Malaysia's Hibiscus Petroleum Berhad announced Wednesday that it has executed a binding term sheet Nov. 9 to acquire 100 percent of the outstanding shares of Australia's Hydra Energy Holdings Pty Ltd.
The acquisition of Hydra Energy and its portfolio of discovered oil fields offshore Australia will boost Hibiscus Petroleum's 2P reserves by 15 to 17 million barrels as well as provide potential exploration upside. The transaction, when completed, would increase Hibiscus Petroleum’s net 2P/2C Australian oil resource base from 8 million barrels to 23-25 million barrels.
“Our West Seahorse concession located in the Gippsland Basin has a 2P/2C oil resource of approximately 8 million barrels. Some of the Hydra Energy assets have the technical and commercial advantages of utilizing the same concept of a relocatable production infrastructure that is being considered for the West Seahorse development. Therefore the inclusion of the Hydra Energy assets into our portfolio provides a basis for optimizations and synergies that should significantly reduce Hibiscus development costs per barrel in a low oil price environment,” Hibiscus Petroleum’s Vice President of Exploration and Development, Stephen Dechant commented in the press release.
Hydra Energy currently has equity interests in seven operated permits -- WA-41-R, WA-8-L, TL/2 & TP/7, WA-47-R, WA-46-R and WA-52-R -- in the Carnarvon Basin, offshore North West Australia. These includes 4 discoveries totalling 15-17 million barrels net to the company.
"The Purchase Price for the acquisition is the fair market value of Hydra Energy as determined by an independent, competent valuer. The transaction will be satisfied through the issue of new Hibiscus Petroleum shares at an issue price to be determined on the date that the fair market value of Hydra Energy is determined," Hibiscus Petroleum said in the announcement.
The transaction, subject to shareholder and regulatory approvals as well as the satisfaction of conditions precedent to the binding term sheet, is targeted for completion in the first quarter of 2016. Meanwhile, "the management of Hibiscus Petroleum and Hydra Energy shareholders have agreed to a lock up period post consummation of the transaction and the transaction is structured such that it is not expected to trigger a mandatory general offer."
When the transaction is completed, Hydra Energy will become a wholly owned subsidiary of Hibiscus Petroleum.
“In the current oil price environment, Hibiscus Petroleum has been consolidating its investments in assets that have discovered, proven, oil. The assets we are currently investing must be in production or have near term potential to be revenue generating. The Hydra Energy assets fall firmly in that category. They are also located in a geopolitically stable area where we are already present. These assets will give us scale in two major producing basins in Australia and will allow us to build a long term sustainable business there. We are truly excited by the opportunity,” Hibiscus Petroleum’s Managing Director, Dr. Kenneth Pereira said.
Ninety seven percent of the shareholders of Hydra Energy are funds advised by Global Natural Resource Investments (GNRI), while the remaining 3 percent of the outstanding shares are held by the Hydra Energy Management Team.
“I am very pleased that we have been able to reach agreement on the terms of a business combination between Hibiscus Petroleum and Hydra Energy. There is significant complementarity between our businesses and the combination creates a significant platform for further growth in Australia and Southeast Asia. Both companies are now in a stronger position to develop the significant reserves and resources they hold, to the obvious benefit of all our combined shareholders,” Hydra Energy’s Managing Director, Paul Nimmo, said as quoted in the press release.
In a related development, Hydra Energy management, GNRI and Hibiscus Petroleum management are in advanced discussions on a non-equity based $20 million financing facility to underpin the combined companies capital requirements. The facility will be utilized to fund existing operational commitments and allows Hibiscus Petroleum to explore new business opportunities.
Earlier on Aug. 6, Hibiscus Petroleum reported that the company and Malaysia's Ping Petroleum Ltd. had entered into sale and purchase agreements to each acquire a 50 percent stake in the Anasuria Cluster of oil and gas fields in the UK sector of the North Sea effective Jan. 1. Stakes in the Anasuria Cluster are held by Shell UK Ltd., Shell EP Offshore Ventures Limited and Esso Exploration and Production UK Limited.
Seen against this background, Hibiscus Petroleum is building its oil resource base globally. When the 2P/2C resources that are in the midst of being secured as part of the Anasuria transaction are combined with those in Australia, including those owned by Hydra Energy, Hibiscus Petroleum’s global net 2P/2C oil resource base would reach around 47 million barrels.