The investment bank maintained its “buy” call with a higher target price of RM1.29, from RM1.12 previously, based on the net present value of all its producing assets’ future free cash flows.
HLIB also considers Hibiscus to be a “compelling investment opportunity that is clearly undervalued”, especially considering its strong position in the upstream energy sector.
In a note today, the research house said the Marigold field development is a breakthrough for the upstream oil and gas company as it denotes its best estimate of contingent (2C) resources.
Contingent resources are petroleum estimated to be potentially recoverable from known accumulations, but are not currently considered to be commercially recoverable.
“Subject to the field development plan (FDP) submission and regulatory approval process, management has indicated it will approximately take 12 months from submission date to reach the final investment decision (FID),” it said.
HLIB also anticipated that AHUK would achieve its first oil production from the Marigold field within a span of four years.
“Hibiscus’ net production is expected to reach optimum in financial year 2025 (FY2025) to 25,000 barrels of oil equivalent per day (boepd), which is an additional growth for Hibiscus.
“Although the production rate of the oil field is still uncertain at this juncture, we think it will substantially elevate Hibiscus’ net production due to the sizeable 2C resources within the field,” HLIB said.
On Sept 15, AHUK entered into the UUOA with Ithaca Oil and Gas Ltd and Caldera Petroleum (UK) to jointly develop the Marigold field, comprising the Marigold West Field and East Field.
Overseen by Hibiscus, the consortium will develop the Marigold field FDP, targeted for submission by early 2024.
In addition, the FDP of the Marigold Sunflower field (Block 15/13b) will be submitted separately, which is excluded from the UUOA.
On the financial front, Hibiscus Petroleum Bhd’s net profit fell 52% to RM123.28 million in the fourth quarter of its financial year (Q4 FY2023), which was less than half the net profit of RM255.39 million registered in the same quarter in 2022.
Revenue was down 42% to RM503.6 million from RM868.37 million in the previous corresponding quarter.
As at 12.30pm, Hibiscus’ share price was up by one sen or 0.92% at RM1.10, giving it a market capitalisation of RM2.21 billion.