Hibiscus Petroleum (Hibiscus) reported headline FY19 net profit of RM230m (+12.9 YTD). Stripping-off all the exceptional items amounting to RM42.8m, the core profit was higher at RM272.8m (+>100% YTD) on the back of higher revenue by 150.6% to RM988.3m. The performance was mainly attributed to the full-year contribution from the Group’s local producing asset i.e. North Sabah PSC. This was also coupled with relatively stable average selling crude oil prices throughout the year. Three off takes were done this quarter, bringing the total offtakes for the year to 12 from both assets versus management’s target of 10 – 11 initially. The results were below our expectations however, accounting for 89% of full year estimates though it was broadly in line with consensus at 96%. The discrepancy is from the higher tax liabilities from Anasuria field subsequent to a re-assessment of YTD income tax obligations. Moving forward, we remain positive on Hibiscus’ earnings outlook given its ongoing initiatives to constantly increase production. We maintain our earnings forecast, Outperform rating and TP at this juncture.

• Improvement in Anasuria field. Average uptime at the Anasuria field improved to 87% from a low of 71% in the previous quarter which resulted from the unplanned production shut down for 6 days. The improvement can also be seen in the field’s oil production rate which increased c.6.3% QoQ to average at 2,662 bbls/day though it was still below 1HFY19 average of 3,601 bbls/day. This was due to the planned turnaround which had commenced in late June-19 and completed in July-19. OPEX remained high at USD20.93 due to this. We believe production levels and OPEX/bbl will normalize to 2QFY19 levels (refer table 2) as the turnaround is now completed.

Despite the shutdown, there was no impact on offtakes scheduled this quarter. About 302,139 bbls of crude oil were sold this quarter at an average realized oil price of USD66.84/bbl. In total, the Group sold 1,349,170 bbls of crude oil in five cargoes in FY19 at an average realised oil price of USD66.60/bbl. The Anasuria field reported revenue of RM396.3m for the FY19 period with EBITDA at RM281.3m.

• North Sabah – the driver of FY19. Better Group performance was actually attributed to full-year contributions from the North Sabah PSC. It delivered seven offtakes in total with 1,958,150 bbls of oil at an average realised oil price of USD72.81/bbl as compared to FY18 which only contributed to 4Q numbers from two offtakes with 623,544 bbls of oil. OPEX amounted to USD14.66/bbl which includes amounts incurred for planned maintenance activities performed. The North Sabah asset recorded an EBITDA of RM294.6m on the back of RM586.8m revenue.

Source: PublicInvest Research - 21 Aug 2019