TIDMPOL
RNS Number : 2766U
Polo Resources Limited
21 November 2019
This announcement contains inside information as defined in
Article 7 of the EU Market Abuse Regulation No 596/2014 and has
been announced in accordance with the Company's obligations under
Article 17 of that Regulation.
21 November 2019
Polo Resources Limited
("Polo" or the "Company")
HIBISCUS PETROLEUM - INVESTMENT UPDATE
Polo Resources Limited (AIM: POL), the multi-sector investment
company with interests in oil, gold, coal, copper, phosphate,
lithium, iron and vanadium, notes that its 8.75% investee company
Hibiscus Petroleum Berhad ("Hibiscus") has announced today a
Corporate and Business Update (the "Update") outlining the
company's targets and initiatives as well as operational updates in
conjunction with the release of its quarterly financial results for
the period ended 30 September 2019 ("Q1 FY2020"). In the Update,
Hibiscus stated that it is positioning for growth through further
acquisitions of producing assets particularly in Southeast Asia.
Hibiscus expects high-quality acquisition opportunities will be
emanating in Southeast Asia as the fields in the area mature and
established players look to review their portfolios.
Hibiscus believes it is in a strong position for growth as it
continues to build its technical capability and track record as a
capable operator, having received awards and recognition from
industry bodies and regulators for operational and safety
performances. In addition, its aggressive production enhancement
programme in 2019 to drill nine wells in Malaysia and the United
Kingdom combined, demonstrates Hibiscus' commitment towards growing
its business in these areas.
On the back of these newly drilled wells, Hibiscus is targeting
to deliver 3.3 to 3.5 million barrels ("bbls") of oil in FY2020,
which is up to 16% higher than the actual oil delivered in FY2019.
With the current and future enhancement projects across both North
Sabah and Anasuria assets, together with potential production from
new acquisitions, Hibiscus aims to achieve its 2021 Mission of
20,000 bbls of oil production per day.
For its 1Q FY2020 results, Hibiscus announced revenue and profit
after tax of RM159.3m (USD38.21m) and RM16.2m (USD3.89m)
respectively, from the sale of 0.6 million barrels of oil. Earnings
before interest, taxes, depreciation and amortisation ("EBITDA")
for the period was RM77.1m (USD18.49m) with a strong EBITDA margin
of 48.4%. Overall, despite a softer oil market and the effects of
higher maintenance activities in the quarter, Hibiscus remained
profitable.
Hibiscus is still debt-free, and its unrestricted cash balance
was RM179.4m (USD43.03m) as at 30 September 2019.
Commenting on the outlook for Hibiscus, Managing Director, Dr
Kenneth Pereira, said, "We have clearly established our 2021
Mission and the Group as a whole is actively working towards
achieving it. By 2021, existing assets are expected to deliver
12,000 barrels of net oil per day. We will close the gap with an
acquisition. We will be extremely selective and will only invest in
assets that we believe will generate strong positive cashflows.
The Corporate and Business Update covers the following:
-- an overview of targets and key initiatives being pursued by the Management of Hibiscus;
-- a brief review of key operational initiatives and business
achievements by Hibiscus Petroleum during the calendar year
2019;
-- and an operational update for the First Quarter of Financial
Year 2020 ended 30 September 2019.
Highlights
Hibiscus is positioning for further acquisitions of producing
assets with a focus on adding to its existing portfolio in
Southeast Asia;
-- Hibiscus is maintaining its 2021 target for:
o the Anasuria asset to deliver 5,000 bbl/day;
o the North Sabah asset to deliver 7,000 bbl/day;
o Hibiscus is also maintaining its target for the final Field
Development Plan for the Marigold development to be secured by the
end of 2020; and
o Hibiscus has been recognised for operational, safety and
business performances in Malaysia and the United Kingdom.
Management Targets and Key Initiatives
Production
The company's key target for the current financial year ending
30 June 2020 is to deliver approximately 3.3 to 3.5 million bbls of
oil, safely and efficiently from its two producing assets.
Cost Management
Hibiscus' business performance is underpinned by several
factors, predominantly the price of the Brent crude oil benchmark
at approximately the time of a scheduled offtake from its crude oil
storage facilities. Hibiscus has seen oil prices at various price
levels, on some occasions lower and at other times, higher than at
the current time, but the company has managed to remain profitable
throughout these fluctuations. The careful management of costs to
maintain low operational expenditure and the successful execution
of production enhancement projects are, therefore, key towards
achieving low unit production costs and the continued delivery of a
healthy EBITDA. Prudent cost management will remain a priority
business initiative.
