Full report of Hong Leong research 09/05/2022

https://www.hlib.hongleong.com.my/Published/Download.ashx?ArticleId=18666&mode=view

Tverberg: The World Has A Major Crude Oil Problem; Expect Conflict Ahead


https://www.zerohedge.com/geopolitical/tverberg-world-has-major-crude-oil-problem-expect-conflict-ahead

Agree with zhangzuode,

hibiscus might interested in SK408 Jerun asset from sapura, no need other assets



SapuraOMV's Sarawak unit inks final investment decision agreement for Jerun gas field with partners --April 13, 2021 19:39 pm +08


Gross production from these fields stands at 575 MMscfd (96 kboed). When Jerun comes onstream, it will add a further 500 MMscfd (83 kboed) of production.


https://www.theedgemarkets.com/article/sapuraomvs-sarawak-unit-inks-final-investment-decision-agreement-jerun-gas-field-partners

How to valuate hibiscus as value investor:

1) EV / EBITDA method ( recommended by Mr. Deepak )
EV = Enterprise Value = Market cap + Total debts - cash

For 2QFY2022 ( end 31/12/2021), before Repsol acquisition
Closing price 31/12/21 = RM 0.815
Market cap = RM 0.815 x 2000 million of shares = RM 1,630 million
Debt = 0
Unrestricted cash = RM 552 million
EV = 1630 + 0 - 552 = RM 1,078 million
EBITDA 3Q FY2021 ( Jan - Mar 2021) = RM 122 million
EBITDA 4Q FY2021 ( Apr - Jun 2021) = RM 130 million
EBITDA 1Q FY2022 ( Jul - Sept 2021) = RM 124 million
EBITDA 2Q FY2022 ( Oct - Dec 2021) = RM 140 million
EBITDA for CY2021 ( Jan- Dec 2021) = 122+ 130+ 124+140 = RM 516 million
EV / EBITDA for CY2021 = 1078 / 516 = 2.09 ( UNDERVALUED)

Let’s presume hibiscus borrowed USD 80 million from Trafigura via Prepayment Facility and used all cash RM 552 to pay remaining USD123.65 million for Repsol acquisition on 24/01/2022
Current market price RM 1.20 = RM 2,400 market cap
Total debt = USD 80 million = RM 328 million
Cash = 0
EV = 2400+328-0 = RM 2,728 million
If Brent USD 100/bbl, EBITDA for CY2022 = RM 1,378 million
EV / EBITDA = 2728/1378 = 1.98 ( UNDERVALUED)

2) EV/ 2P reserves method
Current market price RM 1.20 = RM 2,400 market cap
EV = RM 2,728 million = USD 665 million ( Maybank estimated USD795.5m)
Latest 2P reserves = 77.3 million boe
EV/ 2P reserves = 665/77.3 = USD 8.6/boe ( UNDERVALUED, Maybank estimated USD 6.7/boe)
If compared with EnQuest = USD 12/ boe.
Range of EV/ 2P reserves for other medium E&P companies in Norway and UK = USD 13.6-31.1/boe

3) Price to Earning ( P/E) ratio
Current market price RM 1.20 = RM 2,400 market cap
If Brent USD 100/bbl, net profit for CY2022 = RM 551 million , PER = 4.36 ( UNDERVALUED)
If Brent USD 70/bbl, net profit for CY2022 = RM 386 million , PER = 6.22
If compared with other O&G companies in Malaysia with closing price on 08/04/2022 ( using i3investor data):
DNex = 7.61
Pchem = 11.22
PetGas = 16.91
Dialog = 28.37
Yinson = 13.95
Armada = 4.32
MISC = 18.55
Dayang = - 3.38 ( loss)
Serba , Sapura : no comment
KLSE : 14-16


4) Free cash flow method( quite difficult to estimate , might need 3QFY22 report)
Free cash flow = Operating cash flow - Capital expenditures ( CAPEX)
For FY2019,
Net cash generated from operating activities = RM 496 million
EBITDA = RM 549 million
For FY2020,
Net cash generated from operating activities = RM 122 million
EBITDA = RM 213 million
For FY2021,
Net cash generated from operating activities = RM 297 million
EBITDA = RM 309 million
So, it is safe to say that EBITDA is slightly above operating cash flow.
If Brent USD 100/bbl, estimated EBITDA for CY2022 = RM 1,378 million,
Estimated net cash generated from operating activities around RM 1,200 million

CAPEX for North Sabah + Anasuria + Repsol per year= ??RM 300 - 600 million
Major CAPEX in next 2-3 years : Teal West tie-back Project and Marigold Project
2C resource of Teal West : 4 million boe
2C resource of Marigold : 43.5 million boe
FYI, DNex, Ping Petroleum Ltd, would likely require at least between RM300 and RM400 million in capital expenditure (capex) to develop its newly-acquired Avalon oil field in the United Kingdom, with expected production between 5,000 and 6,000 barrels per day.

