As the slowdown in the oil and gas (O&G) industry draws out, service providers such as Malaysian OSV players Bumi Armada are starting to face issues with receivables, local media reported.
Bumi Armada said it has been trying to recover doubtful debts from the company’s OSV as well as its transport and installation (T&I) customers, however acknowledged that its customers were also “facing difficult financial circumstances” due to the current industry conditions.
Following queries from a shareholders’ interest group, the Minority Shareholder Watchdog Group, on the likelihood of recovery for some MYR66m ($17.6m) worth of doubtful debts, Bumi Armada said it was actively pursuing the receivables and expected to receive MYR47.4m, earlier classified as not recoverable in the next 12 months, after its floating, production, storage and offloading (FSPO) charter starts.
The funds were for Bumi Armada’s Indonesian joint venture for an FPSO contract with Husky-CNOOC and used to purchase a vessel and cover expenses for the tender of the Husky Madura project at the BD field in the Madura Strait, Offshore East Java.
As at the first quarter ended 31 March 2015, the company has recovered about MYR15m.
On other queries by the watchdog group, Bumi Armada said it frequently reviewed its cost structure. It said recent cost reduction measures had been carried out, including lowering crewing rates and stacking vessels that were idle for a prolonged period.
“We regularly engage with our key suppliers to further reduce cost and enhance efficiency,” said Bumi Armada.
In a separate announcement, Bumi Armada also said it has appointed former Transocean president and ceo Steven Leon Newman as its board member effective 1 July.
Newman has more than 20 years of experience in strategy development, crisis management, organisational turnaround, leadership team formation, mergers and acquisitions, capital markets transactions and board renewal and development and was with Transocean from 1994 until recently.
This could be a precursor to the appointment of a new ceo at Bumi Armada as the company has been without a ceo since the departure of Hassan Basma, who requested for early release from his employment contract in early December last year.
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