Hibiscus to Capitalize on Lower Service Rates for 2015 Drilling Operations

Malaysia's oil and gas exploration and production firm Hibiscus Petroleum Berhad plans to seize opportunities presented by the decline in service rates resulting from the current low oil price environment as it carries out its 2015 work program, a top company executive said, as quoted in local daily The Star Friday.

Firms such as Hibiscus hopes to benefit from the decline in service rates, including day rates for rigs as it has several drilling projects planned this year.

Among the drilling operations planned for 2015 are exploration wells in the Sharjah concession in the United Arab Emirates and the Sea Lion prospect in permit VIC/P57 offshore Australia, Hibiscus revealed in a company presentation earlier this month.

The company will also conduct drilling at Oman's offshore Block 50 and two development wells at the West Seahorse field in Permit VIC/L31 offshore Australia, while it is part of a joint venture drilling in PL 591, PL 708 & PL 616 licenses offshore Norway.

"The drilling climate is extremely attractive right now, with drilling rates down by 25 percent compared to the same period last year. Therefore, as subscribers to services, we see this as an opportunity. A year ago, we could only drill four wells but today, given the generally low service company rates, we could be drilling five wells,” Managing Director Dr Kenneth Pereira commented at a luncheon talk organized by MIDF Investment Bank Bhd.

Meanwhile, Hibiscus is optimistic about achieving its five-year reserves target of 100 million barrels as it already has 12.3 million barrels.

“Therefore, with the five wells to be drilled this year, we would be seeing more than 100 million barrels in reserves,” he Pereira added.

Looking ahead, the Hibiscus managing director believed that that falling oil prices are cyclical and the oil and gas industry would adapt to the circumstances.

“We believe that in the mid-term, the oil price will go up, according to expert consensus ... Prices would start turning favorable towards the second half of this year, as supply and demand slowly find an equilibrium,” Pereira said.

The current oil price environment present acquisition opportunities for the company and Hibiscus would focus on securing upstream assets in areas that are geopolitically stable.