Hibiscus Petroleum Berhad (Hibiscus Petroleum) and its wholly-owned subsidiary Oceania Hibiscus Sdn Bhd (OHSB) announced that they have entered into an agreement with Australian Securities Exchange-listed 3D Oil Limited (3D Oil) for the subscription of 30,963,000 new 3D Oil shares representing 13% of the enlarged share capital of 3D Oil for approximately AUD2.0 million (RM6.6 million).
Hibiscus Petroleum also announced that via Carnarvon Hibiscus Pty Ltd (CHPL), a wholly-owned subsidiary of OHSB, it has entered into a conditional farm-in agreement with 3D Oil for the acquisition of a 50.1% unencumbered legal and beneficial right, title and interest in the exploration permit VIC/P57 (VIC/P57) and any petroleum recovered from the permit area, for a purchase price of approximately AUD13.5 million (RM44.4 million). The purchase price was arrived at on a willing-buyer, willing-seller basis. The Company is also injecting a further AUD13.5 million (RM44.4 million) to fund its share of the joint operating activities.
3D Oil is a Melbourne-based exploration and development company, incorporated in July 2003 and listed on the Australian Securities Exchange on 22 May 2007. It acquired 100% interest in VIC/P57 in April 2004. The VIC/P57 licence is located in the prolific Gippsland Basin, Australia, its north-western boundary approximately 8 km off the south-east Victorian coastline and infrastructure. It covers an area of 483 km˛ in water depths generally less than 50m and includes the West Seahorse discovery. Whilst Hibiscus Petroleum’s current estimate is more conservative, a reputable international certification agency has certified that the West Seahorse oil discovery has at least a 50% probability of containing at least 9.2 million barrels (MMbbls) of recoverable light oil. First production is expected by mid-2014, subject to relevant approvals and the availability of rig and production facilities. The field life is estimated to be around 13 years.
VIC/P57 also contains the Sea Lion and Felix exploration prospects. Sea Lion, located 7 km to the north-west of West Seahorse, has Best Estimate Prospective Resources of 11 MMbbls of oil. Felix is located on the prolific Rosedale Fault oil trend, between Esso’s Moonfish and Wirrah fields, both of which contain numerous oil and gas zones.
The Gippsland Basin is the most productive hydrocarbon province in Australia, with initial resource estimates of more than 4 billion barrels of oil and condensate reserves and 9.8 trillion cubic feet of gas reserves. It has produced approximately two-thirds of Australia’s cumulative oil production and one-third of its gas production to date.
Hibiscus Petroleum Chairman, En Zainul Rahim bin Mohd Zain, said: “This deal is exciting because it provides Hibiscus Petroleum a major stake in an oil and gas concession which contains discovered hydrocarbon resources. It also presents an excellent opportunity for Hibiscus Petroleum to develop as an E&P operator of a discovered oil field within a mature hydrocarbon province in Australia. Moreover, the commercial terms of this investment are attractive for Hibiscus Petroleum’s shareholders.”
Completion of the proposed acquisitions is conditional on approvals by the relevant Australian regulatory authorities and by Hibiscus Petroleum’s shareholders. As part of the deal, Hibiscus Petroleum Managing Director, Dr Kenneth Pereira will be appointed to the Board of Directors of 3D Oil. “We are very excited by the prospects of expanding our operations into the Gippsland Basin as this will not only further diversify the spread of our portfolio geo-politically but will also enable us to acquire interest in a proven field, in line with our business strategy. Oil has already been discovered in the West Seahorse field, while Sea Lion and Felix are excellent exploration prospects. Furthermore, 3D Oil possesses a small but very competent technical team that has extensive experience in several areas including the Gippsland Basin. We look forward to working with them,” Dr Kenneth Pereira said.
3D Oil’s Chairman, Mr Campbell Horsfall, commended the partnership, saying it would create synergies for both parties. “Together with Hibiscus Petroleum, we will move 3D Oil from an explorer to a developer and oil producer. We have created a strong strategic alignment between 3D Oil and Hibiscus Petroleum by granting an interest in our key asset as well as a cornerstone shareholding in our company. I warmly welcome the Managing Director of Hibiscus Petroleum, Dr Kenneth Pereira, to our Board of Directors.”
The Subscription Consideration, Purchase Consideration and investment in the joint operating activities totalling AUD29 million (RM95.5 million) will be funded via available internal funds and proceeds raised from Hibiscus Petroleum’s private placement of convertible redeemable preference shares (CRPS) announced on 2 August 2012. As at 3 August 2012, Hibiscus Petroleum had entered into six conditional subscription agreements that would raise RM74.5 million out of the total maximum of RM210 million.