Posted by JayC > 2018-09-02 17:02 | Report Abuse

you are a very good analyst. TQ for your insight

Posted by cheoky > 2018-09-02 17:49 | Report Abuse

Rated as sell. Drilling expected to hit rock instead of oil. Intangible shall vaporized

Posted by Up_down > 2018-09-02 17:52 | Report Abuse

The article is informative. It’s rather confusing when the writer used EBITD to calculate EPS. No matter how, we have to use projected PAT for computation of EPS.

Posted by Larrytrader > 2018-09-02 18:17 | Report Abuse

good written

Posted by BenPg > 2018-09-02 18:28 | Report Abuse

Any reason why Hibiscus fell 14sen on the eve of Merdeka? Why the panick selling?

Posted by lloydlim > 2018-09-02 19:00 | Report Abuse

Suddenly a lot of bloggers giving buy call, helping big boss for distribution?

Posted by Up_down > 2018-09-02 19:12 | Report Abuse

Bear in mind, North Sabah may have to pay export duty of 10% for petroleum crude oil export from Malaysia plus Income tax levied on PSC is 38%.

Posted by Up_down > 2018-09-02 19:17 | Report Abuse

North Sabah segment
For every 10% increase in crude oil price, the company may have to pay 4.42% of Export duty plus Income Tax. In the end the company can only enjoy 5.58% extra profit from every 10% increase in selling prices.

Posted by JayC > 2018-09-02 20:55 | Report Abuse

oil price 75 - opex per barrel USD 15 = USD 60 - USD 10 (for admin/miscellaneous cost) = USD 50 x 55.8% = USD 27.9

USD 27.9/75 = 36% profit margin

that is exactly the same profit margin pbb and alliance DBS forecasted

Posted by JayC > 2018-09-02 20:57 | Report Abuse

over a year

5500+3000= 8500 x 360 days x 4 exc rate x USD 75 = 918m

918m X 36% profit margin = 330m per annum

Posted by Up_down > 2018-09-02 21:16 | Report Abuse

Reality is cruel. The actual margin from Profit After Tax (North Sabah) is rather low at current crude oil prices unless we are expecting crude oil prices to surge another 20 to 30%.

Posted by stockmanmy > 2018-09-02 21:37 | Report Abuse

Hibiscus is good training ground for aspiring analysts / accountants....Ground where many of the them will be buried.



qqq3 hibiscus.....lets say, analyst very good...do a good cash flow projection.....buy or don't buy?...u still got a $ 1 billion intangible assets.....hundreds of million of provisions.....and 1. 6 billion shares to support......what I am saying is......this Hibiscus will show huge cash flows in future years....but all is a return of capital , not real profits....the last thing to do is PE...PE not a fair tool....but, market may use PE...so very confusing one.
qqq3 depleting asset with huge intangibles.....and hundreds of millions of liabilities at the end of it.

qqq3 PE ratio is for companies with hhuge terminal vallues at the end of valuation period.

this one got huge liabilities woh.

qqq3 PE ratio is for companies with huge terminal values at the end of valuation period.

this one got huge liabilities woh...............interesting to read the kind of mistakes analysts will do with this company....go la...go do Hibiscus....
u can make a name for your self if u go do a proper valuation on Hibiscus....what is it really worth based on current oil reserve.

Posted by stockmanmy > 2018-09-02 21:41 | Report Abuse

what is it really worth based on current oil reserve.

oil in the ground is carried in the Balance Sheet under intangibles...this needs to be charged out to PL later.

the bigger the intangibles at merger accounting date, the bigger the negative goodwill.......Big negative goodwill just means the oil in the intangibles carried at higher figure.

Posted by OrlandoOIL > 2018-09-02 21:52 | Report Abuse

stockmanmy qqq3 one idiot

Posted by qqq3 > 2018-09-02 21:59 | Report Abuse

orlando.....when u understand what I wrote....then u can achieve enlightenment.

Posted by qqq3 > 2018-09-02 22:00 | Report Abuse

what is it really worth based on current oil reserve. ?

oil in the ground is carried in the Balance Sheet under intangibles...this needs to be charged out to PL later.

the bigger the intangibles at merger accounting date, the bigger the negative goodwill.......Big negative goodwill just means the oil in the intangibles carried at higher figure.

Posted by qqq3 > 2018-09-02 22:07 | Report Abuse

since they do fair value merger accounting and shows u an NTA of 63 sen.....the oil in the ground is valued at a certain value in the Balance Sheet as intangible assets.....

a quick and easy valuation is......buy if market price is at a discount to 63 sen........lol.

Posted by OrlandoOIL > 2018-09-03 07:51 | Report Abuse

Postedby OrlandoOIL > Aug 30, 2018 05:26 PM |Report Abuse X

negative goodwill may n wil increase d cost of production in future



Tis point I highlighted it earlier thn u

U probably copied me


But u stil got it wrong overall

Posted by teoct > 2018-09-03 12:09 | Report Abuse

@up_down, thank you for your comment on EPS derived from EBITD. It actually included depreciation and amortization and I have corrected the table.

Reason why I am just looking at just EBIT is because I wanted to check the performance of the management with regards to activities that produces CASH only.