Fundraising
The company's activities and acquisitions to-date have been
funded with equity and internally generated funds. Over the course
of the next six months, Hibiscus anticipate that it shall undertake
certain fundraising activities to ensure that projects and
opportunities that company has in hand, which are expected to
enhance production and create value, may be executed smoothly.
Hibiscus currently has no debt and is in a position to gear up
to a conservative level as the need arises. Based on Hibiscus'
projected activities, the company envisage that some borrowings may
be required and is currently considering various debt options that
are on offer, bearing in mind factors such as long term capital
requirements, preference for Hibiscus to maintain a certain level
of agility and financial flexibility and overall weighted average
cost of capital, etc. Hibiscus shall make the relevant disclosures
as its plans mature.
Mission (2017 - 2021)
Delivery of the company's 2021 Mission is foremost in mind.
There are two elements to the company's 2021 Mission:
-- to secure assets with proven and probable (2P) Reserves of 100 million barrels; and
-- to deliver a daily production of circa 20,000 bbls per day of oil or oil equivalent.
Identified projects within the company's two producing assets
should provide a production platform of approximately 12,000 bbls
of oil per day by 2021. The gap to achieve the company's target of
20,000 boe/day could be materially reduced by either:
-- acquisition of a producing asset on a selective basis in, or
around areas of geographic focus; or
-- development of Marigold and Sunflower fields in the United Kingdom (UK) to first oil.
Acquisition of a Producing Asset
Successful acquisition of an appropriate producing asset will be
dependent on the company's ability to identify and deliver superior
value from the target that it pursues. Hibiscus believes that:
-- There will be high quality opportunities emanating in
Malaysia and the surrounding countries as the fields in the area
mature and established players review their portfolios; and
-- Climate change activism will cause some large companies to
review their portfolios and choose to exit assets in which they
have large exposure to carbon emissions. Again, this type of
approach may cause new opportunities to come to market.
Marigold and Sunflower Development
For the next twelve months, the company's goal remains to high
grade the contingent resources of the Marigold and Sunflower
discovered fields into producible 2P Reserves through the
preparation of a Field Development Plan.
Key Operational Initiatives and Business Achievements: Calendar
Year 2019
Operational Initiatives
Major operational activities carried out during calendar year
2019 include the following:
Malaysia South China Sea - North Sabah Production Sharing
Contract ("North Sabah PSC")
Hibiscus has successfully planned, executed and completed its
first development project which involved the drilling of three
infill wells in the Saint Joseph field. Hibiscus is now also at the
tail-end of its second development project which involves the
drilling of three infill wells in the SF30 field. In parallel,
drilling activities have commenced on the company's third
development project which involves the drilling of a water
injection well in the SF30 field as part of a wider waterflood
development strategy in this field.
The net oil production rate is now, as recorded in October 2019,
approximately 6,200 barrels per day. When Hibiscus assumed the role
of Operator of this asset in April 2018, the net oil production
rate recorded in March 2018 was approximately 5,700 barrels per
day. From preliminary data obtained, Hibiscus has seen a net
increase in production, demonstrating that the company has been
successful in arresting natural decline and enhancing
production.
United Kingdom North Sea: Anasuria Cluster
Hibiscus completed two major projects this year in the United
Kingdom Continental Shelf ("UKCS"). In August 2019, the company
completed the planning and execution of the GUA-P1 side-track
project which involved the drilling of a side-track from the
existing GUA-P1 well to drain additional volumes of oil and gas.
The well commenced production in September 2019. The final scope of
this project which entailed installing a gas-lift jumper to enhance
production, was conducted as part of a diving campaign in October
2019.
Hibiscus believes that new data, obtained from drilling this
well, will allow the company to reset its geological model of the
Guillemot field after a wider and more detailed subsurface study.
Hibiscus looks forward to such work resulting in further value
accretion of the asset.
The Cook Water Injection project was another major capital
project that was implemented this year. The Cook field Operator
completed the drilling of the water injection well in May 2019.