I estimate total CAPEX for both Teal West tie-back Project and Marigold Project around RM 1,000 million till RM 1,500 million. This CAPEX will be smaller if hibiscus reduce Marigold interest from 87.5% to 50%

Strategy :
1) If got another dip, will accumulate hibiscus at RM 1.00 ( previous target at RM 0.90). Will switch from other stock to hibiscus and increase hibiscus position till 50% of portfolio.
2) Keep till at least 2025-2026

Estimation of EBITDA and net profit after repsol acquisition for 1 year

Presumption :
1) Daily oil net production of North Sabah + Anasuria = 8,000 bbl/day
2) Daily oil and condensate net production of repsol = 7,500 bbl/day
3) Daily gas net production of repsol = 7,500boe/day
4) Total daily net production = 23,000boe/day
5) The price of natural gas of Repsol links to crude oil price, around USD 100/bbl equal to USD 6.7 /MMbtu
6) If Brent USD 100/bbl, gas price = USD 6.7/MMbtu = USD 38.85/boe
7) If Brent USD 90/bbl, gas price = USD 6.03/MMbtu = USD 34.97/boe
8) If Brent USD 80/bbl, gas price = USD 5.36/MMbtu = USD 31.08/boe
9) If Brent USD 70/bbl, gas price = USD 4.69/MMbtu = USD 27.20/boe
10) EBITDA margin = 50%
11) Net profit margin = 20%
12) USD to MYR conversion rate = RM 4.1

If Brent USD 100/bbl, gas price USD 38.85/boe
1)Revenue oil North Sabah + Anasuria = 8,000 bbl/day x 365 x USD 100/bbl x 4.1 =RM 1,197 million
2) Revenue oil and condensate of repsol = 7,500 bbl/day x 365 x USD 100/bbl x 4.1 =RM 1,122 million
3) Revenue gas of repsol = 7,500 boe/day x 365 x USD 38.85/boe x 4.1 =RM 436 million
4) Total revenue = RM 1,197 million + RM 1,122 million + RM 436 million =RM 2,755 million
5) Total EBITDA = RM 2,755 million x 50% = RM 1,378 million
6) Total net profit = RM 2,755 million x 20% = RM 551 million


If Brent USD 90/bbl, gas price USD 34.97/boe
1)Revenue oil North Sabah + Anasuria = 8,000 bbl/day x 365 x USD 90/bbl x 4.1 =RM 1,077 million
2) Revenue oil and condensate of repsol = 7,500 bbl/day x 365 x USD 90/bbl x 4.1 =RM 1,010 million
3) Revenue gas of repsol = 7,500 boe/day x 365 x USD 34.97/boe x 4.1 =RM 392 million
4) Total revenue = RM 1,077 million + RM 1,010 million + RM 392 millions =RM 2,479 million
5) Total EBITDA = RM 2,479 millions x 50% = RM 1,240 million
6) Total net profit = RM 2,479 millions x 20% = RM 496 million


If Brent USD 80/bbl, gas price USD 31.08/boe
1)Revenue oil North Sabah + Anasuria = 8,000 bbl/day x 365 x USD 80/bbl x 4.1 =RM 958 million
2) Revenue oil and condensate of repsol = 7,500 bbl/day x 365 x USD 80/bbl x 4.1 =RM 898 million
3) Revenue gas of repsol = 7,500 boe/day x 365 x USD 31.08/boe x 4.1 =RM 349 million
4) Total revenue = RM 958 millions + RM 898 millions + RM 349 millions =RM 2,205 million
5) Total EBITDA = RM 2,205 millions x 50% = RM 1,103 million
6) Total net profit = RM 2,205 millions x 20% = RM 441 million


If Brent USD 70/bbl, gas price USD 27.20/boe
1)Revenue oil North Sabah + Anasuria = 8,000 bbl/day x 365 x USD 70/bbl x 4.1 =RM 838 million
2) Revenue oil and condensate of repsol = 7,500 bbl/day x 365 x USD 70/bbl x 4.1 =RM 786 million
3) Revenue gas of repsol = 7,500 boe/day x 365 x USD 27.20/boe x 4.1 =RM 305 million
4) Total revenue = RM 838 million + RM 786 million + RM 305 million =RM 1,929 million
5) Total EBITDA = RM 1,929 million x 50% = RM 965 million
6) Total net profit = RM 1,929 million x 20% = RM 386 million

Latest expected additional EBITDA from Repsol by Maybank

1) Full Year production rate : 15,000 boe/day
2) Annual Production : 5.5 million boe ( 2.75 MMbbl Oil & Condensate + 2.75 MMboe of Gas)
3) Assumed average Brent Price for full year : USD 100/bbl
4) Expected Gas Price : USD 6.6/kscf or USD 6.6/MMbtu
5) Expected Gas Price : USD 40/boe
6) Weighted average realised price : USD 70/boe
7) Expected full calendar year revenue at average USD 100/bbl Brent : USD 385millions
8) Expected full calendar year EBITDA from newly acquired assets at assumed average USD 100/bbl Brent assuming 50% EBITDA margin : USD 192 millions


Free Cashflow from Repsol CY2021 : USD 78 millions

Acquisition price of Repsol : USD 212.5millions

Yes, by the end of Dec 2022, these Repsol assets are considered FREE !!

