Hibiscus Petroleum expects more active project executions this year

KUALA LUMPUR: Hibiscus Petroleum Bhd, which does not foresee a dividend payout to shareholders in the short term, expects 2018 to be the year for both big and small oil & gas (O&G) players as crude oil prices strengthen, which will lead to more active efforts in project execution.
Managing director Dr Kenneth Pereira said the current oil price is reasonable for the group, and he hopes for continued stability.
“During a period when the oil price is up, you’re able to sanction projects and get service rates relatively low. Service rates have not increased substantially,” he told reporters at the group’s EGM here today.
Despite more opportunities arising from a better oil market, Pereira opined that the industry will still be cautious on mergers and acquisitions as buyers may not want to buy at a higher oil price.
Hibiscus Petroleum, for one, is more conservative and is using a lower oil price level for its projections.
“Our view is US$55 (oil price for its investments). It’s not so easy to find the right price deal,” quipped Kenneth.
Nonetheless, chairman Zainul Rahim Mohd Zain does see opportunities for smaller players like Hibiscus Petroleum after cost rationalisation by the big players.
“We’re looking more at brownfields or assets that are generating production as opposed to exploration assets that big players are looking at, where you need a longer gestation period,” he explained.
Meanwhile, Zainul said Hibiscus will not be paying dividends in the short term but will look at its affordability to pay dividends in the future given its priority is to grow the company.

“We need to recognise that this is a capital-intensive business, we’re still growing and we need money to invest and grow the business. The management and the board will review our financial position every year. Depending on our financial situation and plans for the future, if we can afford to pay dividends, we will look into it.
“With North Sabah (Enhanced Oil Recovery Production Sharing Contract) coming in, we see more potential for the company to grow,” he added.
Hibiscus Petroleum’s proposed acquisition of a 50% interest in the North Sabah EOR PSC is expected to conclude on March 31, 2018, barring any unforeseen circumstances.
The group will also start drilling a well in the UK North Sea in May for the Anasuria Cluster. Both the Anasuria and the North Sabah assets are expected to boost its production to 8,000-9,000 barrels per day in FY18.
Earlier at the EGM, Hibiscus Petroleum’s shareholders approved its proposed issuance of up to 317.65 million free warrants on the basis of one new warrant 2018/2021 for every five existing shares.
On Bursa Malaysia today, Hibiscus Petroleum was up 1.5 sen to 95 sen, with 53.7 million shares changing hands.