Subsequently, the installation of subsea facilities to connect the
well to the Anasuria FPSO to allow the injection of water was
completed in October 2019. In drilling the water injection well,
the reservoir pressure at the injection well location was found to
be as predicted. Additionally, the oil water contact is deeper than
originally anticipated. The implication of a deeper oil water
contact is positive and is anticipated to increase the company's 2P
Reserves of the Cook field.
Business Achievements
Major business achievements include the following:
Safety Awards
Hibiscus received the following safety awards and achievements
over the course of 2019:
-- Malaysia South China Sea - North Sabah Operations
o Gold Class 1 Award from the Malaysian Society for Occupational
Safety and Health ("MSOSH") for calendar year 2018 operations under
the category of Petroleum, Gas, Petrochemical & Allied Sectors
for the St Joseph Platform.
-- United Kingdom North Sea - Anasuria Cluster Operations
o Gold Award from the Royal Society for the Prevention of
Accidents ("ROSPA") for calendar year 2018 health and safety
performance of the Anasuria Floating Production Storage and Offtake
("FPSO") facility - 20th consecutive annual award.
o Order of Distinction from ROSPA for 20 consecutive Gold
Awards.
o Five years without a Lost Time Incident on the Anasuria FPSO
achieved on 6 October 2019.
Operational Awards
Hibiscus also received the following awards for operational
performance over the course of 2019:
-- 2018 Production Delivery Award from Petroliam Nasional Berhad
("PETRONAS") for "Outstanding achievements and continuous
contribution towards the oil and gas development and production in
Malaysia Field", and
-- Focused Recognition Award from PETRONAS for Demonstrating
prudent Deferment Management of the North Sabah PSC which "Ensured
the highest standards of Asset Integrity and ensuring successful
collaboration with PETRONAS to meet Deferment Management WPB
targets in 2018 and 2019".
Capital Markets
Hibiscus was included in the MSCI Global Small Cap Index as of
30 November 2018. Following on from this, Hibiscus is pleased to
also be included in the FTSE Bursa Malaysia Mid 70 Index from 24
December 2018. These index inclusions represent significant
milestones in management's efforts to institutionalise Hibiscus'
shareholder base. As of 31 October 2019, approximately 47.2% of the
company's shareholder base is comprised of corporate and
institutional shareholders of which approximately 21.1% are foreign
institutional shareholders.
Being a pure play E&P player in the oil and gas industry,
the company's revenue and profit generation are dependent on the
price of oil hence the company's share price is also highly
correlated to the oil price.
Operational Update for the First Financial Quarter Ended 30
September 2019
United Kingdom North Sea - Anasuria Cluster: Production
Operations
As of 30 September 2019, the company's indirect wholly-owned
subsidiary, Anasuria Hibiscus UK Limited ("Anasuria Hibiscus UK")
has been involved in the joint operations of the Anasuria asset for
over three years. The table below shows the operational performance
achieved by the asset, based on Anasuria Hibiscus UK's 50%
participating interest, for the Current Quarter, as well as for the
prior three financial quarters:
July to April to January October
Units September June 2019 to March to December
2019 2019 2018
Average uptime % 77 87 71 94
----------- ------------- ---------------- ------------- ---------------
Average daily oil
production rate bbl/day 2,386 2,662 2,504 3,962
----------- ------------- ---------------- ------------- ---------------
Average daily gas
export rate @ boe/day 204 390 274 454
----------- ------------- ---------------- ------------- ---------------
Average daily oil
equivalent production
rate boe/day 2,589 3,053 2,778 4,416
----------- ------------- ---------------- ------------- ---------------
Total oil sold bbl 272,345 302,139 249,116 274,015
----------- ------------- ---------------- ------------- ---------------
Total gas exported
(sold) mmscf 112 390 148 251
----------- ------------- ---------------- ------------- ---------------
Average realised oil
price USD/bbl 58.41 66.84 60.39 58.08
----------- ------------- ---------------- ------------- ---------------
Average gas price USD/mmbtu 1.04 / 2.52 1.42 / 3.39 2.63 / 5.98 3.22 / 7.25
(#) (#) (#) (#)
----------- ------------- ---------------- ------------- ---------------
Average OPEX per boe USD/boe 26.04 20.93 23.27 15.05
----------- ------------- ---------------- ------------- ---------------
Figure 1: Operational performance for Anasuria.
