Hibiscus Petroleum’s quarter three 2023 core results came in as expected, affected by lower production & realised hydrocarbon prices. Maybank Investment Bank Bhd (MIBB)’s revised financial year 2023 to 2025 earnings now reflect lower off-takes following the unplanned output disruption at its Kinabalu ops.
That said, securing extension for its Repsol ops and/or Field Development Planning (FDP) approval for its Marigold project are re-rating catalysts, said MIBB in a recent report.
Headline net profit of RM72 million in quarter three financial year 2023 includes several exceptional items, namely the provision for de-commissioning costs associated with 2 historical exploration wells in Australia and net forex.
Excluding that, Hibiscus reported core net profit of RM87 million in quarter three 2023, which took its nine months 2023 core earnings to RM340 million.
The quarter-on-quarter weakness was expected, largely due to lower realised oil/gas, condensates prices and lower sales volume. It declared an interim dividend per share of 0.75 sen in quarter three 2023.
“Our revised financial year 2023 to 2025 estimates reflect lower group off-take sales and production disruption at its Kinabalu field. Hibiscus now targets to sell a lower 7.2 million barrel oil equivalent (boe) of oil/gas/ condensates in financial year 2023 but a higher 7.7 million to 7.9 million boe in financial year 2024,” said MIBB.
MIBB’s oil price estimate remains unchanged, at USD80 to 85/ boe for financial year 2023 to 2025. MIBB expects Hibiscus to declare at least 1 sen dividend per share in quarter four 2023, for it has set a minimum dividend per share of 2.5 sen for financial year 2023.
Securing FDP approval on Marigold would turn its 43.6 million barrels of 2C resources to 2P reserves, lift its group’s 2P reserves by 76% to 100.7 million barrels and make it a more attractive merger and acquisition proposition.
An extension to Repsol’s production sharing contract would also be positive in improving Repsol’s NPV, potentially adding a further 30 million barrels of 2P reserves to Hibiscus.
“We reckon the Repsol extension would come first,” said MIBB.
