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Hibiscus Petroleum, Malaysia's listed oil and gas company, is actively pursuing acquisitions in the Asia-Pacific region as multinational energy companies divest assets under decarbonization pressures.
Hibiscus Petroleum Seizes Opportunity in Asia-Pacific as Global Energy Giants Divest Amid Decarbonization
Hibiscus Petroleum, a Malaysian oil and gas exploration company listed on the local exchange, is pursuing the acquisition of assets from multinational energy companies in the Asia-Pacific region as these companies divest amid increasing pressures for decarbonization. In an interview with Nikkei Asia, Kenneth Pereira, the company's founder and managing director, stated that Hibiscus aims to become a "regional consolidator" of established oil and gas assets to become a prominent independent oil company.
Pereira explained that while the acquisition strategy might lead to higher maintenance costs as assets age, the investment risk is lower due to the existing infrastructure and extensive production history. In June, Hibiscus announced the acquisition of TotalEnergies' assets in Brunei for $259 million. This acquisition, with 85% of production being gas and the remainder oil, will increase the company's overall gas production to nearly 50% of its total oil and gas assets.
Hibiscus emphasized that acquiring the well-established gas asset in Brunei and taking over its operations further solidified its position as an independent exploration and production player in the region. The acquisition aligns with the company’s strategy to strengthen its presence in the Asia-Pacific region amid a broader industry shift driven by the need to decarbonize.
As multinational oil companies face increasing pressure from the public and investors to decarbonize, asset divestment has become more common. BloombergNEF reported that the nine largest oil companies sold assets worth $290 billion from 2015 to 2023, with upstream oil assets comprising half of these deals. Rystad Energy, a researcher based in Oslo, estimates that $5 billion worth of exploration and production assets is currently on the Southeast Asian market, with Indonesia leading the way.
Hibiscus Petroleum Prioritizes Cautious Growth Amid ESG Challenges and Ambitious Production Goals
Despite the opportunities presented by the current market, Pereira emphasized that Hibiscus intends to grow cautiously. This approach, particularly given the challenges of securing funding from banks unless the company meets environmental, social, and governance (ESG) standards for fossil fuel assets, reassures stakeholders about the company's financial stability. The company’s mid-term goal is to achieve production levels of 35,000 and 50,000 barrels per day by 2026. Hibiscus produced an average of 21,000 barrels per day in the January-March quarter of 2024, but the Brunei acquisition is expected to help reach 35,000 barrels per day by the end of next year.
Incorporated in 2007, Hibiscus became Malaysia's first listed independent oil and gas exploration and production company in 2011. The company has focused on expanding its portfolio in Southeast Asia, the U.K., and Australia through strategic acquisitions. For the fiscal year ending June 2023, Hibiscus reported a net profit of 400 million ringgit ($90 million), a 39% decrease from the previous year, while revenue increased by 38% to 2.34 billion ringgits. This successful track record instills confidence in the company's past performance.
