Hibiscus Petroleum's 1Q net profit triples, as it expects growth in UK to continue

Hibiscus Petroleum's 1Q net profit triples, as it expects growth in UK to continue
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KUALA LUMPUR (Nov 22): Oil and gas (O&G) exploration and production company Hibiscus Petroleum Bhd saw its net profit more than triple to RM135.26 million for the first financial quarter ended Sept 30, 2022 (1QFY2023), from RM41.52 million a year ago, on the back of elevated O&G prices.

The higher prices contributed to profitability for all of its producing assets in Malaysia and the UK, Hibiscus said on Tuesday (Nov 22).

As a result, quarterly earnings per share rose to 6.72 sen per share, from 2.07 sen per share for 1QFY2022.

The group sold one million barrels of oil and condensate in the quarter under review, and over 510,000 barrels of oil equivalent (boe) of gas. Revenue rose 145.15% to RM604.77 million for 1QFY2023, from RM246.69 million for 1QFY2022.

On a quarter-on-quarter (q-o-q) basis, however, net profit fell 37.2% from RM215.51 million for 4QFY2022, as revenue fell 30.36% from a record RM868.4 million.

The weaker q-o-q performance was partly due to lower contributions from the commercial agreement area segment. This was on the back of planned major maintenance, coupled with production ramp-up delays caused by mobilisation of a drilling rig, and disruption from poor equipment performance, Hibiscus said.

Average uptime rose to 93% in North Sabah, from 85% in 4QFY2022.

It was slightly lower in the UK’s Anasuria cluster due to a now-resolved malfunction (53%, from 61% in 4QFY2022) and the Peninsula Hibiscus Group — previously known as Fortuna International Petroleum Corp — whose acquisition was completed in January (88%, from 91% in 4QFY2022).

On its outlook, Hibiscus remains positive on the sector, said managing director Dr Kenneth Pereira in a separate statement.

“We believe that the current macro trends driving high energy prices and a strong performing US dollar will continue,” he said.

While energy profit levy is being increased in markets like the UK, corresponding investment incentives are concurrently being offered as O&G still has an important role to play in the energy transition, he added.

The UK asset contributed 19.4% of the group’s net profit for 1QFY2023. Overall, the group intends to increase sales by 50%, from FY2022 levels, to 7.2 million to 7.5 million boe of oil, condensate and gas in FY2023.

“It is thus our intention to phase our capital expenditure plans to optimise value from these incentives. We believe that by doing so, the impact of the tax increases will be minimised, and our UKCS (UK Continental Shelf) growth strategy can progress, albeit cautiously,” Pereira said.

“Overall, we believe that for the group, the net effect of these tax hikes will not be material, and we have a positive outlook on the sector,” he added.

At Tuesday's noon market break, Hibiscus settled down half a sen at 96.5 sen, giving it a market capitalisation of RM1.93 billion.

Kang Siew Li