Hibiscus (5199) - AGM 2019 Details

Q: How do you decide the price when you sell crude oil to customers? Is it possible to not sell to customers at low prices and wait until the price is up?

A: When we dig up crude oil from bottom of the sea and put it in a large oil tank. FPSO ships will carry crude oil out on every 2 months. When the oil is taken away, we will use the 5 days average international oil price to calculate the selling price. We cannot delay the sale of crude oil to our customers, and it is because the customers had already ordered crude oil from us 2 months ago. The price will be determine based on the average price of 5 days, and we have not done any hedging.

Q: Is Barrels per day written in the report every day or working day? And the Barrel recorded into the book is only Barrel owned by the company or it is the total output from oil field

A: This is a dairy routine, and the Barrels per day written in the report is only Barrel owned by the company.

Q: The company's Capex in Anasuria is low and the storage capacity is high, but the Capex in Sabah is high, but it is less than expected. Can you explain it?

A: We cannot predict whether the oil field output will be the same as our estimation. We make our estimation and judgments based on the data we have at that point of time. Some fields will be better, others will not. This is the risk in our industry.

Q: There are many other energy sources such as solar energy, will this affect the company?

A: The gasoline industry still has room for development. Other energy sources will not affect us much in the short term.

A: Anasuria has its own FPSO. The ship has already been depreciated. We just need to give Maintenance cost, hence our cost is very competitive. As for Sabah, our cost is relatively high, and there are still a lot of assets to spend, but the cost is still very competitive. In fact, when international oil prices are low, we will get an additional "reward", so Sabah's earnings will be relatively stable. But Anasuria didn't.

A: No, our gearing is 0, hence we borrow money from bank. In fact, many investors doesn't like Right Issue.

A: This is because the North Sabah oil field has led to the need for more staff. We used to have 40-50 employees, but now we have 400 ++. We do not plan to outsource employees outside. Regarding the core business, we still hire our own people, as this is the way we can build a professional team for future expansion.

A: No, some customers have a 30-day billing period. These are all about matter of time. There will not be impairment.

Q: Why do reports sometimes show that more crude oil is sold than your own production?

A: There will not be dividend for the time being, we need more cash in hand and expansion our new oil fields.

A: In Q1 for some other reason, we just sold 2 offtake crude oil. It usually sells 12 offtakes a year, and offtake is variance in different quarter, sometimes will have more, and sometimes will have less in offtake.

Several shareholders at this general meeting were dissatisfied and questioned the company's decision not to pay dividends. Management still sets FY2022 to produce 20,000 crude oil a day. The company currently expects Anasuria to produce 5,000 barrels and North Sabah to produce 7,000 barrels. The remaining 8,000 barrels will come from future acquisitions or Marigold production. Hibiscus is very dependent on international oil prices; hence international oil prices will directly impact on company's stock price.