Public IB said the oil and gas exploration and production company’s strategy to achieve 35,000 barrels oil equivalent (boe) per day by 2026 from its current 23,000 is a realistic target.
PETALING JAYA: Hibiscus Petroleum Bhd
’s strong acquisition track record, healthy balance sheet and strategy in building a resilient portfolio are expected to support its profitability in the quarters ahead, says Public Investment Bank Bhd (Public IB).
The research house said the oil and gas exploration and production company’s strategy to achieve 35,000 barrels oil equivalent (boe) per day by 2026 from its current 23,000 is a realistic target.
“The gap of about 10,000 boe per day to achieve the 2026 mission production levels will be met through exploration and development of opportunities in existing production-sharing contracts, the development of Marigold assets, future acquisition of producing assets and new licences from bid rounds,” it said in a report.
The research outfit said Hibiscus’ established relationships with major players like Shell, Exxon and Repsol will bode well for the group in terms of sourcing future deals.
“We believe that any asset disposal from these players would be less price sensitive and more focused on the buyer’s technical capabilities, employees’ welfare and contingent liabilities assurance. Hibiscus has demonstrated its capabilities and deliverables to these players thus far,” Public IB said.
Hibiscus’ cash reserves has grown by more than 18-fold since 2016 to stand at RM532mil now, due to past diligence in acquisitions. The group also has US$149mil (RM666.4mil) debt facilities ready to be utilised for capital expenditure (capex) to enhance its production and value-accretive acquisitions.
“We believe this provides sufficient headroom when good opportunities emerge, especially during a depressed crude oil price environment. The Brent crude oil price has touched a 15-month low amid elevated global recession risk arising from rapid rate hikes, which may dampen oil demand,” said Public IB.
In enhancing asset performance, the group managed to stop the decline in production after the transfer of operatorship.
“Hibiscus remains committed to continuing to enhance its asset performance by determining a total of US$245mil (RM1.1bil) of capex to be spent on drillings of four development wells, six producer wells and seven water injector wells across its producing assets,” said the research house.
