Hibiscus Petroleum Plans to Acquire Hydra Energy to Grow Oil Resource Base

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.