Hibiscus active on rumours of more concessions

PETALING JAYA:Malaysia's first listed special-purpose acquisition company, Hibiscus Petroleum Bhd,
saw active trading on its first trading day of the year, with both the
mother and warrant shares gaining 22.5 sen and 6.5 sen to RM1.17 and
59.5 sen respectively.
While both shares were heavily traded on
the volumes list, Hibiscus warrant was the top traded stock of the day,
with 96.27 million changing hands. The mother share saw 33.8 million
being traded.
When contacted, the management of Hibiscus said
there was no new development in the company other than what it had
already announced.
However, there is speculation that Hibiscus
may be getting more concessions from Lime Petroleum, based on the 35%
stake it bought in the latter last year.
Last October, Hibiscus
bought a 35% stake in Middle East-based Lime Petroleum for US$55mil
(RM171mil). Lime has three oil and gas concessions in the Middle East
Ras Al Khaimah, Sharjah both in the United Arab Emirates (UAE), and the
largest one in Oman, with the fourth potential concession in Fujeirah,
also in the UAE. Each concession is for 20 years.
“Based on the
deal between Lime and Hibiscus, should Lime get any new concessions
after Hibiscus becomes its shareholder, Hibiscus is entitled to the new
concessions without having to fork out any money,” said a banker
familiar with the deal.
Based on the current agreement between
Hibiscus and Lime, Hibiscus will be the project manager of the latter's
concessions for the next five years. This agreement is automatically
renewed unless either party gives six months notice.
An EGM to
approve Hibiscus' 35% acquisition is dependent on the approval by the
Securities Commission (SC). Hibiscus has submitted the relevant
proposals to the SC on Dec 16.
“This means that despite the
minority equity stake, Hibiscus has significant influence over the daily
operations of Lime. In return, Hibiscus will be paid monthly project
management fees on an actual cost, plus 7% margin,” said RHB analyst Yap
Huey Chiang in a report.
Meanwhile, Lime will have exclusive access to the proprietary technologies owned by Rex Oil & Gas Ltd for five years. Rex's technologies are for finding oil.
“We
understand that the technology has the potential to speed up the
exploration to two to three years, from the conventional five years, and
minimise the chance of commercial failure. So, Hibiscus' management is
confident that Lime will be able to reach commercialisation by 2013,”
Yap said.