KUALA LUMPUR (June 4): Hibiscus Petroleum Bhd expects its daily oil and condensate production to double from 9,000 to 18,500 barrels per day next year after it has taken over five production sharing contracts from Spanish oil major Repsol.

The acquisition will cost Hibiscus US$212.5 million (RM879.5 million).

In the statement, Hibiscus said it estimated that the new asset purchased will generate  approximately US$255 million total net undiscounted cash flows over the next five years.

It also highlighted that the estimated earnings before interest, taxes, depreciation and amortisation (Ebitda) contribution to the group is US$135 million for 2022.

The company’s indirect wholly-owned subsidiary, Peninsula Hibiscus Sdn Bhd had on Tuesday entered into a conditional sale and purchase agreement (SPA) with Repsol Exploración, S.A. for the proposed acquisition by Peninsula Hibiscus of the entire equity interest in Fortuna International Petroleum Corporation (FIPC).

FIPC owns stakes in four PSCs in Malaysia and one PSC in Vietnam.

The transaction includes a 35% interest in PM3 CAA PSC, 60% in 2012 Kinabalu Oil PSC, 60% in PM305 PSC and 60% in PM314 PSC offshore eastern Peninsular Malaysia, and 70% in Block 46 CN in Vietnam (a tie-back asset to the PM3 CAA production facilities).

Trading of Hibiscus shares is suspended from Wednesday until Friday in conjunction with the announcement. The counter last closed at 65.5 sen, valuing the group at RM1.3 billion. The stock will resume trading next Tuesday (June 8).

In a bourse filing today, the company said almost 50% of the FIPC Group’s production comprises gas.

“The addition of gas production is expected to present a better balance to the Hibiscus group’s asset portfolio in terms of price volatility, markets and operations,” it said.

According to the group, the actual breakdown of the source of funding will only be determined later, and will depend on, amongst others, the group’s cash reserves and future funding requirements.  

Meanwhile, it said, the purchase price was arrived at on a willing-buyer willing-seller basis.

“The company anticipates completing the transaction in 2021. However, given that the effective date of the proposed acquisition is Jan 1 2021, all economic benefits and risks from that date will accrue to Hibiscus Petroleum,” Hibiscus said.

The acquisition will boost the company’s 2P net entitlement of daily gas production from 2 MMscf per day to 49 MMscf per day in 2022; meanwhile 2P oil and condensate reserves will be increased from 46 MMbbl to 67 MMbbl and 2P gas reserves would jump from 9 Bscf to 93 Bscf.

It added, the 2P oil, condensate and gas reserves are valued at US$285 million.

“Once completed, this acquisition will be transformational for us and bodes well for the business trajectory of Hibiscus Petroleum into its next phase of growth.

“Finally, we will be enhancing our geographical footprint and entering Vietnam and thus we look forward to developing a strong working relationship with PetroVietnam, both as a regulator and as our new partner,” said Hibiscus Petroleum Managing Director Dr Kenneth Pereira.