PETALING JAYA: Hibiscus Petroleum Bhd shares plunged as much as 8.5 sen or 23.3% to 28 sen yesterday on news that it plans to acquire Australia-based Hydra Energy Holdings Pty Ltd for an undisclosed price.
The all-share deal will see Hydra Energy emerge as Hibiscus Petroleum’s largest shareholder.
The counter closed 6 sen or 16.4% lower at 30.5 sen on 156.4 million shares done, and was the most heavily traded stock of the day.
In a filing with the stock exchange, Hibiscus Petroleum said it executed a binding term sheet on Nov 9 to acquire a 100% equity interest in Hydra Energy. The acquisition price will be determined by an independent valuer, according to Hibiscus Petroleum.
Hydra Energy has equity interests in seven operated Petroleum Titles located in the Carnarvon Basin, offshore North West Australia, of which four have discoveries totalling 15 million to 17 million barrels net to Hydra Energy.
As the deal will be satisfied through the issuance of new Hibiscus Petroleum shares, Hydra Energy will likely become the largest shareholder of Hibiscus Petroleum. The shareholders of Hydra Energy are funds advised by Global Natural Resource Investments 1 (97%) and the management team of Hydra Energy (3%).
Filings with the stock exchange show that Hibiscus Upstream Sdn Bhd, which is controlled by managing director Kenneth Pereira, has the largest stake of 17.19% in Hibiscus Petroleum.
The acquisition is expected to be completed by the first quarter of 2016. It is subject to the completion of due diligence by both the vendors and Hibiscus Petroleum, among others.
“The management of Hibiscus Petroleum has provided an irrevocable undertaking on behalf of 17% of Hibiscus Petroleum shares on issue to vote in favour of the transaction,” it said.
Hibiscus Petroleum noted that both parties have agreed to a lock up period post consummation of the transaction, so that it is not expected to trigger a mandatory general offer.
Hibiscus Petroleum said the acquisition will allow it to add 15 million to 17 million barrels of proven and probable (2P) reserves.
“The acquisition will provide Hibiscus Petroleum with a significantly increased reserve base in Australia and allow shareholders to capitalise on the synergies that exist between the organisations and the asset bases,” it explained.
Meanwhile, Hibiscus Petroleum disclosed that it is in advanced talks with the management team of Hydra Energy on a non-equity based financing facility worth of US$20 million (RM87.41 million) to underpin the combined companies capital requirements.
“This facility will be utilised to fund existing operational commitments and also allows Hibiscus Petroleum to explore new business opportunities,” it said.
In a separate announcement to Bursa Malaysia, Hibiscus Petroleum said no zones of commercial hydrocarbons were encountered in the Sea Lion-1 well. “Forward operations are to plug and abandon the Sea Lion-1 well and to demobilise the West Telesto drilling rig from the site.”
While the Sea Lion results were disappointing, the acquisition of Hydra Energy and their 2P reserves in Western Australia have reduced the impact of the unsuccessful Sea Lion well on the company, Hibiscus Petroleum said.
Source: http://www.thesundaily.my/news/1608697
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