Hibiscus Petroleum Berhad - Still can go higher?
Prospect
-Acquired 50% participating interest in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract.
-Exploration & development in the Bass Strait of Australia
-2018 and 2019 is estimated to deliver up to 5,000 barrels per day (Anasuria)
Recent Updates
On 22 December 2017, SEA Hibiscus, Petronas, the sellers and PCSB entered into a novation agreement for the assignment and transfer of the entire Interest of the Sellers in the 2011 North Sabah EOR PSC to SEA Hibiscus effective 31 March 2018.
The proposed acquisition of the 2011 North Sabah EOR PSC has the potential to:-
-Increase the oil production output of the Group by a factor of up to three times. (Which is around 9,000 barrel per day)
-Provide the group with a second revenue stream. This can help Hibiscus to not only depend on the Anasuria Cluster.
-Allow the group strengthen its technical and operational capabilities.
Factors that affect Anasuria performance
i)Oil price of the Brent crude oil benchmark at approximately the time of a scheduled offtake from the Anasuria FPSO.
ii)Gas price for the Cook field and Guillemot A, Teal and Teal South fields
iii)Exchange rate of the RM and:-
- United States Dollar: For the revenue of the group and valuation of Anasuria
- British Pound: FOr the majority costs in Anasuria
Q2 2018 Review
Hibiscus net profit rose 3.4% to RM 11 million YOY on higher revenue and lower expenses. Revenue for the group rose 21% to RM 76 million YOY. This result even QOQ and YOY increase but investor expected more from it. The revenue and net profit for this quarter is lower due to lower average uptime and lower average production rate as a result of planned offshore turnaround and unplanned event. There is planned offshore turnaround which is 16 days of total shutdown in October 2017. The unplanned event which is temporary interruption in production of cook-P1 well and temporary failure of gas compression facility. The group has stated that all technical issues have been resolved, with wells and facilities currently performing at expected levels. The higher average operational expenditure in Q2 compared to the previous quarter is due to lower daily oil production rate.
Opinions
Using the latest 4 quarter result, the EPS is 2.5sen. The P/E ratio will be 35.6 using the closing price of RM 0.89 (9/3/2018). After Hibiscus successfully acquired 50% participating interest in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract, the oil production will be reaching around 9,000 barrel per day. Just estimate that Hibiscus net profit can increase 2x, the P/E ratio will be 17.8. If Hibiscus able to increase it's net profit 3x by reducing it's operational cost and higher production, the P/E ratio will be 11.9. All this haven't include if the crude oil price can increase to above USD 70 per barrel. From my opinion, I think that Hibiscus share price can break new high after successfully acquired 50% participating interest in the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract together with crude oil price breaking new high. All this above is just my opinions and predictions. :)
Technical Analysis
Brent crude oil - short term support will be USD 60.8 - USD 61.8
Hibiscus Petroleum Berhad - Support RM0.865, RM 0.76 , Resistance RM 1.06
DISCLAIMER
Everything above is for sharing purpose only.
This is NOT a buy or sell call.
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