Notes to Figure 1:
@ Conversion rate of 6,000 standard cubic feet ("scf") per boe.
For Cook field.
# For Guillemot A, Teal and Teal South fields. boe - bbl of oil equivalent.
mmscf - million standard cubic feet. mmbtu - million British
thermal units.
The average uptime and average daily oil equivalent production
rate at the Anasuria asset achieved for the Current Quarter of 77%
and 2,589 boe per day is lower than that of the Preceding Quarter.
One crude oil offtake was conducted at Anasuria in August 2019, in
which 272,345 bbls of oil net to Anasuria Hibiscus UK was sold at
an average realised oil price of USD58.41 per bbl. The average OPEX
per boe in Anasuria for the Current Quarter was USD26.04 per boe,
higher than USD20.93 per boe in the Preceding Quarter.
Operational performance for the Current Quarter was affected by
several one-off activities such as the planned replacement of
critical machinery and the planned 2019 Offshore Turnaround which
commenced at the end of June 2019 and subsequently completed in
July 2019. During this period the FPSO facilities were completely
shut down to allow for planned maintenance activities to be carried
out to improve performance and to ensure that Hibiscus continues to
provide a safe workplace for its offshore personnel.
To recap, a similar programme was conducted in 2017 for one
month ("2017 Offshore Turnaround"). Subsequent to the conduct of
the 2017 Offshore Turnaround, the average uptime recorded for each
quarter of the 2018 calendar year was as follows:
Units January to April to July to October to
March 2018 June September December
2018 2018 2018
Average uptime % 82 94 88 94
------- --------------- ---------- ----------- -----------
It is hoped that subsequent to the conduct of the 2019 Offshore
Turnaround, average uptime levels will be maintained or further
improved for the financial year ending 30 June 2020.
In the Current Quarter, Anasuria Hibiscus UK invested
approximately RM66.6m (USD15.97m) in capital expenditure in the
Anasuria Cluster which is primarily attributed to two production
enhancement projects. The first project is the Cook WI project
which was executed by Ithaca Energy UK Limited ("Ithaca"), the
operator of the Cook field. The first phase of this project - which
entailed the drilling of the water injection well - commenced early
in the financial quarter ended 31 March 2019 and was completed on
25 May 2019. The next phase of connecting the water injection well
to the Anasuria FPSO was subsequently completed on 3 October
2019.
The second project which has significantly contributed to the
capital expenditure invested in the Current Quarter is the drilling
of GUA-P1 ST. This project commenced execution in May 2019 and was
completed in August 2019.
United Kingdom North Sea - Anasuria Cluster: Cook Water
Injection Project Update
Anasuria Hibiscus UK together with its partners in the Cook
field had, in May 2018, sanctioned the Cook WI project. Ithaca is
the operator of the Cook field. This project involved the drilling
of a water injection well into the Cook field to increase its
reservoir pressure. It is expected that an increased reservoir
pressure will result in an improved oil and gas production rate as
well as an improved recovery of hydrocarbons from this field.
The execution of the water injection well drilling operations
commenced on 25 March 2019. The well was drilled to a total depth
of 13,045-ft measure depth (-12,248-ft true vertical depth subsea
("TVDSS")) on 2 May 2019. In drilling the water injection well, the
reservoir pressure at the injection well location was found to be
as predicted. Additionally, the oil water contact is deeper than
originally anticipated. The implication of a deeper oil water
contact is positive and is anticipated to increase its net proven
and probable oil reserves ("2P Reserves") in the Cook field. A
further announcement will be made when the detailed work has been
completed to establish the latest reserves estimates.
The water injection well was completed as planned on 25 May
2019. Subsequently, the installation of a subsea pipeline to link
the water injection well to the Anasuria FPSO was carried out in
the Current Quarter and injection of water into the Cook field
reservoir commenced on 3 October 2019. The total capital
expenditure net to Anasuria Hibiscus UK estimated for this project
is RM61.0m (USD14.63m). Of this amount, RM49.6m (USD11.90m) has
been incurred up to the end of the Current Quarter, with a
remaining RM11.4m (USD2.73m) to be incurred for the rest of
calendar year 2019.
