The reason for the write-off is based on the initial assessment which found that the hydrocarbon volumes seen in the well may not meet commercially viable economic thresholds.

The South Furious Merah exploration well is part of Hibiscus’s drilling programme which is conducted by its indirect wholly-owned subsidiary, SEA Hibiscus Sdn Bhd.

SEA Hibiscus is expected to drill three exploration wells, including the South Furious Ungu and South Furious Ungu ST wells, to evaluate prospective Near Field exploration locations within the boundaries of the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract.

“The campaign initially kicked off at the South Furious Ungu well’s location on Oct 29, 2023, and later moved to the South Furious Merah location on Jan 19, 2024, after drilling the South Furious Ungu ST well,” Hibiscus said in a filing to Bursa Malaysia today.

Hibiscus added that the capital costs, net of tax to SEA Hibiscus, estimated for the Ungu wells are expected to be in the range of RM54 million.

“All capital costs were funded from internal resources, and the costs associated with the campaign have been included in the SEA Hibiscus cost recovery bank,” it added.

At 2.30pm, Hibiscus’s share price was flat at RM2.53, giving it a market capitalisation of RM2.04 billion.