PETALING JAYA: Hibiscus Petroleum Bhd ’s proposed acquisition of Brunei’s TotalEnergies EP may help boost the group’s earnings profile in the second half of financial year 2025 (2H25) and beyond.
The deal would also increase its gas portfolio mix as a new asset – the latter’s block B Maharajalela Jamalulalam is 84% a gas field.
Maybank Investment Bank Research said post-acquisition, the production and reserve profile of Hibiscus is expected to increase substantially by over 35%.
It added that the acquisition price for TotalEnergies, for a cash consideration of US$259.4mil is fair.
This is based on the realised long term price assumptions of indepedent broker RPS Energy.
The research house maintained its earnings estimates and has a “hold” call on Hibiscus pending deal completion.
Its target price of RM2.31 a share is unchanged, based on the discounted cash flow model.
On June 13, Hibiscus announced a proposed acquisition of the entire equity interest in TotalEnergies for cash US$259.4mil.
The acquisition implied an enterprise value over proven and probable reserves valuation of US$10 per barrel of oil equivalent (boe) based on Jan 1, 2024 reserves of 21.7 million boe.
The EV worked out to US$217.1mil – the purchase price of US$245mil less net cash of US$44.9mil plus balance payment of US$17mil – which the research house said is fair, referring to an earlier Repsol deal in June 2021 which was done at a valuation of US$6.2 per boe.
This latest acquisition will be funded via internal funds and/or debt, according to the research house.
Assuming a natural field production decline of 4% annually starting FY28 and other factors, the incremental net present value of US$195.7mil will be overshadowed by an increase in the group’s net debt position to RM1.1bil from a net cash position of RM98.6mil as at end-FY25, which will be captured in its valuation matrix.