Hibiscus allocates US$105m to develop two assets

KUALA LUMPUR: Hibiscus Petroleum Bhd, which completed the acquisition of 50% interest in the North Sabah Enhanced Oil Recovery Production Sharing Contract (PSC) today, will allocate about US$105 million (RM405.4 million) towards the development of the North Sabah and UK Anasuria cluster.
Hibiscus managing director Dr Kenneth Pereira told reporters at a media briefing, the company’s priority currently lies with the North Sabah and Anasuria assets, but the attractiveness of the Australian asset is set to grow.
In Australia, Hibiscus has a 100% owned development asset in the West Seahorse field known as VIC/L31 and a 78.3%-owned VIC/P57 development asset in the Gippsland Basin.
“(As for) Australia, all the regulatory approval has been obtained to go into production, the only thing we are looking at are in terms of capital allocation from the company, on where do we put our money right now and we should prioritise Anasuria and North Sabah,” he said.
Kenneth added that the group is looking at a capital expenditure (capex) allocation of US$50 million for the North Sabah PSC, depending on the projects implemented and also subject to a review by Petronas.
Meanwhile, the UK Anasuria cluster is expected to take up about US$55 million over the next two years.
Looking ahead, Hibiscus is targeting to hit a net crude oil production of 20,000 barrels per day (bpd) by 2021 from the current production level of close to 9,000 bpd.
However, according to Kenneth this is only possible if the Australia asset begins production by 2021.
In addition to that, it is also aiming to grow its net proven and probable (2P) oil reserves to 100 million barrels by 2021. The North Sabah EOR has a gross 2P reserve of 40.9 million barrels while Anasuria has 22.73 million barrels.
Kenneth said the 100 million barrels target is not possible with existing assets, and will require “some kind of investment into new ventures”.
“I wouldn’t say in the near term. We have got two assets in two geographies and income stream so we are not in a rush, oil prices are also high (so) we have to be cautious. I would say that we are selectively looking at new ventures but that remains the target. The timeframe to get there is 2021,” he explained.
Going forward, Hibiscus will be “even more disciplined” when it comes to cost saving, and more cautious in terms of spending– while also working towards reducing cost at North Sabah without affecting operations and safety.
On expanding into new areas, Kenneth added that Hibiscus will be looking around areas where it has a foothold, namely Malaysia and Australia.
Having previously ruled out dividend payouts, Kenneth said the group’s focus will be on making sure that the operating cash flow is strong.
“We are trying to move the thinking of the market not so much on profitability but on cash flow. Profit don’t mean much but it is your cash generation capacity. I think the most important thing for us is to ensure that, if we have let’s say 12 or 15 quarters of strong cash flow, then we can look at it. I think let’s look at earnings before interest tax, depreciation and amortisation (ebitda)... if our ebitda is strong, then we can think of dividends.”