Hibiscus’ FY21 core net profit of RM114 million was above expectations, driven by a jump in sales volume with four more cargo shipments from the group’s jointly-owned concessions – three from North Sabah and one from Anasuria concessions.
KUCHING: Hibiscus Petroleum Bhd’s (Hibiscus) financial year 2021 (FY21) core net profit has come in above expectations, with analysts expecting higher oil price of US$70 per barrel currently to support stronger FY22F earnings delivery.
According to AmInvestment Bank Bhd (AmInvestment Bank), Hibiscus’ FY21 core net profit of RM114 million was above expectations, coming in 26 per cent above the research firm’s and consensus estimates.
AmInvestment Bank noted that this was due to a 41 per cent year on year (y-o-y) jump in sales volume with four more cargo shipments from the group’s jointly-owned concessions – three from North Sabah and one from Anasuria concessions.
“This was an additional shipment versus management’s earlier FY21 guidance of 12,” the research firm noted.
“While we expect repairs to the riser system to the Anasuria floating production, storage and offloading (FPSO) vessel by the end of 2021 to slightly moderate UK production output, which fell 42 per cent quarter on quarter (q-o-q) and y-o-y to 1,642 barrels per day in the fourth quarter of FY21 (4QFY21), we expect higher oil price of US$70 per barrel currently versus US$50 to US$52 per barrel in FY21 to support stronger FY22F earnings delivery.”
AmInvestment Bank gathered that Hibiscus’ development plans for its 70 per cent interest in the Teal West field and a proposed 85 per cent working interest and operational control of the nearby Eagle pre-producing area (which was a farm-in arrangement with EnQuest) have been delayed with first oil now likely towards the second half of 2023 (2H23), from an earlier target of end-2022.
The research firm also gathered that this stems from the rejection by the UK’s Oil and Gas Authority (OGA) on EnQuest’s request to extend the Eagle field licence, which expires in late 2022.
“Hibiscus is now hoping to secure the licence directly from the OGA by aborting the farm-in agreement with EnQuest and expediting the development process.”
Meanwhile, AmInvestment Bank remained positive on Hibiscus’ proposed acquisition of Repsol’s assets for US$212.5 million cash, which will double its daily production to 18,500 barrels of oil equivalent (boe) and increase its proven and probable (2P) reserves by 72 per cent to 81 million boe.
“Based on the equity value (EV) for the group’s expanded 2P reserves, Hibiscus is currently only trading at US$3.37 per barrel, at an unjustified discount of 76 per cent to its closest peer, UK-listed EnQuest and 74 per cent of regional average.”