KUALA LUMPUR (Aug 4): Gulf Hibiscus Ltd, a wholly-owned subsidiary of Hibiscus Petroleum Bhd (Hibiscus), has been awarded the South East Ras El Ush concession (Block 2) in the southern Gulf of Suez, Egypt, by Ganoub El-Wadi Petroleum Holding Company — an entity of Egypt’s Ministry of Petroleum — for oil and gas exploration.

In a filing with Bursa Malaysia, Hibiscus said Gulf Hibiscus received the award after a successful bid by Gulf Hibiscus and its partner, Pacific Oil Ltd, for a joint equal ownership of the concession.

Pacific Oil, a special purpose vehicle registered in the Seychelles to pursue oil and gas, exploration and production opportunities predominantly in Africa, will be the operator of the concession, to leverage on its management team’s experience in Egypt, the filing read.

Hibiscus Petroleum said the award is subject to the execution of a definitive agreement, but Gulf Hibiscus’ financial exposure to undertake the minimum work commitment is estimated to be approximately US$8 million over the first four years (first exploration phase).

“The acceptance of the award of the concession, subject to the execution of a definitive agreement, provides the company an opportunity to explore and develop in an area which is one of the oldest-producing basins in the world,” the filing read.

“The basin has more than 1,900 drilled wells, with a total of 123 producing fields and an annual production of approximately 180 million barrels of oil.”

The filing stated that Block 2 covers an area of 68 sq km, with water depth of up to 75 metres. It contains the discovered West Ashrafi field, which is included in the above award of concession, and may be developed with a production tie-in to the nearby existing onshore infrastructures, said Hibiscus.

Two wells previously drilled in the West Ashrafi field, had tested commercial oil and gas, Hibiscus added.

Hibiscus (fundamental: 1.65; valuation: 3) said the acceptance of the award of the concession (subject to the execution of the definitive agreement) is in the best interest of the group.

Its counter, suspended from trading today, last closed at 86.5 sen, for a market capitalisation RM818.27 million. It will resume trading tomorrow (Aug 5).

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)