Important summaries (that I think) from these 2 videos :

Hibiscus Petroleum Berhad briefing
https://www.youtube.com/watch?v=CLQ6hpFJOkk&t=4s

Hibiscus Petroleum Bhd : Big Plays in Oil & Gas
https://www.youtube.com/watch?v=pbsVtesj1P4


1) The current crude oil cycle is quite different from the previous traditional cycles. Dr Ken is quite bullish about Brent price for next 2-3 years, average USD 80-110/bbl. He also predicted the Brent price will fall when the O & G midstream service companies start making huge profits.

2) Hibiscus is not selling crude oil everyday. Hibiscus sells crude oil by using offtake ( cargo). 1 offtake is equal to 250,000-300,000 barrels of oil. For 1 year, North Sabah will be able to produce 6-7 offtakes, Anasuria 4 offtakes, Kinabalu 4 -5 offtakes, PM3 CAA 4-5 offtakes. Total around 18-21 offtakes per year. In order to reduce the risk of volatility of Brent price, Hibiscus plans for co-loading with other partners. Hibiscus plans to reduce 1 offtake to around 100,000 barrels. So hibiscus can sell crude oil more frequently and even out the average realised selling price. For next few quarters, hibiscus might mention volume of sale in ‘barrel’, rather than in ‘offtake’.

3)PM3 CAA supplies natural gas to Malaysia and Vietnam everyday via pipelines. Hibiscus gets paid every month. The price of natural gas links to crude oil price, around USD 100/bbl equal to USD 6.7 /MMbtu, much lower than current UK Heren NBP Index Natural Gas price.

4) The conditions of Repsol assets are good. No need to add extra CAPEX such as maintenance of pipelines.

5) PM3 CAA license will expire by 2027. It is not difficult to extend the license, just keep spending reasonable CAPEX to maintain the asset in good condition. If hibiscus able to extend the license, this will help for further extra increment of 2P reserve.

6) UK is facing energy crisis. The UK government already invited the O & G companies ( including hibiscus) to their office, and asked them to accelerate their upstream projects in North Sea. The UK government will loosen the stringent of regulations. UK Hibiscus also received calls from banks, the bankers are willing to help the O & G companies now ( ? by supplying borrowings or issuing bonds). These will help hibiscus to convert 2C resource of Teal Weal and Marigold to 2P reserve by 2023, and might achieve first oil by 2024.

7) Project of converting 2C resource of North Sabah to 2P reserve also in progress, can be achieved in next 12 months

8) Hibiscus will not buy new assets in high oil price environment. But Dr Ken did mention that they might consider acquisition of special assets with special price in special circumstances even in an environment of high oil price. ( ?? SapuraOMV assets)

9) For malfunction of critical equipment in Anasuria from 2021, the problem will be solved by August 2022. Anasuria will be able to achieve normal production rate for 2QFY2023 (Oct-Dec 2022)

10) Mr Deepak Thakur, VP Economic and Business Planning, key person in valuation of Anasuria, North Sabah and Repsol assets acquisition, opined that with market cap of RM 2.3billions, current EV/EBITDA of hibiscus is around 3.5 only ( without adding Repsol assets) , undervalued if compared with other O&G companies. He also emphasized that as a value investor, the important metric in investing a stock is choosing a good management team :)

11) The government link funds start collecting hibiscus already

Long-Term Oil Prices Beginning To Reflect The Coming Oil Shortage, Part 1

https://www.zerohedge.com/energy/long-term-oil-prices-beginning-top-reflect-coming-oil-shortage-part-1

Oil: 'Biggest Supply Crisis In Decades' Warns Of Higher Prices Ahead (Part II)


In order to meet the potential record new demand coming this year plus offset 3–4 million bbl/d of lost Russian supply, the market would need a trifecta of good fortune:

1) A successful Iran deal
2) Saudi and UAE breaking ranks with OPEC+
3) US shale kicking into high gear

But even in this goldilocks scenario, the market would be still be running on fumes in terms of spare capacity.



https://www.investing.com/analysis/oil-biggest-supply-crisis-in-decades-warns-of--higher-prices-ahead-part-ii-200620739

Oil's 'Biggest Supply Crisis In Decades' Warns Of Even Higher Prices Ahead


The IEA published its first official estimate of Russian supply losses last week…and it was staggering. The agency is forecasting a massive 25% decline in Russian production starting in April. In other words…

An already-fragile global oil market could lose 3 million bbl/d starting next month.



https://www.investing.com/analysis/oils-biggest-supply-crisis-in-decades-warns-of--even-higher-prices-ahead-200620735

Thanks for your suggestion !!

I agreed with your calculation in Esceram and Pchem cases.

I just can't understand why higher market cap/FCF with lower market price/FCF is better than lower market cap/FCF with higher market price/FCF

I will invest in Esceram, rather than Pchem because of lower market cap/FCF

May be you can share the article/research regarding the significant of market price/FCF in valuation of stock.

Sorry for my poor knowledge

Price to Free Cash Flow TTM


The Price to Free Cash Flow Ratio, or P / FCF Ratio, values a company against its Free Cash Flow. It is the Share Price of the company divided by its Free Cash Flow per Share


https://www.stockopedia.com/ratios/price-to-free-cash-flow-733/

mokluhanj21 - thank you for your good suggestions.

