Date / Fri, 18thMar 2016 / Lead Article / -
Headline / Low Oil Prices, But Hibiscus Petroleum Buys Up Oil Fields
Low Oil Prices, But Hibiscus Petroleum Buys Up Oil Fields
Kuala Lumpur-listed Hibiscus Petroleum, undaunted by low oil prices, has completed the acquisition of its first oil-and-gas fields in the UK North Sea. PHOTO: REUTERS
Kuala Lumpur-listed Hibiscus Petroleum, undaunted by low oil prices, has completed the acquisition of its first oil-and-gas fields in the UK North Sea.
Malaysia's first listed oil-and-gas independent has also set targets for the next 18 months - to develop 50 million barrels of proven and probable (2P) reserves on its now expanded portfolio, and to add another 50 million barrels of contingent resources through further acquisitions of oil-and-gas fields.
Just last week, Hibiscus finalised the acquisition of a 50-per-cent stake in the Anasuria Cluster oil-and-gas fields in the UK North Sea from subsidiaries of Shell and ExxonMobil for US$52.5 million; this acquisition and the subsequent set-up of a joint venture with Ping Petroleum has made it the first Malaysian independent to operate a cluster of oil-and-gas fields in UK North Sea.
The deal comes after the sale-and-purchase agreement for the Anasuria Cluster was announced in August 2015, when Brent crude was trading in the US$40s and US$50s.
But Hibiscus maintained in its investor presentation that hydrocarbons in the Anasuria Cluster can be economically developed, even with oil prices in the range of US$30.
Its managing director Ken Pereira told The Business Times that the Anasuria Cluster was, in fact, cash positive from the moment the acquisition was completed. The deal has brought with it the first barrels of oil production accretive to Hibiscus's interest in an upstream asset.
The cluster of UK fields in the acquisition - comprising four producing fields and one discovery (yet-to-be-developed) field - are producing more than 7,000 barrels of oil equivalent per day (boepd), with about 4,000 boepd net to Hibiscus.
Hibiscus has pinned hopes on being in the black for the year ended June 30, although Mr Pereira clarified that this depends on the accounting of the accrued revenue from the Anasuria Cluster.
The company is next looking to more than double output to 10,000 barrels per day by boosting output from the Anasuria Cluster and bringing its 100 per cent-owned West Seahorse field off Australia into production. Mr Pereira said more can be extracted by using high-pressure gas and by de-bottlenecking the existing floating production, storage and offloading vessel (FPSO).
UK-listed Petrofac has been appointed to run the day-to-day field operations under a US$250 million contract over five years from this month. The fees payable to Petrofac fall under operating expenditure split equally between Hibiscus and Ping.
Mr Pereira said no significant capex is projected for Anasuria Cluster until after 2018; he projects that up to US$200 million in additional capex could be required if resources (including undeveloped discoveries) are to be exploited in the 16 to 20 years remaining in the production life of the UK fields.
Mr Pereira said the Anasuria Cluster acquisition comes with production assets, such as the FPSO, which are unencumbered and can be tapped for refinancing if needed.
Off Australia, Hibiscus will look into acquiring more assets to expand the reserve base for its proposed West Seahorse field development, he said. But the plan to bring West Seahorse into production by 2017 has had two setbacks, Mr Pereira said. First, funding parties which had committed US$100 million in 2015 pulled back after the oil price collapse.
Then, when Hibiscus set out to acquire Australia-based Hydra Energy to quadruple the resource base for the West Seahorse project to 23 to 25 million barrels, the Australian outfit reportedly fell into financial distress.
Mr Pereira hinted however, that Hibiscus will press on with its hunt for additional resources to support the sanctioning of the West Seahorse project, which is deemed viable at US$40 oil prices.