Hibiscus Petroleum looks to Anasuria and North Sabah
Hibiscus Petroleum Bhd

If successful, the North Sabah PSC acquisition will have a significant impact on the group’s business in the long term, until 2040

By MARK RAO / Pic By HUSSEIN SHAHARUDDIN

Hibiscus Petroleum Bhd will focus on asset consolidation, managing cost and raising production to remain profitable as the oil and gas (O&G) sector starts to recover from its slump.

Malaysia’s first listed independent O&G exploration and production company is expected to complete a 50% acquisition in the 2011 North Sabah enhanced oil recovery production sharing contract (PSC).

The acquisition would provide the company access to four oilfields and an existing pipeline infrastructure.

Hibiscus Petroleum MD Dr Kenneth Gerard Pereira said the company’s focus is to monetise the main operating asset, namely the 50% stake in the Anasuria oilfield cluster in the North Sea of the UK, as the higher oil price environment is creating uncertainty on the ability to secure deals with good upside potential.

“Right now, the main focus is to complete what we have in hand and consolidate that into the company,” Pereira said after the company’s AGM in Kuala Lumpur yesterday.

“There is enough opportunity in Anasuria and potentially in North Sabah (when the acquisition is completed) to keep us busy for a while.”

The O&G company is striving to raise production from Anasuria from the 3,204 barrels a day achieved in the fourth quarter (4Q) ended June 30 this year, to 5,000 barrels a day by 2019, to offset the possible decline from the mature asset.

The oilfield cluster contributed to RM256.8 million, or 98.3% of the group’s total revenue, for the 2017 financial year.

If successful, the North Sabah PSC acquisition will have a significant impact on the group’s business in the long term, as the oilfields are expected to continue pumping oil until 2040.

The company told Bursa Malaysia yesterday that it received consent from Petronas Carigali Sdn Bhd (PCSB) — the current joint-venture partner in the PSC — to acquire the 50% participating interest in the North Sabah oilfields.

The deal worth US$25 million (RM101.5 million) was reached between its indirect wholly owned unit, SEA Hibiscus Sdn Bhd, Sabah Shell Petroleum Co Ltd and Shell Sabah Selatan Sdn Bhd in October last year. Petroliam Nasional Bhd (Petronas) approved the agreement in May this year.

Pereira said the company would make the necessary disclosures on the acquisition, but added that the consent obtained from PCSB was a step in the right direction.

The company is also sitting on its Australian domiciled assets after securing an extension until 2021 for its major project facilitation as the operator of the West Seahorse field.

The company intends to revisit the project at that time. Hibiscus Petroleum’s share price peaked at RM2.15 on Feb 27, 2014, after going public in 2011.

But the oil price crash in 2014 saw the O&G counter plummetting to a low of 18 sen by the end of May 2016. The counter is trading above the 70 sen mark.

Despite the challenging and uncertain market conditions, Pereira said Hibiscus Petroleum remained profitable over the last seven quarters when oil prices ranged between US$45 and US$51 per barrel.

He said managing cost and keeping production numbers up will be the key to delivering good results.

The company recognised higher average realised oil prices of US$51.54 per barrel for its 1Q ended Sept 30 this year, and is anticipating prices to perform between US$45 and US$55 per barrel in the near term.