United Kingdom North Sea - Anasuria Cluster: GUA-P1 Side-Track
Project Update
The GUA-P1 ST project is an opportunity to re-enter the existing
GUA-P1 wellbore and drain additional volumes of hydrocarbons from
the Guillemot A field. This project targeted the unlocking of
approximately 1.7 million bbls of oil from Anasuria Hibiscus UK's
current net 2P Reserves. Operations on GUA-P1 ST commenced with the
Stena Spey drilling rig being mobilised to location and deploying
anchors on 17 May 2019.
On 28 July 2019, the well reached a total depth of 11,615-ft
measured depth and encountered approximately 445-ft TVDSS of
oil-bearing sands with a net pay of 190-ft TVDSS in the targeted
reservoirs of the Guillemot A field. The relevant hydrocarbon
bearing zones were perforated on 16 August 2019. The well was
subsequently cleaned-up and hydrocarbons were flowed to surface at
the end of August 2019. The well achieved a stabilised gross
production flow rate to the Anasuria FPSO of approximately 1,800
bbls per day (900 bbls per day net to Anasuria Hibiscus UK).
Whilst the well has commenced production, the final scope of
this project to install a gas-lift jumper to enhance production was
conducted as part of a diving campaign executed in October 2019.
The total capital expenditure net to Anasuria Hibiscus for this
project is estimated to be RM97.7m (USD24.43m). Of this amount,
RM93.3m (USD22,38m) has been incurred up to the end of the Current
Quarter, with a remaining RM4.4m (USD1.06m) to be incurred for the
rest of calendar year 2019.
United Kingdom North Sea - Marigold Cluster
On 17 October 2018, Hibiscus announced that its indirect
wholly-owned subsidiary, Anasuria Hibiscus UK, had completed the
transaction to acquire a 50% interest in the UK Continental Shelf
Petroleum Production Licence No. P.198 Block 15/13a and Block
15/13b (collectively referred as "Blocks") from Caldera Petroleum
(UK) Ltd for a purchase consideration of USD37.5 million. The
Blocks are located offshore, in 140 meters water depth, in the UK
sector of the North Sea, approximately 250km northeast of
Aberdeen.
On 7 October 2019, Hibiscus announced that Anasuria Hibiscus UK
had signed a conditional Sale and Purchase Agreement ("SPA") to
acquire 100% interest in Blocks 15/18d and 15/19b (Licence No.
P2366).
Hibiscus has defined the Marigold Cluster to currently include
the following licenses (and fields):
-- P198 - Block 15/13a (Marigold Discovery);
-- P198 - Block 15/13b (Sunflower Discovery); and
-- P2366 - Blocks 15/18d and 15/19b (Crown Discovery).
Block 15/13a contains a significant oil-bearing discovered field
("Marigold"), whilst Block 15/13b which lies northeast of Block
15/13a contains a smaller discovered field ("Sunflower"). Based on
an independent report by AGR TRACS International Limited (which was
conducted as part of the due diligence exercise to acquire the
Blocks in October 2018), 2C Resources in the Blocks is estimated to
be 60.0 million bbls of oil (30.0 million bbls of oil net to
Anasuria Hibiscus UK).
Hibiscus was appointed Exploration Operator of Licence P198,
Blocks15/13a and 15/13b effective 12 February 2019 and ahead of the
31 March 2019 target date set by the UK Oil and Gas Authority
("OGA"). A dedicated project team, located in Kuala Lumpur with a
modest presence in Aberdeen, Scotland, has been established. The
project team has been tasked to conduct the subsurface field
development engineering studies and, with the support of
third-party contractors, execute the concept select phase as part
of the effort to establish a field development plan for Marigold
and Sunflower by the end of calendar year 2020. Development options
that have been considered include a fixed platform, a floating
solution, as well as a tieback to existing, nearby infrastructure
solutions.
Thirty-four development scenarios were studied to determine the
optimum solution for development of the Marigold and Sunflower
resources and select the concept that provided the best balance of
cost, value and risk. The selected concept is to drill and complete
subsea wells that are tied back to a Floating Production Storage
and Offloading unit ("FPSO") via flexible flowlines and umbilicals.
This concept provided the highest project value with the lowest
execution and commercial risk. It will also facilitate a phased
development approach to further mitigate project risks. The project
is expected to proceed in two phases to mitigate subsurface
uncertainties and minimise capital outlay required to achieve first
oil production.