Another excellent write up by zhangzuode !!

https://klse.i3investor.com/blogs/ZZD/2022-03-20-story-h1600338629-Hibiscus_coming_BOOM.jsp

Estimation of 3QFY22 net profit after repsol acquisition

Presumption :
1) Total operating days for North Sabah/Anasuria from Jan till March 2022 = 31 + 28 + 31 = 90days

2) Total operating days for Repsol from 24/01/2022 till 31/03/2022 = 8 + 28 + 31 = 67days

3) Average Brent price from 01/01/2022 till 18/03/2022 = USD 95/bbl

4) Average realised selling price for oil = USD 95/bbl + 5% premium = USD 100/bbl

5) Daily net production rate of North Sabah/ Anasuria for 3QFY22 is similar with 2QFY2022

6) Daily net production crude oil ( oil + condensate) of repsol = 9511 bbl/day

7) Daily net production gas of repsol = 47MMscfd =48,880MMbtu/day. Estimated average realised selling price of gas for repsol = USD 3.7 /MMbtu

8) For the last 4 quarters ( with average realised selling price more than USD 60/bbl) , net profit margin of North Sabah was around 23%. OPEX and taxation ( PITA 38% ) of repsol almost same with North Sabah. So we can presume net profit margin of Repsol for crude oil = 23%

9) Natural gas for repsol is less profitable than crude oil, so let’s presume the net profit margin of natural gas is around 15%

10) USD to MYR conversion rate = RM 4.1

11) For investing holdings and group activities, hibiscus recorded net loss of RM 12.2m in 1QFY22 and another net loss of RM 12.2m in 2QFY22. So we estimate hibiscus most likely will record another net loss of RM 12.2m in 3QFY22.


Net Profit of North Sabah for 3QFY22
= 5937bbl/day x 90 days x USD 100/bbl x RM 4.1 x 23%
= RM 50.4millions

Net Profit of Anasuria for 3QFY22,in view of
1) inconsistency of net profit margin,
2) average realised selling price for 2QFY22 was USD 72/bbl and estimated average realised selling price for 3QFY22 was USD 95/bbl (without 5% premium, increasing 31.9%),
3) UK Heren NBP Index Natural Gas price for 3QFY22 is higher than 2QFY22,
4) we presume 3QFY22 net profit of Anasuria will also increase 31.9%
Net Profit of Anasuria for 3QFY22
= RM 16.9m + ( RM 16.9m x 0.319 )
= RM 22.3m

Net Profit for repsol crude oil for 3QFY22
= 9511bbl/d x 67days x USD 100/bbl x RM 4.1 x 23%
= RM 60.1m

Net Profit for repsol natural gasl for 3QFY22,
= 48,880MMbtu/day x 67days x USD 3.7/MMbtu x RM 4.1 x 15%
= RM 7.5m

Net loss of investing holdings and group activities for 3QFY22
= RM 12.2m

Total net profit of hibiscus in 3QFY22
= RM 50.4m + RM 22.3m + RM 60.1m + RM 7.5m - RM 12.2m
= RM 128.1m


1) Hibiscus bought Anasuria UK in March 2016 with USD 52.5 million, recorded negative goodwill ( profit) of RM 361 million in 4QFY2016

2) Hibiscus bought North Sabah in March 2018 with USD 25 million, recorded negative goodwill ( profit) of RM 206 million in 4QFY2018

3) Valuation of Repsol assets by RPS Energy in 1 January 2021 was USD 285 million, with oil price scenario of around USD 55-60/bbl

4) Hibiscus completed Repsol assets acquisition on 24 Jan 2022 with USD 212.5 million

5) Most likely Hibiscus will ask RPS Energy to revaluate Repsol assets, with oil price scenario of possible USD 80-90/bbl

6) Most likely Hibiscus will record another negative goodwill ( profit) from Repsol acquisition in 3QFY22 , maybe around RM 200m to RM 300m.

So for accounting purpose, net profit 3QFY22 will be around RM 330 to RM 430m


Historical price and average price of Brent oil
https://www.investing.com/commodities/brent-oil-historical-data

Daily net production crude oil / gas for repsol
Estimated average realised selling price of gas for repsol
page 174, circular part 1 ( the second last page of circular part 1) :
https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3218076


UK Heren NBP Index Natural Gas price
https://www.tradingview.com/chart/?symbol=NYMEX%3ANBP1!

Andurand Sees $200 Oil By Year-End As Biden Sends SPR To Record Lows


And as you say, when we’re in the opposite scenario where inventories are very low and there are places in the world where a delivery of certain contracts, such as Cushing in Oklahoma for WTI, where the tanks are all empty and there's no oil in those tanks anymore. If somebody is long futures and tries to take delivery of oil at that place and that point in time, well, nobody can deliver, and then you can go to any price.



https://www.zerohedge.com/energy/andurand-sees-200-oil-year-end-biden-sends-spr-record-lows

High Jet Fuel Prices Can’t Curb Consumers’ Insatiable Demand To Fly


Delta Air Lines CEO Ed Bastian chimed in with, "We've not seen a stronger demand ... in my career."


