Hibiscus Petroleum a big winner as oil prices surge

 The oil and gas producer’s shares have soared nearly 50% since the US and Israel attacked Iran on Feb 28.

Hibiscus is Malaysia’s first listed independent O&G exploration and production company, producing about 26,500 barrels of oil equivalent per day. (Hibiscus Petroleum pic)

PETALING JAYA:

 Hibiscus Petroleum Bhd’s shares rose as much as 20% today after oil prices blew past the US$100 mark as the Middle East conflict between the US-Israel and Iran escalated.

Research houses have singled out the independent oil and gas (O&G) exploration and production company as the major beneficiary of rising oil prices in the wake of the virtual closure of the Strait of Hormuz.

Before the conflict erupted, roughly one-fifth of the world’s oil and liquefied natural gas (LNG) supplies pass the narrow choke point daily.

The stock jumped as much as 41 sen or 20% to RM2.46 earlier today before giving up some of its gains to close at 34 sen or 16.6% higher at RM2.39, valuing the company at RM1.76 billion.

Since the US and Israel launched their attack on Feb 28, Hibiscus’s shares have run up nearly 50%. It is up almost 63% over the past one month.

Public Investment Bank (PublicInvest) upgraded its call on the oil and gas sector to “overweight” and selected Hibiscus as its top pick given its “strong earnings sensitivity to oil price movements”.

In a note today, the research house also upgraded its call on the stock to “outperform” and raised its target price to RM3.40 from RM2.40 previously, an upside of 41.7%.

“Our base case assumes Brent remains above US$100 per barrel over the next five months, reflecting the time required to restore shipping confidence, the gradual drawdown of global inventories to absorb supply disruptions, and the persistence of elevated geopolitical risk premiums.

“Prices could subsequently moderate towards US$90 later in the year if tensions de-escalate and tanker traffic through the Strait of Hormuz gradually normalises,” said PublicInvest.

Meanwhile, TA Research said upstream oil producers like Hibiscus and rig operators like Velesto Energy Bhd stand to benefit if high oil prices sustain.

It said the prolonged closure of the Strait of Hormuz could push crude oil prices towards US$150 per barrel, triggering global energy shortages and risk-off financial conditions.

“For Malaysia, higher crude export prices provide some cushion, but rising subsidy burdens, weaker consumption, and external volatility can tilt the outlook towards stagflation,” it said in a note today.

Earlier today, oil prices surged to levels not seen since mid-2022 as major oil producers cut supplies amid fears of prolonged shipping disruptions due to the expanding US-Israeli war with Iran.

Brent crude futures hit a high of US$119.50 a barrel, its biggest-ever absolute price jump in a single day while US West Texas Intermediate (WTI) crude futures reached US$119.48 a barrel.

Before today’s surge, Brent had already climbed 28% and WTI 36% over last week. The war could leave consumers and businesses worldwide facing weeks or months of higher fuel prices.

Hibiscus is Malaysia’s first listed independent O&G exploration and production company, focussing on monetising producing fields in Malaysia, Brunei, the UK, Vietnam, and Australia.

Founded in 2007 and listed in 2011, it operates assets like North Sabah and Anasuria, producing about 26,500 barrels of oil equivalent per day. - FMT