< News Analysis> Kaskida FPU contract in the bag

• Secured the long-awaited BP&rsquo s Kaskida FPU contract that is estimated to worth over SGD1bn
• Another near-term catalyst is the conclusion of MAS/CAD investigation the next few weeks
• On course for earnings turnaround Reiterate BUY TP SGD3

 

Kaskida FPU contract in the bag.  Seatrium has signed a contract with BP Exploration and Production Inc (BP) to perform engineering, procurement, construction and onshore commissioning (EPC) work for the Kaskida Floating Production Unit (FPU) project in the US Gulf of Mexico, following letter of intent (LOI) signed in Jun-2024. Comprising a single topside module supported by a four-column semi-submersible hull, the Kaskida FPU is supported by subsea production wells located in a water depth of approximately 6,000 feet. The Kaskida FPU has a capacity to produce 80,000 barrels of crude oil per day from six wells in the first phase of development. This also marked Seatrium&rsquo s fourth FPU project for the region. Construction lead time should be around 3-4 years with delivery in 2027-2028 as BP aims to commence production for Kaskida oilfield in 2029. 

Reiterate BUY and TP SGD3, based on 1.5x P/Bv. While contract value is undisclosed, we estimate that it could worth over SGD1bn given the work scope. This shall bring YTD wins to nearly SGD14.5bn. Orderbook as of end 2024 likely to stand at c.SGD23bn (slightly down from SGD24.4bn as of end Sept after excluding c.SGD900mn Golar FLNG contract that has recently been terminated), which represents c.3-years of revenue coverage. Besides robust order wins, we are also looking forward to the conclusion of MAS/CAD investigation pertaining to the Brazil Car Wash Operation case, possibly the next few weeks (guided by year end), removing an overhang. We believe Seatrium is on track to deliver strong earnings recovery next year with the delivery of most legacy contracts this year and execution of higher margin new contracts (10-15% gross margin).