This article first appeared on GuruFocus .
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Profit After Tax (PAT):MYR70 million in Q2 and MYR20 million in Q1, totaling MYR90.4 million for the first half of FY 2026.
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Average Oil Price:$71 per barrel for the first half of FY 2026.
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Production:4.4 million barrels of oil equivalent in the first half of FY 2026.
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Dividend:Second interim dividend of $0.02 per share, totaling $0.04 per share for the first half of FY 2026.
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Cash and Cash Equivalents:Increased from MYR320 million to MYR760 million as of December 31, 2025.
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Gearing Ratio:0.3 times debt-to-equity ratio.
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CapEx:Significant expenditure on Teal West project in the UK, PM3 CAA wells, and LPC project in Brunei.
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Net OpEx Reduction:Decreased by 16% from Q1 to Q2.
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Realized Oil Price for Q3:Approximately $74 per barrel for North Sabah and Kinabalu offtakes.
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Release Date: February 27, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Hibiscus Petroleum Bhd ( XKLS:5199 ) reported a solid quarter with a 10% increase in production and a 16% reduction in net operating expenses.
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The company declared a second interim dividend of $0.02 per share, maintaining a dividend guidance of $0.08 per share, with potential upside to $0.10 if oil prices exceed $75 per barrel.
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Significant progress was made on the Teal West project, with first oil expected in mid-2026, contributing to the company's production target of 35,000 barrels of oil equivalent per day.
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The company has doubled its cash balances to MYR760 million as of December 31, 2025, despite significant capital expenditures.
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Hibiscus Petroleum Bhd ( XKLS:5199 ) is actively pursuing energy transition initiatives, including the construction of a solar PV farm in Brunei, expected to generate electricity by January 2027.
Negative Points
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The company experienced a topsy-turvy first half of the year due to maintenance activities and full field shutdowns, impacting production and uptime.
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There is uncertainty regarding the timeline for finalizing strategic investor partnerships, which could be distracting if not resolved by the end of the financial year.
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The company is in a heavy investment CapEx period, which may delay the realization of free cash flow from new assets.
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The effective tax rate is high, particularly in the UK, due to additional allowances, resulting in a group-wide effective tax rate of approximately 42% to 45%.
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There is a wide gap between the fundamental value of the company and its market price, which is recognized by both the company and potential strategic investors.
Q & A Highlights
Q: Plans for IPP, is it still ongoing? A: Yes, we are working on projects with various data center developers. It is a significant focus in our business plan for 2026, with tangible KPIs set for the team working on this project.
Q: Effective tax rate since your provision for the UK tax? A: The group's effective tax rate is around 42% to 45% for this financial year. This is due to the concentration of business overseas, with Malaysia at 38% and Brunei above 55%. The UK is over 100% due to additional allowances that offset future taxable income.
Q: Can you share more about the premium relation to the entry of new strategic investors? A: We recognize the gap between fundamental value and market price. We are working with strategic investors who recognize this value. We aim to finalize something meaningful by the end of this financial year.
Q: Guidance on when free cash flow will inflate given the current heavy CapEx period? A: CapEx for 2024-2026 is around USD160-195 million. Once major projects like Teal West and LPC are completed, CapEx will reduce significantly to USD80-100 million net to Hibiscus from 2027 onwards, helping to build free cash flows.
Q: Production growth targets and CapEx per barrel for future investments? A: For 2026-2027, Teal West will add 7,000-9,000 barrels per day initially. Post-2027, projects like PKNB will add 4,000-5,000 barrels per day by 2028. CapEx for PKNB Phase 1 is USD170-180 million, with Hibiscus's share at USD110 million.
Q: Can we assume a floor of dividend payout of $0.07 to $0.08 for the next two years? A: We wouldn't make that assumption. While production volume is increasing, revenues should rise even if oil prices remain stable. We aim not to lower dividends from current levels.
Q: How does the group plan to mitigate ForEx losses as rates strengthen? A: There is a high level of natural hedge as many payments are in US dollars. Unrealized gains/losses are mostly intercompany balances. Revenues and debt repayments are in US dollars, providing a natural hedge.
Q: How long will the company maintain the share buyback? A: We have not bought back any shares. Share buyback is low in our capital allocation hierarchy. We focus on long-term investments and ensuring any share issuance is beneficial for all stakeholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
