Hibiscus to invest RM200mil
O&G firm to develop fields in Sabah and North Sea
PETALING JAYA: Hibiscus Petroleum Bhd is planning to spend close to RM200mil in capital expenditure (capex) for development of its oil and gas (O&G) fields located in north Sabah and Anasuria cluster in the North Sea.
Managing director Kenneth Pereira said the O&G firm had yet to decide on the financing, which could be from debt or equity market.
It is worth noting that Hibiscus is debt free and is sitting on a cash pile of RM302mil as at Sept 30.
“We have received the board approvals for the north Sabah investments of RM70mil, but not for the Anasuria cluster of about US$30mil,” Pereira said after Hibiscus’ shareholders meeting.
At the moment, Hibiscus is producing 9,000 barrels of oil per day and targeting to produce between 10,000 and 12,000 barrels a day in 2019.
Hibiscus is sitting on the sweet spot as its average production cost per barrel of oil is below US$20.
It said the average selling price of crude oil achieved by the company was US$65.59 per barrel for finan- cial year 2018 and US$76.36 per barrel in the first quarter of financial year 2019.
On its O&G assets in Australia, Pereira said the company has not allocated any capex for next year.
“We are going to decide on what to do with our Australian assets... whether we apply capital or sell down some interests.
“The operating cost in Australia is almost doubled to that in the North Sea and in north Sabah. So it is not very attractive when the price of oil is volatile,” he said.
Chairman Zainul Rahim Mohd Zain expected oil prices to remain volatile in 2019.
He said the firm would continue to keep its cost low so that the com- pany would remain profitable even if oil were to hit US$40 a barrel.
“We will still be making profits at US$40 a barrel but it’s not a comfortable level,” he said.
He reckoned that the O&G industry had learned its lesson between 2014 and 2016 when oil price saw a massive decline and cut in capex by oil majors for exploration and production activities.
“The industry will continue tightening its belt like it did in the past and there is no place to be complacent,” Zainul said.
Yesterday shares in Hibiscus closed three sen or 2.78% higher to RM1.11. On a year-to-date basis, the counter’s share price has risen more than 24%, giving it a market capitalisation of RM1.76bil.
Hibiscus also had undergone a tough period in the past years before it bloomed.
For the first quarter ended Sept 30, Hibiscus posted a nine-time jump in net profit to RM100mil from RM10.78mil a year ago, on the back of a six-fold surge in revenue to RM360mil from RM58mil previously.
The firm attributed the increase in topline and bottomline to the contribution of its two producing assets, Anasuria and north Sabah.