PETALING JAYA: Rising crude oil prices would translate to higher earnings for exploration and production company Hibiscus Petroleum Bhd , which is in the midst of acquiring upstream assets worth hundreds of million ringgit.
PublicInvest Research estimates that Hibiscus’ earnings could grow more than 100% year-on-year in the coming quarters, thanks to the favourable crude oil prices, coupled with the expected earnings from “Repsol assets” from the first half of financial year 2022 (FY22) onwards.
International benchmark Brent crude oil has steadily traded above US$80 (RM333) per barrel since early October – the highest since 2018.
“We understand that the progress of Repsol asset acquisition is on track, pending the regulatory approval from Petronas and PetroVietnam which is targeted this month, as well as approval by the shareholders at an EGM tentatively in mid-December this year,” it said in a report yesterday.
Hibiscus had made an offer to acquire Spanish energy major Repsol Exploración, S.A.’s upstream assets in Malaysia and Vietnam for a cash consideration of US$212.5mil (RM884.85mil) in June.
The acquisition comprises five production-sharing contracts – one of which is in Vietnam, a new market for Hibiscus.
Presently, Hibiscus already has producing assets in the UK and Malaysia, as well as assets in Australia at a development stage.
Hibiscus said the “Repsol asset” could yield earnings before interest, tax, depreciation and amortisation of US$135mil (RM562.14mil).
For the first quarter ended Sept 30, Hibiscus’ net profit quadrupled to RM41.52mil from RM10.03mil a year earlier, thanks to the spike in global crude oil prices.
The research firm said the results accounted for 16.8% and 19.1% of its and consensus full-year estimates, respectively. “We deem it in line as we expect better performance for the remaining quarters,” it added.
However, on a quarter-on-quarter (q-o-q) basis, PublicInvest said Hibiscus posted a 21% drop in core net profit on the back of a 2.5% decline in revenue.
“The key reason for a weaker q-o-q was the malfunction of a critical component at the subsea infrastructure of Anasuria field in the UK since May this year, which required it to be isolated from the primary production system.
“This isolation has affected its overall daily production rate, average uptime and operational expenditure.
“The field reported RM12.1mil net profit in the first quarter of FY22 (minus 16% q-o-q) with 191,770 barrels of oil sold, which is 24.8% lower than last quarter.
“This was, however, cushioned by a higher oil price of US$76.31 (RM317.75) per barrel from the fourth quarter of FY21 at US$62.67 (RM260.96) per barrel and lower operational expenditure per barrel of US$27.94 (RM116.34) from US$38.22 (RM159.15) in the fourth quarter of FY21,” it said.