering & constructi on

M.Sc Aircraft Design, Delft Uni vesity, Degree i n Aircraft Engineering, Pisa University

Adriaan Petrus Van De Korput Sr. VP, Projects Veter an of Bl uewater Offshore Producti ons Syster ms B.V. M.Sc Management, Brussels Univesity, Bs. Sc Mechanics, Rijswijk, Netherlands

Jonathan Edward Duckett Sr. VP, Corporate planning

Over 18 years experience in research, pl anni ng & strategy

BA, Business Admin, The American College, London

Madhusudanan Madaser y Balan Chief Talent Officer Over 22 years of HR experience i n O&G and other industries

M. Arts Public Administration, numerous other degrees from Indi a

Noor Azmi bin Abdul Malek VP, BAE Over 20 years experience in engineering B. Sc, Mechanical Engineering, Colorado State Uni versity

Noval D’avila Paredes VP, Corporate HSEQ Over 16 years experience in HSEQ in Brazil

MBA, Finance, Ibmec, Master in Production Engineering, Rio Federal Uni versity

Choong Guan Huat VP, Strategic Procurement

Over 18 years experience in procurement and pr oject management

Advanced Diploma, Busi ness Admin, UK, Certified Purchasi ng Manager, USA

Source: Company

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APPENDIX 1

Definition of Ratings

Maybank Investment Bank Research uses the following rating system:

BUY Total return is expected to be above 15% in the next 12 months

HOLD Total return is expected to be between -15% to 15% i n the next 12 months SELL Total return is expected to be below -15% in the next 12 months

Applicability of Ratings

The respecti ve anal yst mai ntai ns a cover age universe of stocks, the list of which may be adjusted accordi ng to needs. Investment ratings ar e onl y applicable to the stocks which form part of the coverage uni verse. Reports on companies which are not part of the cover age do not carry investment ratings as we do not acti vely follow developments i n these companies.

Some common terms abbreviated in this report (where they appear):

Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings BV = Book Value FV = Fair Value PEG = PE Rati o To Growth CAGR = Compounded Annual Growth Rate FY = Financi al Year PER = PE Ratio Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter CY = Calendar Year MoM = Month-On-Month ROA = Return On Asset DCF = Discounted Cashflow NAV = Net Asset Value ROE = Return On Equity DPS = Dividend Per Share NTA = Net Tangible Asset ROSF = Return On Shareholders’ Funds EBIT = Earnings Before Interest And Tax P = Price WACC = Weighted Average Cost Of Capital EBITDA = EBIT, Depreciati on And Amortisation P.A. = Per Annum YoY = Year-On-Year EPS = Earnings Per Share PAT = Profit After Tax YTD = Year-To-Date EV = Enterprise Value PBT = Profit Before Tax

Disclaimer

This report is for information purposes only and under no circumstances is it to be consi dered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herei n. Investors shoul d note that i ncome from such securities, if any, may fluctuate and that each security’s price or val ue may rise or fall. Opinions or recommendations contained herei n are i n for m of technical rati ngs and fundamental ratings. Technical ratings may differ from fundamental r atings as technical valuations apply different methodologies and are purel y based on price and volume-related i nfor mati on extracted from Bursa Malaysi a Securities Berhad i n the equity anal ysis. Accordingl y, investors may receive back less than originally invested. Past performance is not necessaril y a guide to future perfor mance. This report is not intended to provide personal investment advice and does not take into account the specific investment objecti ves, the financial situati on and the particular needs of persons who may recei ve or read this report. Investors shoul d ther efore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.

The information contained herei n has been obtai ned from sources believed to be reliabl e but such sources have not been independentl y verified by Maybank Investment Bank Berhad and consequentl y no representation is made as to the accuracy or completeness of this report by Maybank Investment Bank Ber had and it shoul d not be relied upon as such. Accordingly, no liability can be accepted for any direct, indirect or consequenti al losses or damages that may arise from the use or reliance of this report. Maybank Investment Bank Berhad, its affiliates and related companies and their officers, directors, associates, connected parties and/or employees may from ti me to ti me have positions or be materially inter ested in the securities r eferred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies. Any information, opini ons or recommendati ons contai ned herei n are subj ect to change at any ti me, without prior notice.

This report may contai n forward looking statements which are often but not al ways identified by the use of words such as “anticipate”, “believe”, “esti mate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achi eved and other similar expressions. Such forward looking statements ar e based on assumptions made and information currentl y availabl e to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. Maybank Investment Bank Berhad expressl y disclaims any obligation to update or revise any such forward looking statements to refl ect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.

This report is prepared for the use of Maybank Investment Bank Berhad's clients and may not be repr oduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of Maybank Investment Bank Berhad and Maybank Investment Bank Berhad accepts no liability whatsoever for the actions of third parties in this respect.

This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located i n any locality, state, countr y or other jurisdiction where such distribution, publication, availability or use would be contrar y to law or regul ation.

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APPENDIX 1

Additional Disclaimer (for purpose of distribution in Singapore)

This report has been produced as of the date hereof and the infor mati on herein maybe subject to change. Kim Eng Research Pte Ltd ("KERPL") in Singapore has no obligation to update such infor mati on for any recipient. Recipients of this r eport are to contact KERPL i n Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accr edited i nvestor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), KERPL shall be legall y liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.

As of 6 March 2012, KERPL does not have an interest i n the said company/companies.

Additional Disclaimer (for purpose of distribution in the United States)

This research report prepared by Maybank Investment Bank Ber had is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) onl y by Ki m Eng Securities USA, a broker-deal er registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended).

All responsibility for the distributi on of this r eport by Ki m Eng Securities USA in the US shall be borne by Ki m Eng. All resulti ng transactions by a US person or entity shoul d be effected through a registered broker-dealer i n the US.

This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herei n may not be eligible for sale i n all jurisdictions or to certain categories of investors. This report is not directed at you if Ki m Eng Securities is prohi bited or restricted by any legislation or regulati on in any jurisdiction from making it available to you. You shoul d satisfy yourself before reading it that Kim Eng Securities is per mitted to provi de research material concerning investments to you under rel evant legislation and regul ations.

Without prejudice to the foregoi ng, the reader is to note that additional disclai mers, warnings or qualifications may appl y if the reader is receivi ng or accessi ng this report in or from other than Malaysia.

As of 6 March 2012, Maybank Investment Bank Berhad and the covering analyst do not have any interest in any companies recommended in this Mar ket themes report.

Anal yst Certification:

The views expressed i n this research report accuratel y reflect the anal yst's personal views about any and all of the subject securities or issuers; and no part of the research anal yst's compensation was, is, or will be, directl y or indirectly, related to the specific recommendations or vi ews expr essed in the r eport.

Additional Disclaimer (for purpose of distribution in the United Kingdom)

This document is being distributed by Ki m Eng Securities Limited, which is authorised and regulated by the Financial Services Authority and is for Informational Purposes onl y. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Mar kets Act 2000 within the UK. Any inclusi on of a third party link is for the reci pients convenience onl y, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the indi viduals own risk. Nothing in this report shoul d be consi dered as constituting legal, accounting or tax advice, and that for accurate guidance recipients shoul d consult with their own independent tax advisers.

Published / Printed by

Maybank Investment Bank Berhad (15938-H)

(A Partic ipating Organisation of Bursa Malaysia Securities Berhad) 33rd Floor, Menara Maybank, 100 Jalan Tun Perak, 50050 Kuala Lumpur

Tel: (603) 2059 1888; Fax: (603) 2078 4194 Stockbroking Business:

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