Date / Thu, 13thOct 2016 / Lead Article / -
Headline / Hibiscus Petroleum Unit Buys Stakes In Sabah Shell, Shell Sabah For US$25 Million
Hibiscus Petroleum Unit Buys Stakes In Sabah Shell, Shell Sabah For US$25 Million
KUALA LUMPUR: Hibiscus Petroleum Bhd is buying Shell’s 50% equity interest in the 2011 North Sabah EOR Production Sharing Contract (PSC) for US$25 million.
Hibiscus said its wholly-owned subsidiary, SEA Hibiscus Sdn Bhd, inked an agreement with Sabah Shell Petroleum Company Limited and Shell Sabah Selatan Sdn Bhd to acquire the 50% interest. The remaining 50% interest in the PSC is held by Petronas Carigali Sdn Bhd.
In a filing with Bursa Malaysia, Hibiscus said the US$25 million excludes post completion adjustments and reimbursement to Shell.
Shell’s interest also includes operatorship responsibilities which would transfer from Shell to the SEA Hibiscus through a transfer of operatorship programme, it said.
The PSC encompasses the Labuan Crude Oil Terminal (LCOT), and the fields of St Joseph, South Furious, SF30 and Barton, all located offshore Sabah.
Hibiscus said the purchase is expected to be funded through internally-generated funds, as well as external financing or credit facility.
“This acquisition is in line with the growth strategy of the Group to invest in profitable development and producing business operations in our identified core geographical areas of interest,” said Hibiscus managing director Dr Kenneth Pereira.
“It also provides the group with immediate access to proven and probable oil & gas reserves with future potential upside,” he added in a statement.
The fields are reported by independent technical valuer RISC Operations Pty Ltd to be producing over 16,000 barrels of oil a day, and have an estimated remaining developed reserves of 62 million barrels as of April.
The PSC has production rights until 2040. Once resources are channelled towards future development opportunities already identified by Shell, the incremental resources which may be exploited is estimated to be up to 79 million barrels.
Hibiscus said the acquisition is expected to complete in 2017, subject to obtaining regulatory approval from Petroliam Nasional Bhd (Petronas) and consent from Petronas Carigali.
Meanwhile, Shell said in a statement that the transaction is part of its review of its upstream portfolio, to focus on acreage positions that hold or can reach the scale required.
It added that Malaysia continues to be an important country for Shell, and that its Sabah portfolio is contributing significantly to Malaysia’s economy through deep-water projects, like Gumusut-Kakap and Malikai.
Hibiscus shares jumped 10.42% to 26.5 sen today. The counter topped the active list on Bursa Malaysia, with 138.8 million shares exchanging hands. It had a market capitalisation of RM371.7 million.