Hibiscus Petroleum (Hibiscus) announced that it has entered into Marigold Field Unitisation and Unit Operating Agreement (UUOA) to jointly develop the Marigold Field. The unitisation integrates the development of two separate licenses i.e. Marigold West (Anasuria Hibiscus and Caldera) and Marigold East (Ithaca). This will resolve potential overlap of Marigold license at the boundary as both licenses are adjacent to each other. We view this integrated development positively as it will reduce the upfront capital expenditure required by Hibiscus and reduce carbon footprint in the overall development. At the moment, no guidance has been given on its financial commitment for the development, however, a Field Development Plan (FDP) will be submitted by early 2024. The approval of the FDP is expected within 12 months from the submission (early 2025) and is targeted to achieve its first oil by end 2028. On this note, we make no changes on our numbers for now. We retain our call Trading Buy and TP of RM1.20, taking opportunity on the improving sentiment with Brent Price above USD90/bbl.

• In UUOA agreement, Hibiscus via its wholly owned subsidiary Anasuria Hibiscus UK (AHUK) holds 61.25% interest in unitised development being holding 87.5% interest in Licence P198 Block 15/13a in Marigold West. Meanwhile, its existing partner in Marigold West, Caldera holds 8.75% and Ithaca, the licensee of P2158 Block 15/18b in Marigold East holds 30% of the unitised development.
  The determination of the stake was decided after taking into consideration of extensive geological static modelling and reservoir simulation in the each of the individual license, as we understand. An integrated project team led by AHUK and Ithaca secondees will develop the Marigold FDP with submission target by early 2024 and target to achieve first oil by end 2028.

• Economies of scale. Developing a greenfield project typically requires a large amount of capital, however, it is a challenge for an exploration and production (E&P) company to seek external funding for fossil fuel project given the environmental concern. Thus, we view this agreement positively as sharing the development cost with other licensee would reduce capital commitment and carbon footprint as compared to standalone development.

• Sunflower field not part of the UUOA. Although Sunflower field is part of P198, the FDP will be submitted separately, hence does not form part of UUOA. All rights and reserve of AHUK on Sunflower field is unchanged including its 87.5% of development stake and operatorship status. Nevertheless, it proposed to develop the field as a subsea tie-in to Marigold Project Infrastructure, akin to Teal West development subsea tie-back to Anasuria FPSO.

Source: PublicInvest Research - 18 Sept 2023