KUALA LUMPUR (Nov 23): Hibiscus Petroleum Bhd expects to bid for assets in Southeast Asia in the next six months using part of the RM203.6 million proceeds raised from the convertible redeemable preference shares (CRPS).

Its managing director Dr Kenneth Gerard Pereira said the proceeds will be utilised to partially fund the acquisition of high-quality good value-producing upstream oil and gas (O&G) assets in the region. The assets are expected to churn out a minimum internal rate of return of 12%, he added.

“Looking at oil price projections and seeing where it is going and looking at opportunities in the market, our target is to bid for assets in the next six months. There are already some available in the market now and we are engaged in the processes,” he told a virtual media briefing today.

Under the fundraising exercise, Hibiscus issued 203.6 million Islamic CRPS — the largest CRPS issuance this year — which were listed on Bursa Malaysia today and the first of a multi-tranche CRPS exercise of up to RM2 billion, first announced on Sept 9 and approved by shareholders on Nov 3.

The O&G company said the CRPS tranches are sized to minimise dilutive effects on existing shareholders, taking into account the requirements of financial institutions supporting the debt component of various bids being contemplated for submissions by the company.

On the oil price outlook, Hibiscus chairman Zainul Rahim Mohd Zain said much will depend on the development of the Covid-19 pandemic, as well as developments in OPEC+ compliance and the US shale industry recovery.

“The way we see it now, assuming the pandemic is going to flatten off and the vaccine is in place (which will improve economic prospects worldwide), we expect the oil price to move up a bit in the second half of next year.

"We expect a more stable oil price in the second half of 2021 and if nothing goes wrong with the pandemic, the oil price should be further strengthened from 2022 onwards. It should be higher than what we see today,” added Zainul Rahim.

At the noon break, shares in Hibiscus settled half a sen or 0.92% higher at 55 sen, with a market capitalisation of RM873.53 million.