In February 2022, U.S. domestic flight bookings returned to pre-COVID levels, the Adobe Digital Economy Index showed on Tuesday. Actual bookings were up by 4 percent over 2019 levels, while revenue was 6 percent higher, due to inflation in ticket prices, according to the analysis.


https://oilprice.com/Energy/Energy-General/High-Jet-Fuel-Prices-Cant-Curb-Consumers-Insatiable-Demand-To-Fly.html

New Lockdowns In China Could Derail Oil Demand Growth


“More widespread lockdowns will weigh on mobility in the coming weeks,” according to an Energy Aspects note this week cited by Bloomberg. Energy Aspects reduced its oil demand estimate for China by 170,000 barrels per day (bpd) for the first quarter and by 130,000 bpd for the second quarter.


https://oilprice.com/Energy/Crude-Oil/New-Lockdowns-In-China-Could-Derail-Oil-Demand-Growth.html

Crude oil is going back to $40-$50 a barrel: Analyst


https://finance.yahoo.com/video/crude-oil-going-back-40-154932882.html

How Oil Could Hit $200 And Beyond (Part II)


https://www.investing.com/analysis/how-oil-could-hit-200-and-beyond-part-ii-200620035

How Oil Could Hit $200 And Beyond


Physical oil trading is a complex business that involves multiple layers of transactions and counterparties. So even where Russian crude is still technically legal to trade, the sanctions package in many cases has gummed up the inner-workings of the trade to the point of killing the market.


https://www.investing.com/analysis/how-oil-could-hit-200-and-beyond-200619833

Why I will hold till 2026 :

1) The new 2022-2026 mission of hibiscus is to grow daily net production to 35,00-50,000boe/day by 2026. This can be achieved with Teal West Project, Marigold Project and another acquisition of valuable asset in Southeast Asia.

2) hibiscus able to generate positive cash flow if Brent price more than USD 30/bbl

3) hibiscus able to generate net profit if Brent price more than USD 40/bbl

4) I believe the Brent price will stay above USD 70 /bbl for next 3 years due to prolonged underinvestment in O&G industry

5) With daily net production of 35,00-50,000boe/day and average realised selling price above USD 70/bbl, I think Hibiscus able to reach RM 3.00 by 2026

6) I will achieve my goal of financial free if hibiscus can reach RM 3.00. I just need to hold till 2026 without do frequent trading. I just need to monitor progression of Teal West Project and Marigold Project

will accumulate around 88 - 90 sen

Then will hold till 2026

Investment strategy : How to become financial free through stock market investment?

Step 1 : Try to find a way to make a big fund as early as possible, may be at least RM 300,000. This is the hardest part.

Step 2: Use all your fund to buy a single undervalued stock when the chance comes. Keep it for 3 to 7 years until 3X ,then sell all of them. Your fund should be worth at least RM 1 million. Keep all of these money in FD or bonds, and wait for the second chance.

Step 3: When the second chance comes, use all of your fund to buy a single undervalued stock, keep it for 3 to 7 years then sell it at 3X. Your fund should be worth at least RM 3 million.

Step 4 : Finally, you should diversify all these money in high dividend stocks (Maybank, TNB, PetGas, etc) or REITs which will give at least 5% dividend. That means you will have at least passive income of RM 150,000 every year.

This is a very simple way to help you retire early, but not easy to practise. You need to read a lot and do some research. You need to convince yourself regarding the true intrinsic value of stock.

Jeff Bezos, founder, chairman, CEO, and president of Amazon is the richest man in the world. Once in a meeting with Warren Buffett, he asked America’s most prolific investor, your investment thesis is so simple. You’re the second richest guy in the world, and it’s so simple. Why doesn’t everyone just copy you?”

Warren Buffett responded Jeff by saying, “Because nobody wants to get rich slow.”

For weekend read

Maybank analysis report on 15/02/2022 , total 28 pages

Hibiscus Petroleum -- Energy Beast , TP: RM 1.70

https://mkefactsettd.maybank-ke.com/PDFS/251422.pdf

Warren Buffett is still buying Occidental Petroleum, adding shares worth $1.5 billion


After spending around $4.5 billion last week to buy 91.2 million shares of Occidental Petroleum, he’s spent more than $1.5 billion this week to add another 27.1 million shares to Berkshire Hathaway’s stake.



https://www.cnbc.com/2022/03/12/warren-buffett-is-still-buying-occidental-petroleum-adding-shares-worth-1point5-billion.html

@dragon328

Hope these data for Repsol acquisition from circular for shareholders, announced on 13 Dec 2021,page 174, circular part 1 ( the second last page of circular part 1) will help your calculation

https://www.bursamalaysia.com/market_information/announcements/company...


Free cash flow to repsol, 2P – consolidated—----- page 174

Estimation of CY 2021
Total net production : 15,198 boe/day
Estimated realised oil price : USD 63 bbl/day
Estimated realised gas price : USD 3.9 / MMbtu
Net revenue : USD 247 millions
Net Opex : USD 99 millions
Net Capex : USD 20 millions
Net Abex : USD 18 millions
Net Opex/boe : USD 17.85/boe
Net (Opex + Capex + Abex)/boe : USD 24.70/ boe
Net project free cash flows : USD 77 millions


Estimation of CY 2022
Total net production : 17,364 boe/day
Estimated realised oil price : USD 60 bbl/day
Estimated realised gas price : USD 3.7 / MMbtu
Net revenue : USD 271 millions
Net Opex : USD 113 millions
Net Capex : USD 82 millions
Net Abex : USD 15 millions
Net Opex/boe : USD 17.83/boe
Net (Opex + Capex + Abex)/boe : USD 33.13/ boe
Net project free cash flows : USD 45 millions


