This article first appeared in The Edge Financial Daily on November 22, 2019

KUALA LUMPUR: Hibiscus Petroleum Bhd is targeting to deliver between 3.3 million and 3.5 million barrels of crude oil for the current financial year ending June 30, 2020 (FY20), higher than the 3.2 million barrels sold in FY19.

The 3.2 million barrels achieved in FY19 exceeded the group’s earlier disclosed target of 2.7 million to three million barrels. Of these, five offtakes of crude oil were from the UK’s Anasuria Cluster and seven from North Sabah.

“We expect to do a little bit better this year,” said the group’s managing director Dr Kenneth Pereira. “Even though we are a little bit low (in terms of sales) in this quarter (1QFY20), for the second, third and fourth quarters we will catch up.”

Hibiscus Petroleum only managed to sell two offtakes of crude oil in 1QFY20 compared with four in 1QFY19, he said at a media briefing on the group’s 1QFY20 financial results yesterday.

Pereira said it is normal to have high and low periods, noting that the group sold only two cargo offtakes in 2QFY19 but managed to sell three to four cargo offtakes in the other three quarters of the year.

Nonetheless, the lower cargo offtakes sold, coupled with costs incurred on maintenance for its assets as well as softer crude oil prices, have impacted the group’s overall financial performance for 1QFY20.

Hibiscus Petroleum’s net profit for the quarter plunged 83.77% to RM16.23 million, from RM100 million a year earlier. Earnings per share dropped to 1.02 sen from 6.30 sen.

Quarterly revenue dropped 55.74% to RM159.30 million from RM359.96 million previously, the independent oil and gas exploration and production company said in a filing with Bursa Malaysia.

Meanwhile, the group said it hopes to achieve sales of 20,000 barrels of crude oil per day by 2021 and this will be done by acquiring producing assets in Southeast Asia and enhancement projects across its existing Anasuria and North Sabah assets.

The group expects high-quality acquisition opportunities will be emanating in Southeast Asia as the fields in the area mature and established players look to review their portfolios.

The target of producing 20,000 barrels per day comprises 7,000 barrels from North Sabah, 5,000 barrels from Anasuria and 8,000 barrels from new producing assets.

The capacity expansion represents a 150% growth over its current more than 8,000 barrels per day production — 3,000 from Anasuria and more than 5,000 from North Sabah.

“We have a list [of assets] that we are interested in and we are considering them,” Pereira said.

The group’s target to produce 20,000 barrels of crude oil by 2021 was first announced by Hibiscus Petroleum in March, when it said it is open to look at new acquisitions.

Pereira said the group is confident of its positioning for growth due to an increase in manpower and expertise.

“There is a 10-fold growth to 360 people from 30 people in 2015, and the group has proven to have well-managed the cost given its debt-free position.

“We also won quite a few operational awards and recognition in the past year from Petronas and The Edge under the highest return to shareholders over three years,” he added, saying it demonstrates the group’s capabilities.

The group is in a debt-free position with a cash balance of RM179.4 million as at Sept 30.

Hibiscus Petroleum’s share price fell 1.5 sen or 1.61% to 91.5 sen yesterday, with a market capitalisation of RM1.45 billion. The counter saw some 7.86 million shares traded.