KUALA LUMPUR, Dec 21 — Yinson Holdings Bhd's shares on Bursa Malaysia went up in the early session today as the group secured a floating, production, storage and offloading (FPSO) project in Brazil worth US$505 million (RM2.1 billion).
As at 10.33am, the counter rose 15 sen to RM5.76 with 304,200 shares changing hands.
On Monday, Yinson's indirect wholly owned subsidiary, Yinson Acacia Ltd, received a letter of intent (LOI) from Enauta Energia S.A. for the provision, operation and maintenance of a FPSO asset in the Atlanta field in Santos Basin, offshore Brazil (Atlanta FPSO).
In a statement, Yinson said the estimated aggregate value of the project -- including a two-year operations and maintenance agreement -- may further increase to US$1.98 billion (inclusive of a five-year extension period), should Yinson exercise the call option.
Kenanga Research said the unique contract structure -- a sale-and-lease-back of the FPSO from Enauta, as compared to a conventional straight-up charter contract -- gives more flexibility for Yinson to better allocate capital and resources for its project management, given that Yinson already has several other Brazilian projects progressing on hand.
“Essentially, from Yinson’s perspective, the majority of the project’s equity capital expenditure only needs to be forked out around two years later after the completed conversion of the FPSO and upon exercising the call option in order to undertake the charter contract,” it said in a research note today.
Meanwhile, RHB Research said the cash flow generated from the engineering, procurement, construction, and installation (EPCI) contract with Atlanta FPSO could help to fund the equity outlay, should Yinson exercise the call option to own the vessel.
“The call option is positive — in our view — as it allows Yinson to only execute the EPCI work and choose not to proceed to own the vessel if Yinson is able to obtain a better job to allocate its resources or if the future prospect deems unfavourable,” it said in a note today.
Maybank Investment Bank (Maybank IB) also shared the same view.
“Enauta’s Atlanta is a brownfield. The field’s profile is well understood, which eliminates production risk.
“Yinson also gets to recognise ‘real EPC profits’ from this project, and with Enauta paying all the capital expenditure upfront during the refurbishment period, Yinson does not need to come up with any equity,” it said.
It also noted that Yinson has the option to ‘exercise or walk away’ from the charter of the FPSO, post completion of EPC. — Reuters