Estimation of CY 2023
Total net production : 16,056 boe/day
Estimated realised oil price : USD 58 bbl/day
Estimated realised gas price : USD 3.6 / MMbtu
Net revenue : USD 246 millions
Net Opex : USD 108 millions
Net Capex : USD 13 millions
Net Abex : USD 11 millions
Net Opex/boe : USD 18.43/boe
Net (Opex + Capex + Abex)/boe : USD 22.52/ boe
Net project free cash flows : USD 81 millions

Berkshire Hathaway reveals $5 billion stake in oil giant Occidental Petroleum


Even though the warrants have not been exercised, for the purposes of the SEC filing trigger they have to be counted, technically putting Berkshire’s stake at more than 17%.


https://www.cnbc.com/2022/03/05/berkshire-hathaway-reveals-5-billion-stake-in-oil-giant-occidental-petroleum.html

@zhangzuode

Actually, when to sell is more difficult than when to buy.

As short term investor/speculator, we might consider to take profit if we think we can time the stock/oil market and beat the average retail investor/speculator. Then wait for another opportunity for lower entry point.

As long term investor, we might consider to sell Hibiscus if we think :
1) Hibiscus is overpriced
2) We got better investment plan with the money we sell Hibiscus

As long term investor, I think Hibiscus still undervalued at current market price. The management team plans to increase net oil/gas daily production to 35,000 ~50,000 boe/day by 2026. With estimated average realised selling price of USD 70-80 per barrel and daily net production of 35,000 ~50,000 boe/day, I wont surprise to see Hibiscus at RM 3 to RM5. I believe that the trend of Brent price will repeat 2011-2014 pattern ( higher and longer) due to prolonged underinvestment. I also quite confident in Hibiscus management team and I will hold till at least 2026

I might consider to sell Hibiscus when:
1) Hibiscus is not undervalued, may be if Hibiscus skyrockets to RM 2.50 ( market cap of RM 5 billions and historical highest price was RM 2.74) within 6 to 12 months,
2) reaching my target price which help me to achieve financial free.


There is a good article from Howard Marks, Oaktree capital. Worth to read.

Selling Out

https://www.oaktreecapital.com/docs/default-source/memos/selling-out.pdf?sfvrsn=5a4f7166_11

Another excellent write up from Zhang Zuode !!

Hibiscus - What now

https://klse.i3investor.com/web/blog/detail/ZZD/2022-03-01-story-h1599380388-Hibiscus_What_now

What is SWIFT, and why does it matter in the Russia-Ukraine war?


https://www.washingtonpost.com/business/2022/02/26/swift-russia-sanctions-explained/

The Northern Las Vegas Strip is Seeing an Increase in Tourism


New reports have recently begun to surface that discuss the growing popularity of Northern Strip casinos. Many of these properties including Resorts World, The Strat, and Sahara Las Vegas have started seeing big surges in tourism.


https://www.bestuscasinos.org/news/northern-las-vegas-strip-seeing-increase-tourism/

Small Frackers Race To Drill As OPEC+ And Big Oil Majors See No Need To Pump Faster


After years of fighting low oil prices, a general and possible global consensus is emerging among major oil players who would rather see oil prices stabilize rather than undergo boom and bust phases.


https://www.zerohedge.com/energy/small-frackers-race-drill-opec-and-big-oil-majors-see-no-need-pump-faster

Big shareholder increased his position from open market after QR release.

Good sign !!

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3234344

agree with you, i3lurker.

Sure will maximize hibiscus in my portfolio if got chance to buy the dip, may be around 80sen. Will wait patiently.

but hibiscus is quite different with Serba in view of :

1) hibiscus is debt free company

2) hibiscus sells North Sabah crude oil to one company only, which is Trafigura and share 50% profit with Petronas. So it is quite difficult to manipulate the accounting.

3) hibiscus sells Anasuria cluster crude oil to one company only, which is BP Oil and share 50% profit with Ping Petroleum. So it is also quite difficult to manipulate the accounting.

4) hibiscus has no asset or project in Middle East. hibiscus got bad experience in Oman business before.

5) hibiscus plans to acquire another asset in Southeast Asia, not in Middle East

6) For next 3 years, hibiscus will be quite busy with Repsol assets, Teal West Project and Marigold Project.

7) hibiscus management team has excellent track record. Shell, Exxon Mobil, Repsol, Petronas, Petrovietnam, BP Oil and Trafigura trust Hibiscus and quite happy to do business with hibiscus

Most of the new capacity to produce oil in the global markets has come from the U.S. Tight Oil (fracking) and the Canadian Tar sands (also called oil sands)

The significance of this is that this extra oil production capacity stabilized global demand for crude oil, as conventional oil production plateaued in 2005. U.S. shale (tight oil, fracking with horizontal drilling) contributed 71.4% of new oil supply since 2005. By contrast, OPEC has added 20% of total supply, barely enough to cover losses from countries whose production has been declining.