It is anticipated that in phase 1 of the development, three
Marigold wells will be drilled, completed and tied back to the FPSO
via a production manifold. Additional wells in Marigold, along with
wells in the Sunflower discovered field and the recently acquired
Crown discovered field (pending acquisition completion), could be
developed in a second project phase. It is envisaged that wells in
these fields will also be tied back to the FPSO.
On 7 October 2019, Hibiscus announced that Anasuria Hibiscus UK
had signed a conditional SPA to acquire 100% interest in Blocks
15/18d and 15/19b (Licence No. P2366) from United Oil and Gas Plc
("United") and Swift Exploration Ltd. ("Swift") for a total cash
consideration of up to USD5.0 million, to be paid based on a
combination of a series of milestones and an overriding royalty
scheme ("Proposed Acquisition").
Licence No. P2366 is located offshore in the UK sector of the
North Sea, approximately 250km northeast of Aberdeen and 12km
southeast of the Marigold field, and includes the Crown discovered
field which consists of 2C Resources of between 4 to 8 million bbls
of oil, subject to an independent third-party expert's
assessment.
The rationale for this transaction is to secure the opportunity
to aggregate 2C Resources (from the Crown discovery) at a
competitive unit cost per barrel and integrate these contingent
resources as part of the Marigold area-wide development with the
objective of reducing overall unit development and production
costs.
The Proposed Acquisition is subject to the receipt of regulatory
approvals for the assignment of the licence to Anasuria Hibiscus UK
and the appointment of Anasuria Hibiscus UK as operator. If the
conditions have not been fulfilled or waived by the parties by 31
December 2019 (or such later date no later than 31 March 2020 as
the parties may mutually agree), the Proposed Acquisition will be
terminated according to the terms of the SPA. In terms of capital
expenditure, approximately RM2.4m (USD0.58m) has been incurred in
the Current Quarter on progressing activities on the Marigold
Cluster.
A concept select report for the development of Marigold and
Sunflower fields was submitted to the Oil and Gas Authority ("OGA")
on 31 August 2019. A letter of no objection to the selected concept
was issued by the OGA on 15 October 2019.
Malaysia South China Sea - North Sabah PSC: Production
Operations
The table below provides a summary of key operational statistics
for the North Sabah asset, based on SEA Hibiscus' 50% participating
interest, for the Current Quarter as well as for the prior three
financial quarters:
July to April to January October
Unit September June 2019 to March to December
2019 2 2019 2018
Average uptime % 85 94 95 85
--------- ---------------- ------------- ------------- ---------------
Average gross oil
production bbl/day 14,234 14,873 14,651 13,400
--------- ---------------- ------------- ------------- ---------------
Average net oil
production bbl/day 5,138 5,057 4,801 4,958
--------- ---------------- ------------- ------------- ---------------
Total oil sold Bbls 334,613 490,753 578,487 293,624
--------- ---------------- ------------- ------------- ---------------
Average realised
oil price 1 USD/bbl 63.63 72.59 67.87 71.30
--------- ---------------- ------------- ------------- ---------------
Average OPEX per
bbl (unit
production cost) USD/bbl 16.72 13.60 11.77 22.74
--------- ---------------- ------------- ------------- ---------------
Figure 2: Operational performance for the North Sabah asset.
Notes to Figure 2:
1 The average realised oil price represents the weighted average
price of all Labuan crude sales from SEA Hibiscus.
2 Figures for the period July 2019 to September 2019 are
provisional and may change subject to the PSC Statement audit and
that they are pending Petroliam Nasional Berhad ("PETRONAS")'s
review.
The average uptime of the North Sabah production facilities of
85%, achieved during the Current Quarter, is lower when compared to
the Preceding Quarter due to planned shutdowns for maintenance and
infill drilling activities. Consequently, average gross oil
production declined by approximately 4% during the Current Quarter.
Some of the production losses were offset by new crude oil
production from the completion of the St Joseph Infill Drilling
project and continuing production enhancement activities.
One crude oil offtake was conducted in the North Sabah asset in
the Current Quarter with a total of 334,613 bbls of oil net to SEA
Hibiscus sold at an average oil price of USD63.63 per bbl.
Average OPEX per bbl for North Sabah increased to USD16.72 per
bbl when compared to the Preceding Quarter primarily due to lower
production and higher production OPEX from planned maintenance
activities during the Current Quarter.
