Hibiscus Petroleum sees good results in first quarter of FY21
KUCHING: Hibiscus Petroleum Bhd’s (Hibiscus Petroleum) net profit for its first quarter of financial year 2021 (1QFY21) of RM42 million was above expectations mainly due to higher crude oil prices, albeit partly offset by lower production volumes.
Excluding any earnings projections from the proposed Repsol acquisition in 2HFY22, AmInvestment Bank Bhd (AmInvestment Bank) estimate that the results accounted for 30 per cent of its earlier FY22 net profit of RM219 million.
On a quarterly comparison, 1QFY22 revenue dipped by three per cent quarter on quarter (qo-q) largely from a 12 per cent reduction in total sales volume to 757,000 barrels, partly offset by higher realised oil prices.
“While 50 per cent-owned Anasuria concession’s North Sea production will continue to be impacted by the subsea riser malfunction until 3QCY22, daily net production still rose 34 per cent q-o-q to 2,206 barrels, which may be indicative of the output prospects over the next three quarters,” it said in its analysis.
While still under discussion, the net repair costs of US$8 million is likely to be capitalised while the expected shutdown of eight to 10 days seems manageable.
“Covid-19 substantively impacted the execution of contractors for the group’s 50 per cent-owned North Sabah productin sharing contract, which lowered its sales volume by seven per cent q-o-q and drove up operating expenses by 22 per cent q-o-q to US$19 per barrel, the highest over the past three years.
“Together with 1QFY22 effective tax rate rising eight percentage points to 44.5 per cent due to absence of 4QFY20 over-provisions, Hibiscus Petroleum’s 1QFY21 net profit decreased 21 per cent q-o-q.
However, North Sabah’s output is expected to normalise as average uptime improved from 81 per cent in 1QFY22 to 91 per cent in October 2021, increasing daily net production from 5,311 barrels to over 6,000 barrels.
North Sabah continues to be the main earnings generator, accounting for 78 per cent of the group’s 1QFY21 net profit, lower than 89 per cent in FY21 on Anasuria’s improved earnings.
“With North Sabah’s production volumes expected to normalise, we expect stronger quarterly earnings delivery underpinned by higher oil prices,” it added.
“This will be further supported by the recent extension of a US$80 million prepayment facility with Trafigura to Dec 2023, which will be used for capex, working capital and partly fund the Repsol acquisition.
“We remain positive on Hibiscus’ proposed acquisition of Repsol’s assets for US$212.5 million cash, still aimed for completion by January 2022. Recall that this will double the group’s daily production to 18,000 barrel oil equivalents (boe) and increase its 2P reserves by 72 per cent to 81 million boe.
“Based on the EV for the group’s expanded 2P reserves, Hibiscus is currently only trading at US$4.80 per barrel, at an unjustified discount of 64 per cent to its closest peer, UK-listed EnQuest and 69 per cent of regional average.”