Since 2008, the Shale revolution (tight oil or fracked oil) has increased global oil supply which stabilized increased demand. US tight oil produced in August 2019 was 7.73 million barrels per day, approximately 8.37% of global supply. The U.S. tight oil sector accounted for 98% of global oil production growth in 2018.


So, now the US shale producer told us that they can't increase supply even if Biden asks....

Pioneer CEO Warns US Shale Can't Increase Supply Even If Biden Asks


Pioneer CEO Scott Sheffield told analysts Thursday morning that its strategy to boost oil production from 0% to 5% won't be affected even if oil prices surpass $100. "There's no change for us," he said, adding, "$100 oil, $150 oil, we're not going to change our growth rate."


He noted private producers in the Permian Basin need to be "reined in" for their high growth rates. He said a few private firms are raising output "at 15-20% are going to run out of inventory fairly quickly." High growth output isn't sustainable, he continued.


https://www.zerohedge.com/commodities/pioneer-ceo-warns-us-shale-cant-increase-supply-even-if-biden-asks

Hibiscus Petroleum on a roll


https://www.thestar.com.my/business/business-news/2022/02/19/hibiscus-petroleum-on-a-roll

Genting Group head Lim Kok Thay one of “several investors” keen to purchase unfinished cruise ship Global Dream


German Economy Minister Robert Habeck said the government remains willing to provide financial assistance to a “new reliable investor” to finish building Global Dream, which is currently about 72% complete and requires between €500 million and €600 million (US$568 million and US$681 million) for completion.

https://www.asgam.com/index.php/2022/02/16/genting-group-head-lim-kok-thay-one-of-several-investors-keen-to-purchase-unfinished-cruise-ship-global-dream/



Total of construction cost of Global Dream cruise is around USD 1.8 billions

https://www.dreamcruises.jp/wp/wp-content/uploads/2019/06/190820_Global-Class-Flyer_EN_Preview.pdf


Wow!! That means LKT still has extra pocket money of USD 1.8 billion to buy this super cruise !! As Ikan Bilis, we always underestimate how much pocket money this super rich tycoon LKT has....

@DragonG

Thanks for information.

Looking for chance to accumulate again

How Long Will High Oil Prices Last?


The question now is whether the current situation is more like the first half of 2014, or whether it is more like 2011, when prices rose above $100/bbl and largely stayed there for the next three years.

I would argue that we are somewhere in between. In 2011, the markets weren’t oversupplied, but that’s where they were ultimately headed. U.S. oil production has increased by 600,000 barrels per day (bpd) year-over-year, but we are still 1.5 million bpd below the levels just before the Covid-19 pandemic hit the U.S. Thus, with demand largely recovered to pre-pandemic levels, we are still undersupplied relative to two years ago.




https://oilprice.com/Energy/Oil-Prices/How-Long-Will-High-Oil-Prices-Last.html

JPMorgan: Oil Could Easily Hit $120 If Russia-Ukraine Tensions Escalate


But even if Russian exports were just cut in half, oil prices could skyrocket to $150, JPMorgan said in a note this week.


https://oilprice.com/Latest-Energy-News/World-News/JPMorgan-Oil-Could-Easily-Hit-120-If-Russia-Ukraine-Tensions-Escalate.html

Oil will hit $120 a barrel if Russia invades Ukraine, strategist predicts


In a poll of 5,529 people across seven EU member states at the end of January, the European Council on Foreign Relations found that the majority of people in all surveyed countries believed Russia will invade Ukraine.


https://www.cnbc.com/2022/02/09/oil-will-hit-120-a-barrel-if-russia-invades-ukraine-david-roche.html

1) For CY2022, estimated net production oil and gas for Repsol assets is 17,364 boe/day

2) Estimated Opex/bbl for Repsol assets is around USD 17.83/bbl , which is almost same with North Sabah asset

3) For Q4FY2021, with average realised oil price at USD72.07 per bbl, margin of net profit for North Sabah was 23.0%

4) For Q1FY2022, with average realised oil price at of USD75.00 per barrel, margin of net profit for North Sabah was 24.3%

5) IEA revises up 2022 average oil price assumption to USD79.40 a barrel on Nov 2021

6) Let’s say, for CY2022, Repsol will produce 17,000 boe/d with average realised oil price at USD79.40 per bbl, with margin of net profit 20%

7) Revenue for CY2022 = 17000 x 365 x USD 79.40 x RM 4.1 = RM 2,020 millions

8) Net profit for CY2022 = RM 2,020m x 20% = RM 404millions

9) 50% of Repsol assets is natural gas, which is less profitable if compared with crude oil before the crazy spiking up natural gas price in Europe and Asia

10) It is safe to conclude that Repsol assets will increase net profit of Hibiscus around RM 300m to RM 400m for CY2022

11) It is also safe to predict North Sabah and Anasuria assets will generate net profit around RM 150m to RM 200m with average realised oil price at of USD79.40 per barrel for CY2022

12) The average price-to-earnings ratio (PER) for Oil and Gas industry in Malaysia is around 14 to 16. So what is the PER of Hibiscus for CY2022 ??