In terms of capital expenditure, the North Sabah asset incurred
approximately RM91.2m (USD21.87m) (net to SEA Hibiscus) during the
Current Quarter due to the ramp-up of the St Joseph Infill Drilling
and the South Furious 30 Infill Drilling projects, with the St
Joseph Drilling project completed in the Current Quarter. The
company expects capital expenditure to decrease in the next
financial quarter.
Malaysia South China Sea - North Sabah PSC: St Joseph Infill
Drilling
PETRONAS had on 21 December 2018 approved the St Joseph Infill
development plan intended to increase production and reserves of
the St Joseph field. This project entails the drilling of 3 infill
producers utilizing a triple splitter wellhead on the St Joseph
Jacket-A platform with minimal modifications to topside
facilities.
Drilling operations commenced when the rig mobilised to location
on 22 May 2019 and the project completed in August 2019. The three
infill wells reported a combined stabilised flowrate of over 3,200
bbls per day gross, exceeding the company's pre-drill expectations
of 2,600 bbls per day. In addition, this project will add 2.77
million stock tank bbls of gross 2P Reserves to the asset.
Malaysia South China Sea - North Sabah PSC: South Furious 30
Infill Drilling
PETRONAS had on 1 July 2019 approved the South Furious 30 Infill
Drilling project development plan intended to increase production
and reserves of the South Furious 30 field. The total capital
expenditure of allocated for this project of RM126.8m (USD20.41m)
will be shared equally with the company's joint venture partner.
Three wells were spudded from the South Furious Jacket-C ("SFJT-C")
via the remaining conductor slot. The envisaged production from
these wells require minimal topside facilities modifications and
drilling commenced in August 2019.
The company has successfully completed and brought online two
out of the three infill wells planned in the South Furious 30
Infill Drilling project. The first well, SF30-2, was brought online
and produced its first oil on 8 October 2019. The well was tested
at approximately 1,100 bbls per day, with the production choke at
38/64 setting and no indications of water or sand production at
surface. The SF30-2 well is being monitored closely and the
production choke will continue to be gradually increased to
maximise production potential. The second well brought online,
SF30-4, produced its first oil on 26 October 2019. This well be
monitored closely for sand and water production prior to increasing
the production choke to maximum capacity. Drilling and completion
of the third South Furious 30 well is currently in progress.
Hibiscus will disclose the performance of the wells in due
course.
Malaysia South China Sea - North Sabah PSC: South Furious 30
Water Flood Phase 1
PETRONAS had on 17 October 2019 approved the South Furious 30
Water Flood Phase 1 project development plan which entails the
drilling and completion of one infill water injection well intended
for reservoir re-pressurization to scope out the effectiveness of
water injection pressure support as an assessment of the viability
for a full field water injection project. The total capital
expenditure of RM50.7m (USD12.16m) will be shared equally with the
company's joint venture partner. Topside modification was required
and entailed deck strengthening and extension works.
Australia - Bass Strait Cluster
Hibiscus has operatorship of two licenses located in the Bass
Strait of Australia. In addition, the company has a 11.68% interest
in 3D Oil Limited ("3D Oil"), a company listed on the Australian
Stock Exchange ("ASX"). Details and the status of the licences are
as follows:
License Direct Status
Interest
VIC/L31 100.0% Retention Lease application was submitted on
Production 4 December 2019. However, discussions are ongoing
License with NOPTA on whether to maintain the existing
Production License or continue the application
for a Retention License. The decision will
be dependent on the outcome of upcoming discussions
with nearby infrastructure owners on the potential
to tieback the West Seahorse
field.
----------- -----------------------------------------------------------
VIC/P57 75.1% Minimum Guaranteed Work Programme:
Exploration Years 1-3 (March 2018 - March 2021)
Permit * Geological and geophysical studies including
petroleum systems analysis/modelling
* Reprocessing of 230 km(2) of the Northern Fields 3D
seismic data
* Seismic interpretation and depth conversion
The Minimum Guaranteed Work Programme has been
completed and Hibiscus is approximately 2 years
ahead of schedule. Two key prospects have been
identified, the first being Felix, with a best
estimate prospective resources of gross 30
million bbls of oil, and the second being Pointer,
with a best estimate prospective resources
of gross 170 billion cubic feet of gas. A process
to farm out the block for a carry on a well
to be drilled in 2021/2022 commenced in the
Preceding Quarter whereby a data room was put
in place and interested companies assessed
the opportunities. The Group will continue
its efforts to farm-out this permit.
