• Overview. Hibiscus Petroleum (Hibiscus) 1QFY23 core PATAMI declined by 38% QoQ to RM135mn mainly due lower sales volume from North Sabah field. Total oil sales volume declined by 30% QoQ to 1mn bbls (4Q22: 1.4mn bbls). Realised oil price were still elevated at USD112/bbl which was only 7% lower than USD120/bbl in 4Q22.

• Key highlights. Average daily production declined slightly by 10% to 16.8k boepd (4QFY2022: 18.7k boepd) amidst CY2022 annual planned major maintenance campaign at Kinabalu oil field and PM3 CAA PSC.

• Against estimates: Inline. 3MFY23 core PATAMI jumped by more than 100% YoY mainly due to earnings contribution from newly acquired Repsol asset. This is in line with our and consensus’ forecast at 33% and 26% respectively.

• Production enhancement project at North Sabah PSC. The company is close to get the approval for the South Furious 30 Water Flood Phase 2 from Petronas. This project entails the drilling of 6 water injectors and 5 oil infill wells that will be drilled from a newly installed well head platform (WHP), bridge linked to an existing jacket. The drilling is expected to commence from September 2023 and a new water injection facility is expected to be installed in August 2024.

• Outlook. Production is expected to recover in 2Q23 following the completion of annual maintenance campaign. It will also be boosted by higher uptime from Anasuria field as the replacement of malfunctioned riser has been completed in September 2022. However, no change in our forecast as this has already been imputed in our assumption.

• Our call. We maintain a BUY call on Hibiscus as with an unchanged DCF-derived TP of RM1.15. We expect elevated oil price to boost Hibiscus’s earnings which will enable it to finance future expansion project.

Source: BIMB Securities Research - 23 Nov 2022