Hibiscus currently has brownfield assets in North Sabah and the Anasuria cluster in the UK North Sea

by MARK RAO/ pic by TMR

HIBISCUS Petroleum Bhd has identified “a list” of brownfield assets for potential acquisition to raise the company’s total production to 20,000 barrels per day (bpd) by 2021.

MD Dr Kenneth Gerard Pereira (picture) said the output target will be underpinned by one or more acquisitions in the region, though opportunities further afield will be considered.

“It will be a producing asset and we will be selective about that producing asset. We will not overpay for it,” he told reporters during a media briefing yesterday, adding that potential acquisition will have to have positive cashflow and be resilient.

He added that the company has identified “a list” of potential assets. “We have to do the necessary due diligence (and) buy the right asset. We don’t want to buy the first one that comes along — we want to be a bit cautious,” Pereira said.

Hibiscus currently has brownfield assets in North Sabah and the Anasuria cluster in the UK North Sea. North Sabah is currently producing between 5,000 to 5,500 barrels per day while Anasuria produces just under 3,000 barrels.

The company is striving to raise production to 7,000bpd from North Sabah and to 5,000bpd for Anasuria by 2021, largely driven by projects and opportunities within the assets themselves, bringing total production to 12,000 barrels.

The asset or assets to be acquired by Hibiscus will have to produce a minimum 8,000bpd for the company to achieve its 2021 goal.

Hibiscus is now debt-free with an unrestricted cash balance of RM179.4 million as of its first quarter (1Q) ended Sept 30, but the company may gear up to a conservative level if the need arises.

“If we want to buy an asset, and also maintain a reasonably aggressive stance on those projects, we may need to top up with some cash, so we may use some debt. We are working towards that,” Pereira said. He said the board guided a 0.3 gearing level (to shareholders’ funds) as a conservative level for the company.

Hibiscus noted a 83.8% year-on-year (YoY) drop in net profit to RM16.23 million for its 1Q as revenue sunk 55.7% YoY to RM159.3 million largely owing to the lower number of cargo offtakes (oil delivered) in the period as well as weaker crude oil prices and cost incurred from maintenance works on assets.

The company is targeting to deliver 3.3 million to 3.5 million barrels of crude oil for its financial year ending June 30, 2020 (FY20). If achieved, this would represent an increase from the 3.3 million barrels sold in FY19.

The company’s share price fell 1.5 sen to 91.5 sen yesterday, giving it a market capitalisation of RM1.45 billion.