KUALA LUMPUR: Hibiscus Petroleum Bhd today announced that it will write off RM27 million capital costs for one of its exploration wells, after it found that hydrocarbon volumes in the well may not be commercially viable.
"At this stage, we expect to write off the capital cost estimates of RM27 million for the Merah well in the Group's financial statements for the quarter ending Mar 31, 2024.
Hibiscus Petroleum's subsidiary SEA Hibiscus Sdn Bhd's (SEA-H) exploration drilling campaign comprised a drilling programme to drill three exploration wells, namely South Furious Ungu, South Furious Ungu ST and South Furious Merah to evaluate prospective Near Field exploration locations within the boundaries of the 2011 North Sabah Enhanced Oil Recovery Production Sharing Contract.
The campaign initially kicked off at the South Furious Ungu well location on Oct 29, 2023 and later moved to the South Furious Merah location on Jan 19, 2024 after drilling the South Furious Ungu ST well.
The company is currently evaluating data collected from Ungu's drilling operations.
Capital costs (net of tax to SEA-H) estimated for the Ungu wells are expected to be in the range RM54 million.
Hibiscus Petroleum said the treatment of the costs of the Ungu well in the financial statements will be determined once it confirms the final results from the Ungu well, and will be announced at the appropriate time.
All capital costs were funded from internal resources and the costs associated with the campaign have been included in the SEA-H cost recovery bank.
Trading in Hibiscus Petroleum's shares were suspended for an hour following the announcement. It last traded at RM2.57. It resumes trading at 10.36am.
