Hibiscus Petroleum, Malaysia’s listed oil and gas company, is actively pursuing acquisitions in the Asia-Pacific region as multinational energy companies divest assets due to pressure to decarbonise.
Hibiscus Petroleum seizes opportunity in Asia-Pacific as global energy giants sell stakes amid decarbonization
Hibiscus Petroleum, a Malaysian oil and gas exploration company listed on the local stock exchange, is seeking to acquire assets of multinational energy companies in the Asia-Pacific region as these companies divest their stakes amid increasing pressure to decarbonize. In an interview with Nikkei Asia, Kenneth Pereira, founder and chief executive of the company, said Hibiscus aims to become a “regional consolidator” of established oil and gas assets to become a major independent oil company.
Pereira explained that while the acquisition strategy may result in higher maintenance costs as the 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 rest oil, will increase the company’s total gas production to almost 50% of its total oil and gas assets.
Hibiscus highlighted that the acquisition of the well-established Brunei gas asset and the assumption of its operations further cements its position as an independent exploration and production player in the region. The acquisition is in line with the company’s strategy to strengthen its presence in Asia Pacific amid a broader industry shift driven by the need for decarbonisation.
As multinational oil companies come under increasing public and investor pressure to reduce their carbon emissions, divestment of assets has become more common. BloombergNEF reported that the nine largest oil companies sold $290 billion worth of assets between 2015 and 2023, with half of those transactions involving upstream oil assets. Rystad Energy, an Oslo-based analyst, estimates that there are currently $5 billion worth of exploration and production assets in the Southeast Asian market, with Indonesia leading the way.
Hibiscus Petroleum prioritizes cautious growth amid ESG challenges and ambitious production targets
Despite the opportunities presented by the current market, Pereira stressed that Hibiscus intends to grow cautiously. This approach, especially given the challenges of securing bank financing unless the company meets environmental, social and governance (ESG) standards for fossil fuels, reassures stakeholders about the company’s financial stability. The company’s medium-term objective is to reach production levels of 35,000-50,000 barrels per day by 2026. Hibiscus produced an average of 21,000 barrels per day in the January-March 2024 quarter, but the Brunei acquisition is expected to help it reach 35,000 barrels per day by the end of next year.
Founded in 2007, Hibiscus became Malaysia’s first publicly listed independent oil and gas exploration and production company in 2011. The company has focused on expanding its portfolio in Southeast Asia, the UK and Australia through strategic acquisitions. For the financial year ending June 2023, Hibiscus reported net profit of 400 million ringgit (US$90 million), down 39% year-on-year, while revenue increased 38% to 2.34 billion ringgit. This successful track record provides reason for confidence in the company’s performance to date.
