Hibiscus Petroleum (KLSE: HIBISCS) plans to do it all alone in developing the Teal West project in the UK North Sea, as partner NEO Energy exits the licence.
Until the exit, private equity-backed NEO held a 30% stake in Licence P2535 which contains the prospect, with the rest owned by operator Anasuria Hibiscus– a UK subsidiary of the Malaysia-based E&P group. However, annual accounts filings by Hibiscus show that NEO advised of its intention to withdraw from the licence.
Operator Anasuria Hibiscus, commenting on the situation, stated that “Given the advanced state of the technical work that has been done and the value this project adds to the Anasuria Cluster, Anasuria Hibiscus has decided to proceed with activities related to Licence No. P2535 on a 100% interest basis”.
Hibiscus noted that the assignment of NEO’s 30% interest has already been approved by the North Sea Transition Authority (NSTA) and the formal transfer is now pending completion. (Current NSTA records still list NEO as a licence partner).
It is understood NEO will not receive any compensation for the surrender of its share. A spokesperson for NEO said the company could not provide any further information on the process.
Nevertheless, Hibiscus is keen to press on with the development by submitting an environmental statement for the four million-barrel project.
Hibiscus said the field is expected to have a production life of 10 years and, in the high production case, reach a total of 10.4 million stock tank barrels of oil and 9.8 billion standard cubic feet of gas.
Initially, the scheme will consist of one production well, potentially a water injection well and a further production well, with production, tied back to the Anasuria FPSO around 108 miles east of Aberdeen. Drilling is anticipated to begin next year, ahead of the first oil in 2024.
The Teal and Teal South fields already produce as part of the Anasuria cluster linked to the namesake FPSO. In its recent annual filings, Hibiscus said a field development plan (FDP) for Teal West was submitted to the NSTA on 2nd August, alongside its environmental submissions to the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED).
Under the terms of the licence, the FDP must be approved by the offshore authority by the end of 2022. The group expects consent to be granted within six months from its date of submission.
Meanwhile, it will also progress plans to tap the Marigold cluster, containing the Sunflower, Crown and Kildrummy prospects– together with licence partner Caldera and Ithaca Energy, which operates the adjacent Marigold East prospect.
The Marigold field is expected to be in production via a tieback to the Piper Bravo platform by 2026, the annual filings added.
Profit lift
In its annual accounts, Hibiscus reported £62.8 million in revenues from UK operations in the year to June 30 2022 (just under 331 million Malaysian ringgit).
Pre-tax profits from the region also soared to £32.5m, compared with around £5.9m in 2021. Meanwhile, group-wide revenue reached 1.6 billion ringgit (£322m), of which 741m ringgit (£140m) translated to pre-tax profit.
In its filings, Hibiscus also noted the advent of the government’s Energy Profits Levy. While it did not examine the forward impact of the policy on UK operations, it said it did not expect a significant liability arising from the regime.
