Bumi Armada Berhad’s (“Bumi Armada” or the “Company”) wholly-owned subsidiaries, Bumi Armada (Singapore) Pte Ltd (“BASPL”) and Armada Oyo Limited (“AOL”), have each issued a notice of suspension (“Notice of Suspension”) to Erin Petroleum Nigeria Limited (“EPNL”), a subsidiary of Erin Energy Corporation, to suspend the provision of services by BASPL and AOL under the Operational and Maintenance Services Contract (“O&M Contract”) and Bareboat Charterparty Contract (“Charterparty”) respectively (“Contracts”). The suspension of operations is due to longstanding delays in the Charterparty payments due to AOL, as well as irregular payments on the O&M contract to BASPL.

Details of the Contracts

(i) O&M Contract

On 17 February 2014 BASPL entered into the O&M Contract with Oceanic Consultants Nigeria Limited (“Oceanic”) for the provision of operation and maintenance services for the FPSO Armada Perdana (“FPSO”) deployed at the Oyo Field Development located offshore of Nigeria. On 25 March 2014, Oceanic, novated its rights and obligations under the O&M Contract to EPNL.

The O&M Contract was further amended by the letter agreement dated 30 June 2015 between BASPL, EPNL and AOL.

(ii) Charterparty

On 17 February 2014, AOL entered into the Charterparty with Oceanic for the charter of the FPSO by AOL to Oceanic. On 25 March 2014, Oceanic novated its rights and obligations under the Charterparty to EPNL.

The Charterparty was further amended by the letter agreement dated 30 June 2015 between BASPL, EPNL and AOL.

Details of the Notices of Suspension

BASPL and AOL had, on 16 May 2017, after repeated attempts to arrive at a mutually acceptable solution to both parties, issued Notices of Overdue Payment and Letters of Demand (“LOD”) to EPNL in which BASPL and AOL had demanded immediate payment of undisputed outstanding sum. To date, EPNL has not responded to the notices and LOD.

The suspension does not relieve the EPNL of any of its own obligations under the Contracts.

Operational Impact

(i) O&M Contract

BASPL is suspending the performance of its obligations under the O&M Contract with effect from 12.00 p.m. Lagos time (5.00 p.m. Malaysia time) on 21 June 2017 except for the critical maintenance and other activities to mitigate occupational health and safety and environment risk.

(ii) Charterparty

AOL is suspending the performance of its obligations under the Charterparty with effect from 12.00 p.m. Lagos time (5.00 p.m. Malaysia time) on 21 June 2017.

Financial Impact

The outstanding sum claimed by BASPL and AOL has been fully provided for in the Bumi Armada Group’s financial statements. The suspension of operations is not expected to have significant impact on the full year 2017 financial results of the Company, the extent of which cannot be conclusively ascertained at this juncture.

Next steps

The Group continues to evaluate all its available options on this matter including the possibility of working with EPNL to arrive at an amicable solution. In the event that an amicable solution between the parties cannot be achieved, Bumi Armada will proceed with the next steps to fully enforce its rights against EPNL based on advice from external counsel.

Bumi Armada will continue to provide updates from time to time on any further material development on this matter.

This announcement is dated 21 June 2017.

 

Source: Press Release

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