🔥 The oil prices surged over 2% on Monday to their highest in more than 7 years as Ukraine’s president declared a “day of unity” for Feb.16, a date that some Western media have cited as a possible start of Russian invasion.
🔥 Russia is one of the world’s largest oil and gas producers, the fears that it could invade Ukraine have driven the rally in oil closer to $100 per barrel, a level not seen since 2014.
🔥 However, Russia said on Tuesday some of its military units were returning to their bases after exercises near Ukraine, following days of U.S. and British warnings that Moscow might invade its neighbour at any time. It was not clear how many units were being withdrawn, and by what distance, after a build-up of an estimated 130,000 Russian troops to the north, east and south of Ukraine.
🔥 The development drew a cautious response from Ukraine and Britain but prompted a sharp rally on financial markets. Western military analysts said it was too soon to be sure of the extent of any de-escalation.
Hibiscus could be one of the best plays in a rising oil price market.
Background
Hibiscus Petroleum Berhad (5199) is Malaysia’s first listed independent oil and gas exploration and production company. HIBISCS was established in 2007 and was listed in Malaysia in 2011.The company holds operating interest in several concessions in the United Kingdom (UK) and Australia and Production Sharing Contracts (PSCs) in Malaysia and Vietnam. Its portfolio consists of oil & gas assets at the various stages of production, development and exploration.
Business Model
HIBISCS has been involved in gasoline since it completed the acquisition of 35% stake in Lime Petroleum Plc in April 2012.
HIBISCS’s key activities are focused on monitising its producing Oil & Gas fields and growing its portfolio of development and producing assets in areas of its geographical focus in United Kingdom, Malaysia, Australia and Vietnam.
Important Points
1. Acquisition of REPSOL’s assets in SEA
Acquisition of Repsol’s operated assets in Malaysia and Vietnam for US$212.5mil (RM889mil) has been completed in Jan2022.
The asset portfolio comprises interests and operators ship under five production sharing contracts in Malaysia and Vietnam with expiration dates ranging between 2027 and 2033. This deal will immediately triple its O&G production, from 9,107 boe per day to 26,471 boe per day. It also double its 2P reserves to 77.3m boe (from 47.2 mmboe).
2. Anasuria
HIBISCS is currently a joint operator (via Anasuria Operating Company Limited) and owner of these producing fields (Ping Petroleum and Ithaca Energy are its other partners), which are a significant cash and profit generating business for the company.
📌The Anasuria cluster fields hold:
i) 23.6m boe of oil and 1.6m boe of gas 2P reserves (as at 1 Jan 2022)
ii) with production rates of 2,655 boe/day
iii) net average unit production cost of USD28/boe (as at Sep 2021)
3. Marigold & Sunflower
HIBISCS expanded its North Sea footprint by acquiring the discovered oilfields known as Marigold & Sunflower on 16 Oct 2018.
These assets are currently at the development stage and hold substantial 2C oil resources (43.6m boe). This shallow-water development will deliver a step-up to its 2P reserves, production volumes and revenue generating capacity by FY24 (if it goes ahead).
4. North Sabah PSC
HIBISCS acquired a 50% operating stake for USD25m (which translates to just USD1.22 per 2P boe) from Shell on 31 Mar 2018 and successfully assumed the role of operator of the field. It is responsible for the day-to-day operations, maintenance and conduct of production enhancement activities carried on the asset.
The North Sabah PSC is its 2n producing asset, and is arguably its largest earnings contributor to-date. This field has been producing since 1979 with production rights up to 2040.
5. Price Drivers
- Acquired 50% of North Sabah OER PSC for USD25mil, its 2nd producing asset, on 31 Mar 2016.
- Completed the acquisition of Marigold & Sunflower, its 1st UK development asset, on 16 Oct 2018.
- OPEC+ alliance breaks up in Mar 2020, oil price war.
- Raised MYR203.6mil in Islamic CRPS equity.
- Signed conditional SPA on 1 June 2021, to acquire Repsol’s MY and VN’s Offshore assets for USD212.5mil.
6. Net zero carbon emissions target by 2050
HIBISCS has underlined its commitment to be a net zero emissions producer by 2050, in line with majority of the energy players worldwide. The company aims to increase its natural gas in its portfolio of hydrocarbon assets, as part of its strategy to build a resilient portfolio. The Repsol M&A was a case point, which altered its production mix from 98:2 oil: gas to 83:17 oil: gas.
Fundamental Analysis
🍁𝗠𝗮𝗿𝗸𝗲𝘁 𝗖𝗮𝗽: RM2.289bil
🍁𝗡𝘂𝗺𝗯𝗲𝗿 𝗼𝗳 𝗦𝗵𝗮𝗿𝗲𝘀: 2.008bil
🍁𝗘𝗮𝗿𝗻𝗶𝗻𝗴𝘀 𝗽𝗲𝗿 𝗦𝗵𝗮𝗿𝗲: RM0.0673
🍁𝗣𝗘 𝗥𝗮𝘁𝗶𝗼: 16.94
🍁𝗥𝗢𝗘: 8.86%
🍁𝗗𝗶𝘃𝗶𝗱𝗲𝗻𝗱: RM0.015
🍁𝗗𝗶𝘃𝗶𝗱𝗲𝗻𝗱 𝗬𝗶𝗲𝗹𝗱: 1.32%
🍁𝗡𝗧𝗔: RM0.760
🍁𝗣𝗕 𝗥𝗮𝘁𝗶𝗼: 1.50
🍁CAGR – Revenue: 57.3%
🍁TTM Profit 𝗠𝗮𝗿𝗴𝗶𝗻: 14.90%
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