Secondary Work Programme (Optional):
Year 4 (March 2021 - March 2022)
* One exploration well
Year 5 (March 2022 - March 2023)
* Geological and geophysical studies
----------- -----------------------------------------------------------
VIC/P74 50.0% On 26 July 2019, the Group announced that 3D
Exploration Oil has been awarded the VIC/P74 Exploration
Permit Permit in the offshore Gippsland Basin by the
National Offshore Petroleum Titles Administrator
("NOPTA"). VIC/P74 spans an acreage of 1,006
km(2) which is located on the southern side
of the Gippsland Basin. Under the terms of
a pre-bid agreement, the Group has thirty days
to elect to enter into a joint venture with
3D Oil for up to a 50% non-operated interest
in this permit on a ground floor basis. Since
then, the Group has completed farming-in to
VIC/P74 for a 50% non-operated interest. 3D
Oil is currently
undertaking geological and geophysical studies
in this permit.
----------- -----------------------------------------------------------
Financial Performance
Hibiscus' revenue base has grown stronger since the company
completed the acquisition of a 50% participating interests in the
2011 North Sabah EOR PSC on 31 March 2018, to add to the
contribution from the Anasuria Cluster in the United Kingdom, which
has resulted in consistent profitability levels, as clearly
demonstrated in both the Group's earnings before interest, taxes,
depreciation and amortization ("EBITDA") and profit after taxation
("PAT") in each of the most recent five financial quarters.
The careful management of costs to maintain low operational
expenditure and the delivery of production enhancement projects
have been key towards obtaining a low unit production cost
structure. In addition, the company highlights that it continues to
operate without debt.
30 Sep 2019 30 Jun 2019 31 Mar 2019 31 Dec 2018 30 Sep 2018
For the quarter (RM) (RM) (RM) (RM) (RM)
ended
================ =============== =============== ===============
Revenue 159.3m 237.1m 226.1m 165.2m 360.0m
==================== ================ =============== =============== =============== ===============
EBITDA 77.1m 127.1m 115.1m 98.0m 209.2m
==================== ================ =============== =============== =============== ===============
PAT 16.2m 24.7m 55.2m 50.1m 100.0m
==================== ================ =============== =============== =============== ===============
Basic earnings
per share 1.02 1.56 3.47 3.15 6.30
==================== ================ =============== =============== =============== ===============
Figure 3: Highlights from the Company's Profit and Loss
Statement for the last five financial quarters.
As at 30 Sep 2019 30 Jun 2019 31 Mar 2019 31 Dec 2018 30 Sep 2018
(RM) (RM) (RM) (RM) (RM)
================ =============== =============== ===============
Total assets 2,553.2m 2,393.1m 2,222.6m 2,189.4m 2,216.7m
===================== ================ =============== =============== =============== ===============
Shareholders'
funds 1,261.6m 1,237.5m 1,201.4m 1,158.0m 1,114.9m
===================== ================ =============== =============== =============== ===============
Cash and bank
balances 253.1m 273.5m 221.2m 203.8m 302.2m
===================== ================ =============== =============== =============== ===============
Total debt Nil Nil Nil Nil Nil
===================== ================ =============== =============== =============== ===============
Net current assets (30.3m) 80.8m 151.8m 94.0m 226.0m
===================== ================ =============== =============== =============== ===============
Net assets per
share 0.79 0.78 0.76 0.73 0.70
===================== ================ =============== =============== =============== ===============
Figure 4: Highlights from the Company's Balance
The full details of these announcements can be found at
http://www.hibiscuspetroleum.com/.
For further information, please contact:
Polo Resources Limited
- Kudzayi Denenga, Investor Relations +27 (0) 787 312 919
Allenby Capital Limited (Nominated
adviser & broker)
- John Depasquale +44 (0)20 3328 5657
About the Company
Polo Resources Limited is a multi-sector investment company
focused on investing in undervalued companies and projects with
strong fundamentals and attractive growth prospects. For complete
details on Polo, please refer to: www.poloresources.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCBLBDBBXDBGCB
(END) Dow Jones Newswires
November 21, 2019 11:38 ET (16:38 GMT)
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