IEA revises up 2022 average oil price assumption to $79.40 a barrel

https://www.reuters.com/business/energy/iea-revises-up-2022-average-oil-price-assumption-7940-barrel-2021-11-16/

For circular for shareholders, announced on 13 Dec 2021, I think the most important page was page 174, circular part 1 ( the second last page of circular part 1) :

https://www.bursamalaysia.com/market_information/announcements/company_announcement/announcement_details?ann_id=3218076


These are the few summary of that page:

Free cash flow to repsol, 2P – consolidated—---------174

Estimation of CY 2021
Total net production : 15,198 boe/day
Estimated realised oil price : USD 63 bbl/day
Estimated realised gas price : USD 3.9 / MMbtu
Net revenue : USD 247 millions
Net Opex : USD 99 millions
Net Capex : USD 20 millions
Net Abex : USD 18 millions
Net Opex/bbl : USD 17.85/bbl
Net (Opex + Capex + Abex)/bbl : USD 24.70/ bbl
Net project free cash flows : USD 77 millions


Estimation of CY 2022
Total net production : 17,364 boe/day
Estimated realised oil price : USD 60 bbl/day
Estimated realised gas price : USD 3.7 / MMbtu
Net revenue : USD 271 millions
Net Opex : USD 113 millions
Net Capex : USD 82 millions
Net Abex : USD 15 millions
Net Opex/bbl : USD 17.83/bbl
Net (Opex + Capex + Abex)/bbl : USD 33.13/ bbl
Net project free cash flows : USD 45 millions


Estimation of CY 2023
Total net production : 16,056 boe/day
Estimated realised oil price : USD 58 bbl/day
Estimated realised gas price : USD 3.6 / MMbtu
Net revenue : USD 246 millions
Net Opex : USD 108 millions
Net Capex : USD 13 millions
Net Abex : USD 11 millions
Net Opex/bbl : USD 18.43/bbl
Net (Opex + Capex + Abex)/bbl : USD 22.52/ bbl
Net project free cash flows : USD 81 millions

Total net project free cash flows from CY2021 till CY2023
= 77+45+81
= USD 203 millions

Conclusion : Repsol assets are considered free, by end of CY2023 with average realised oil price around USD 60 / bbl and average realised gas price around USD 4 / MMbtu

@Hoot9e

Entitlement subject: Final Dividend

Entitlement description :Final single-tier dividend of 1.0 sen per ordinary share in respect of the financial year ended 30 June 2021

Ex-Date :03 Jan 2022

Entitlement date:04 Jan 2022

Payment Date:28 Jan 2022




1) The ex-dividend date or ex-date marks the cutoff point for shareholders to be credited a pending stock dividend.

2) To receive the upcoming dividend, shareholders must have bought the stock before the ex-dividend date.

3) On the ex-dividend date, stock prices typically decline by the amount of the dividend.


https://www.investopedia.com/terms/e/ex-date.asp

Got few new informations from EGM which I think is important to share:

1) Still no actual approval date from PetroVietnam. Repsol acquisition cannot be completed without approval from PetroVietnam. It is very complicated and quite impossible to manage the oilfields if Hibiscus wants to exclude assets from Vietnam.

2) Tax reduction PITA 38% to 24% in Budget 2022 is not applicable to all Hibiscus assets, including repsol assets.

3) Repsol assets will triple net production of Hibiscus from 9000 boe/d to 26000 boe/d, but it will not triple the EBITDA. Repsol assets will contribute 60% of total EBITDA, North Sabah will contribute 30% of total EBITDA, and Anasuria Cluster will contribute 10% of total EBITDA. That means natural gas is less profitable if compared with crude oil.

I am more confident and trust the management team after the EGM. They really put the priority on shareholders benefits. Will hold Hibiscus long term

The EGM started at 930am, but they started recording at 830am. So you may enjoy the casino music for 1 hour...lol

EGM livestream video

https://vimeo.com/656465051/d4bbfba6ee?embedded=true&source=video_title&owner=129682195

@Windy1974

Agree with you. I also lost pants and underwear by using technical analysis and trading short term.

Nowadays, I always advised my friends and relatives as below if they have interested in investment.

Investment strategy : How to become financial free through stock market investment?

Step 1 : Try to find a way to make a big fund as early as possible, may be at least RM 300,000. This is the hardest part.

Step 2: Use all your fund to buy a single undervalued stock when the chance comes. Keep it for 3 to 7 years until 3X ,then sell all of them. Your fund should be worth at least RM 1 million. Keep all of these money in FD or bonds, and wait for the second chance.

Step 3: When the second chance comes, use all of your fund to buy a single undervalued stock, keep it for 3 to 7 years then sell it at 3X. Your fund should be worth at least RM 3 million.

Step 4 : Finally, you should diversify all these money in high dividend stocks or REITs which will give at least 5% dividend. That means you will have at least passive income of RM 150,000 every year.

This is a very simple way to help you retire early, but not easy to practise. You need to read a lot and do some research. You need to convince yourself regarding the true intrinsic value of stock.

Jeff Bezos, founder, chairman, CEO, and president of Amazon is the richest man in the world. Once in a meeting with Warren Buffett, he asked America’s most prolific investor, your investment thesis is so simple. You’re the second richest guy in the world, and it’s so simple. Why doesn’t everyone just copy you?”

Warren Buffett responded Jeff by saying, “Because nobody wants to get rich slow.”