Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hibiscus Petroleum Bhd (XKLS:5199, Financial) reported a 22.3% increase in quarterly revenue, reaching MYR738 million, and a 15.8% year-on-year increase, totaling MYR2.7 billion for fiscal year 2024.
- The company declared a fourth interim single-tier dividend of MYR1.57 per share, contributing to a total of MYR0.075 per share for the fiscal year.
- Hibiscus Petroleum Bhd achieved a significant milestone by selling 7.85 million barrels of oil equivalent for the full year, surpassing their guidance of 7.5 million to 7.8 million barrels.
- The company announced strategic acquisitions, including a 37.5% stake in Block B MLJ Field in Brunei and a PSC award for the PKNB Cluster in Malaysia, enhancing their asset portfolio.
- Hibiscus Petroleum Bhd maintains a strong financial position with a low debt-equity ratio of 0.12 times and a cash balance exceeding MYR200 million as of June 30, 2024.
Negative Points
- The average production decreased slightly quarter-on-quarter due to maintenance activities, with quarterly production at 20,144 barrels of oil equivalent per day.
- Unit operating expenses increased significantly due to planned maintenance activities, particularly in North Sabah and Peninsula Malaysia.
- The company took an impairment charge of MYR61 million in the Kinabalu PSC due to lower oil prices and operational challenges.
- Hibiscus Petroleum Bhd's UK asset, Anasuria, faced production challenges due to technical issues, resulting in higher unit operating costs.
- The effective interest rate appeared relatively high, with finance costs increasing to MYR106 million in FY24 from MYR77 million in FY23, despite lower total debt.
Q & A Highlights
Q: With the recent change in government in the UK, do you foresee any implications on the tax rate for your operations there?
A: Chee Yeong Yip, CFO: The proposed changes will be discussed in the upcoming autumn budget. While there are proposals to increase rates by 3% and extend the EPL by another year, these were anticipated and factored into our planning. We have conducted sensitivity tests, and while there will be some impact, the carrying value of our UK assets remains protected.
Q: How will the potential tax changes in the UK affect the Teal West project?
A: Chee Yeong Yip, CFO: We have accounted for these potential changes in our projections for Teal West. The impact is not expected to be significant, and the carrying value of the project remains intact. We are targeting first oil in the second half of next year.
Q: What is the expected sales volume for next year if the Brunei acquisition is excluded?
A: Deepak Thakur, VP of Economics and Business Planning: Without the Brunei asset, we expect sales to be around 7.4 to 7.5 million barrels of oil equivalent, similar to this year's figures.
Q: Can you explain the increase in finance costs despite lower total debt compared to last year?
A: Deepak Thakur, VP of Economics and Business Planning: The finance cost includes both interest expense and unwinding of discount. The actual interest expense increased due to a higher outstanding amount of the term loan throughout FY 2024, despite no change in the interest rate.
Q: What is the guidance for CapEx next year, and how will it affect dividend payouts?
A: Deepak Thakur, VP of Economics and Business Planning: The CapEx guidance for FY 2025 is USD262 million, primarily for Teal West and SF30. We do not plan to raise equity for this CapEx, and if crude prices remain stable, we aim to maintain or potentially increase dividends.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
