Hibiscus to write off RM27m due to commercially unviable well

TheEdge Fri, Mar 01, 2024 03:52pm - 1 month View Original


KUALA LUMPUR (March 1): Hibiscus Petroleum Bhd plans to write off RM27 million in capital cost estimates for its South Furious Merah exploration well, after an initial assessment found that the hydrocarbon volumes seen in the well may not achieve commercially viable economic thresholds.

The South Furious Merah exploration well is part of Hibiscus’ drilling programme by its indirect wholly owned subsidiary, SEA Hibiscus Sdn Bhd, 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, after drilling the South Furious Ungu ST well,” Hibiscus said in a filing with Bursa Malaysia on Friday. 

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 had been included in the SEA Hibiscus cost recovery bank,” Hibiscus added.

At the time of writing on Friday, the stock was down by three sen or 1.19% to RM2.50, with 1.59 million shares traded, giving the group a market value of RM2.02 billion.

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