And taxes was excluded because UK and Malaysia tax on oil & gas companies are very different and I am not a tax expert and how well this is managed by management is not so important as oil production and cost of production.

Also, government will try to tax progressively (that is encourage investment activities) rather than regressive (that is discourage investment) more often than not. Otherwise, why invest (CAPEX) to get more oil out of the ground if the gain is so low (after tax that is). Nonetheless, your tax computation maybe correct or not - this I will leave it to tax expert.

Have a good week ahead.

Posted by teoct > 2018-09-03 17:10 | Report Abuse

@stockmanmy, @qqq3, @OrlandoOIL, thank you all for commenting. Yes, the oil (& gas) reserves are intangible assets for obvious reason. Nothing to be fearful about. And like fixed assets (equipment and the likes) are depreciated. For intangible assets it is called amortized. For 2017, the amortization is RM46.5m while 2018 is RM58.2m, that is about RM 41 (USD 10.30) for every barrel sold.

The implied intangible assets "will turn to liabilities", I am not sure how this come about. The non-current liabilities of decommissioning is normal while differed tax is also normal in the cause / course of doing business.

Obviously to be able to buy Hibiscus below 63 sen now would be out of this world. With the Anasuria Cluster reserve upgrade, the book value is already about 90+ sen (rough calculation). So today price of RM 1 gives a price to book of 1.11

Royal Dutch Shell price to book is 1.376 (31/8/18) while Exxon is 1.8. OK, Hibiscus is a very small company, so 1.11 is fair?!?

Mr. Google says that valuation of oil companies uses price to cash flow. Now I had a quick look and concluded that just 2 years of oil production is not long enough for this valuation.

Still at the end of the day, Hibiscus is a young company (don't forget they had blown RM 200+m over exploration and still debt-free), so keeping an eye over the cash producing part of the business (i.e. get the oil out and sell it) is the way forward and that is what I have done to see how efficient this is being carried out.

With the higher revenue, investment can be made to improve productivity as well as to add new production within the current two assets. To buy new production asset (at Anasuria / N Sabah kind of prices) cheap, well the window has closed. Now is to quickly do the maintenance or drilling, etc. while it is still at reasonable cost before everyone wants to do it and fight over the limited resources.

So in financial year 2019, barring any catastrophe, production should be 3.6 million barrels, a 2.6 time more than 2018, EXCELLENT (please tell me which other companies can do this), and the world is willing to pay more for the oil!

Have a good week all.

Posted by teoct > 2018-09-03 20:24 | Report Abuse

The company just announced (@5+pm, check Bursa) that the side-track drilling at Anasuria Cluster is completed. Rig is being de-mob now. Flow test showed 4750 bpd, net to Hibiscus is 2375 bpd. This is extremely good news.

As the announcement mentioned, different choke size will be tried (how wide the tap is open) to ensure smooth flow by the end of this week.

Need to re-look into my (production) estimate now.

Posted by OrlandoOIL > 2018-09-04 07:56 | Report Abuse

Reserve report wit more reserve released b4 qtr 4 result but tell me where did u see d NTA increased to 90+ in d qtr 4 report??



So misunderstood tis Intangible Asset




With the Anasuria Cluster reserve upgrade, the book value is already about 90+ sen (rough calculation).

Posted by paperplane > 2018-09-04 08:10 | Report Abuse

Seems like prospect super good

Posted by teoct > 2018-09-04 09:17 | Report Abuse

@OrlandoOIL. The Anasuria Cluster reserve upgrade was dated 1/7/18; thus the new valuation of USD 401 m (2P) will take effect in Q1 '19 compared with previous valuation of USD 208 m (June 2016). Thus the increased value of USD 193 m (RM 772m) and deduct "this" and "that" (being conservative), let say use only RM 540m/shares issued = 0.33

So add to 0.63 (from Q4 '18, this only included the -ve goodwill of North Sabah) gives 0.96 (it should be more I think).

Hope this explained. Really appreciate your query, so we all learn along the way.

Posted by OrlandoOIL > 2018-09-04 10:29 | Report Abuse

If u mean d nta in d account wil go up due up in reserve I can say u r wrong

Posted by OrlandoOIL > 2018-09-04 10:32 | Report Abuse

OMG it seems I OrlandoOil is d only one who know what is d intangible assets in Hibiscus account

Posted by teoct > 2018-09-04 11:46 | Report Abuse

@OrlandoOIL, ok if you say so. Most grateful if you will teach me what goes into the intangible assets and how the recent Anasuria reserve upgrade be accounted for.

Thank you very much.

Posted by OrlandoOIL > 2018-09-04 12:36 | Report Abuse

It is ok that u don't know cos d intangible here is quite a concept

Tis accountant stockmanmy qqq3 oso obviously don't know

Ask n see if tat young accountant Jon fella if he know or not?

Posted by teoct > 2018-09-04 12:56 | Report Abuse

OrlandoOIL, oh, what a shame. I was looking forward to learning from a Master.

Posted by OrlandoOIL > 2018-09-04 12:59 | Report Abuse

I hv d answer

Jz want to c if tat Jon fella knows onot

Posted by OrlandoOIL > 2018-09-04 13:00 | Report Abuse

Jz try to c if can sweat him a bit