The counter opened 17.1% lower in morning trade at 54 sen, from 64 sen at the close on June 2.
At 10am, the share price slipped further to 50 sen, marking a drop of 20.5%.
An FPSO is a type of floating vessel which is designed to receive, process, store, and offload oil and gas produced from offshore fields.
The Kraken FPSO is owned by Bumi Armada’s wholly owned subsidiary, Armada Kraken Pte Ltd, and is deployed at the Kraken Field, near the North Sea, under a bareboat charter contract (BBC).
Last Friday, Bumi Armada announced that the Kraken was recently shut-in due to the failure of its critical hydraulic submersible pump transformers.
During a “shut-in”, a well’s production is temporarily stopped or reduced by intentionally halting the flow of oil or gas from the reservoir to the surface.
Most analysts cautious
However, not all research houses have downgraded the stock, with RHB Investment Bank analyst Sean Lim maintaining a “buy” call on the counter.
“While there may be a negative share price reaction towards Kraken’s shut-in event, we are still on the assumption that such an issue will be resolved in the short-term,” said Lim in a note today.
As such, Lim trimmed earnings forecast for the year by 14% assuming a three-month disruption coupled with additional maintenance costs arising from this event.
Other research houses were less optimistic. Hong Leong Investment Bank (HLIB) research estimates a six-month downtime for the FPSO and trimmed its FY2023 net profit forecast by 38%.
“We note that the Kraken’s firm contract period will end in 2H2025 (the second half of 2025) – with options for 17 annual extensions,” said HLIB.
CGS-CIMB Securities research estimates a similar downtime. It has included a loss of six months of BBC cash receipts, finance lease income and US$50 million (RM230 million) of repair and maintenance costs into the group’s profit and loss forecast.
As a result, HLIB trimmed the group’s core net profit forecast by 47%.
At noon break, Bumi Armada’s share price was down 20.5% to 50 sen, giving it a market capitalisation of RM2.97 billion.