Hibiscus is an E&P company and it is hard to get financing by banks. This explained why they tend to get ratings from Moody's Investors Service. The other options for funding is CRPS which has been in progress for Repsol acquisition.
When Hibiscus announce the dividend it is good to promote the CRPS but bad for mother as in:
1 ) Sophisticated investors (Smart money) may exit mother to hunt for CRPS for lower risk and better promised dividend. 2 ) EPS will drop as EPS = (Net Income - Preferred Dividend) / Shares and instinctive value will drop a bit. Valuator based on previous instructive value will exit. 3 ) Market sentiment based on real time Brent oil price as they often forget that Hibiscus already gain profit if the oil price is above 75USD (Based on previous QR)
for 1,2 and 3, price will accumulate the price to downtrend and back to uptrend when they has been washed out as the oil price will keep increased to a prediction at least 90USD
Hibiscus benefits from oil price keep on increasing. Besides, just take note on Hibiscus recent 4 quarterly financial report, its profit also in uptrend manner. Due to global energy shortage and upcoming winter, oil price is unavoidable to go up. When compare with other oil stock like Dayang, Uzma, Armada, etc. Only Hibiscus profits is always in uptrend manner for this recent 4 quarterly financial report. Only Hibiscus profits is directly related to oil price.
Hibiscus share price should be higher than RM1.20.
Sorry, oil price should hit usd90/bbl these 2 weeks n usd100 by Dec. Logically share price should easily be over Rm1.20 by then. But Hibiscus share price movements are illogical. In the end will still move up accordingly if patiently wait for it.
CAIRO/DUBAI (Oct 26): Saudi Aramco said oil-output capacity across the world is dropping quickly and companies need to invest more in production.
It’s a “huge concern,” Chief Executive Officer Amin Nasser said in an interview in Riyadh, Saudi Arabia’s capital. “The spare capacity is shrinking.”
His comments come with crude prices having soared 70% this year to around US$85 a barrel. Many major consumers, including the US, Japan and India, have called on producers to pump more.
The supply deficit in oil markets could worsen in 2022 if the coronavirus pandemic eases and more people fly, he said.
Declining rapidly “If there’s aviation pick up next year, that spare capacity will be depleted,” he said. “It’s now getting to a situation where there’s limited supply — whatever is left that’s spare is declining rapidly.”
Several oil and gas traders have criticized governments and climate activists for calling on companies to stop investing in fossil fuels, saying that will cause shortages of energy in the coming decade.
Aramco, the world’s biggest oil company, is investing billions of dollars to raise its daily capacity to 13 million barrels from 12 million. It expects to complete the project by 2027.
Many Wall Street banks and OPEC+ members doubt there will be supply shortages next year. JPMorgan Chase & Co has said oil markets will shift to a supply surplus of 1 million barrels by March from a deficit of around 1.5 million barrels now.
Saudi Arabia’s energy minister told Bloomberg on Saturday there could be a “huge uplift” in crude inventories in 2022.
“We still have Covid,” Prince Abdulaziz bin Salman said, justifying OPEC+’s refusal to ease deep supply cuts it began last year any faster. “We still have jet fuel limited in terms of growth. If you do more now, you’re accelerating the problem.”
The Organization of Petroleum Exporting Countries and its partners are increasing daily output by 400,000 barrels each month. The 23-nation group, led by Saudi Arabia and Russia, next meets on Nov 4 to decide whether to change strategy.
Big Oil About to Post Highest Cash Flow in 13+ Years
The Western world’s biggest oil companies likely just generated more cash than at any time since the Great Recession, and investors are about to find out what they’ll do with it.
The five supermajors -- starting with Royal Dutch Shell Plc and TotalEnergies SE, who release earnings on Thursday -- will report about $29 billion in free cash flow combined in the third quarter, according to analysts’ estimates compiled by Bloomberg. That would be the most since the beginning of 2008. Strong demand for crude, surging prices for natural gas and chemicals, and a rebound in the refining business are likely to be the main drivers.
An upbeat set of results would help cement a remarkable turnaround after a painful 2020, in which Big Oil was forced to cut costs and employees, shelve spending plans and take on debt.
I am more afraid of Putin than anything else out there. His Nord stream 2 pipeline if approved, could send crude oil price into big correction mode. He may sell out opec+ to gain the approval to pump more natural gas to Europe. That approval may affect energy sector. Just keep an eye out for that. Just a warning.
As i have mentioned above, the pipeline is for transportation of natural gas to Europe. How does that affect crude oil price I believe is your question. Well quite a bit of the recent runup in crude oil price can be attributed to Natural gas price having sky rocketed. That has many industries and power plants switching to crude for their energy needs. The high demand pushed up the price of crude oil even higher together with increasing demand from re-opening of economies from pandemic slowdown. Bear in mind the pipeline is already complete and just waiting for approval to pump gas to European countries. When that approval is obtained, the froth in the natural gas and crude oil prices will quickly disappear. Just my opinion. Also another thing to look out for is Delta plus variant now spreading quite fast in many countries. Russia is going into lockdown Oct 30th to Nov 08. China too is starting to get affected. If travel restrictions start to happen in many countries. the demand for crude oil is going to fall. I am just sharing my view. Please don't panic. Read the information out there and make your own decision. Hibiscus is a good counter. I will invest again in time to come. Cheers!!
I wonder for the past 2 yrs the with the under maintenance and investment, will it be similar to the Palm oil scenario. Those days when CPO price was low, palm oil company defers replanting and reduced the use of fertilizer. This is to control the operating cost as well as capital expenditure to manage the cash flow. That has caused a reduction in the yield and caused it CPO to skyrocket to 5300/ton. Will O&G share the same fate?
KingKong You are right there is under investment in oil sector. Big oil companies are under pressure from western governments and environmental groups to shift investment into green energy. Smaller players such as hibiscus are now taking over some of the assets. It looks like a good investment, the purchase of repsol oil and gas fields. When demand starts to increase and oil price is good, the small players should do well.
From the Investor - Material (Pg 22) : As the Target Group is involved in various legal proceedings, following completion of the Proposed Acquisition, the Group could be subject to liabilities or disputes with respect to such activities which could adversely affect the Group’s financial position and require management attention. Total potential tax liability close to RM 100 million. Please take note.
DragonG, thank you. I missed that. It is an income tax issue. Yes many companies big and small had been hit with additional tax. Tenaga comes to mind. Big sum (tax).
DragonG, further thoughts - the tax issues would not affect the valuation of Repsol purchase, it is a cash-flow issue. And should LDHN wins the case and depending on tax evaluation criteria used by Hibiscus, if similar (to Repsol), Hibiscus would face an additional tax bill too.
This may explain the rather huge proposed Bond quantum of USD 110m (RM 450m) - USD 300m.
Hats up to the management. They are transparent and full disclosure to the public. The Investor Material are 300+ pages but genuine investors should have a look at it.
@zhangzuode - Yes cashflow issue and the management already has a plan to raise cash thru bond if require and not CPRS. The back duty tax not sure if has been provided in the accounts or not. If not may impact the bottom line post acquisition.
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https://oilprice.com/Latest-Energy-News/World-News/Oil-Prices-Could-Explode-As-US-Largest-Storage-Hub-Nears-Empty.html