Hibiscus Petroleum Berhad : Completion of Transformative Asset Acquisition

Corporate and Business Update

(Issued in conjunction with the Quarterly Report for the Financial Quarter Ended 30 December 2021)

Kuala Lumpur, 17 February 2022 - 5.00pm

Completion of Transformative Asset Acquisition

Highlights

• Hibiscus Petroleum Berhad ("Hibiscus Petroleum" or the "Group") announced earnings before interest, taxes, depreciation and amortisation ("EBITDA") of RM139.9 million and a profit after taxation ("PAT") of RM48.5 million for the financial quarter ended 31 December 2021 ("Current Quarter"), on the back of revenue of RM284.4 million. A total of 843,598 barrels ("bbl") of crude oil were sold in the Current Quarter.
• Repsol Asset Acquisition: Completed the transformative acquisition on 24 January 2022. Assets are expected to almost triple the Group's net daily oil, gas and condensate production.
• New Group Vision and Mission: Aim to achieve target production of 35,000-50,000 boe/day, secure 2P reserves of 100MMboe by 2026 and to become a net zero emissions producer by 2050.
• Final dividend for financial year ended 30 June 2021 ("FY2021"): 1.0 sen per ordinary share paid on 28 January 2022.

This Corporate and Business Update covers business activities over the Current Quarter and provides commentary on the operational and financial performance of the Group.

Peninsula Hibiscus' Acquisition of Repsol Assets

On 1 June 2021, the Group's wholly-owned subsidiary, Peninsula Hibiscus Sdn Bhd ("Peninsula Hibiscus") entered into a conditional sale and purchase agreement ("SPA") with Repsol Exploración, S.A ("Repsol") for the proposed acquisition by Peninsula Hibiscus of the entire equity interest in Fortuna International Petroleum Corporation ("FIPC") for a total cash consideration of USD212.5 million ("Acquisition"). The Acquisition was completed on 24 January 2022, shortly after all conditions precedent to the SPA were fulfilled as announced on 20 January 2022.

Out of the total consideration, the net amount paid at completion was USD123.65 million after taking into account various adjustments as listed below:

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	USD million	Remarks
Purchase price	212.50	Purchase price as stated in the circular to shareholders
		dated 13 December 2021 for the Acquisition
(plus) Time value amount	4.65	Time value amount calculated from the effective date
		of 1 January 2021 to the closing date of 24 January
		2022
(less) Pre-closing dividend	(78.00)	As declared and paid by FIPC to Repsol
(less) Leakage adjustment amount	(0.50)	Mainly bonuses
Balance purchase price	138.65
(less) Deposit paid	15.00
Net amount paid at completion	123.65

The balance purchase price was funded through:

• Drawdown of prepayment facility with Trafigura Pte Ltd of USD80 million;
• Net proceeds raised from placement of CRPS of about USD47 million; and
• Internally generated funds of the Group.

As operator of the newly acquired assets, the Group is well-positioned to continue to build on its successful operational track record which has been demonstrated in its other producing assets in the United Kingdom ("UK") and Malaysia. We are actively working on further enhancing value in calendar year ("CY") 2022 and beyond. Going forward we expect to produce approximately 2.5 million boe of oil and gas for the period between completion and the end of FY2022 from the recently acquired assets, on top of our North Sabah and Anasuria production. Performance data from the new assets will be made available in the update for the quarter ending 31 March 2022.

Current Reserves and Resources

Figure 1 below depicts our updated net entitlement to oil reserves and resources, as at 1 January 2022, within the licenses in which we have interests.

Figure 1: Hibiscus Petroleum's net reserves and resources.

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The Group's New Vision and Mission

Figure 2: Hibiscus Petroleum's Vision and Mission 2022-2026

In line with the latest global social, political and economic trends, the Group set out to refresh its Vision and Mission. The process involved various workshops with Management and the Board to align its plans for the next five years and beyond.

In pursuit of business growth, we intend to maintain our geographic focus in the North Sea and Southeast Asia. We will continue to assess future growth opportunities in these areas with the aim of achieving our target production of 35,000-50,000 boe/d and 2P reserves of 100MMboe by 2026.

The Group will continue to apply its current core competence to maximise the generation of cash in the near term (against a backdrop of strong oil prices) whilst also recognising that clean energy players will likely have a role to play during the energy transition.

The Malaysian Government aspires to reach Carbon Neutrality as early as 2050. The UK Government is also pursuing a legally binding Net Zero goal by the same date. To this end and pursuant to the Group's Sustainability Policy, the Group aspires to become a Net Zero Emissions producer by 2050. To do so, we will include climate-related considerations that are relevant to our industry, in our capital investment decisions.

Over the next five years, our strategy will include fortifying the resilience of our portfolio of hydrocarbon assets, decarbonising our upstream operations, and investing in green/clean energy opportunities. The resilience of our portfolio of assets may be enhanced by increasing our gas reserves and resources, as we believe gas has a critical role in the energy transition.

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The 2022-2026 Mission will enable the Group to continually enhance shareholder value whilst also positively positioning the Company for a future in which the world will transition to a more diversified energy mix.

To become a more Respected, Valuable and Responsible Energy Company, the Group's 2022-2026 Mission will be pursued and underpinned by our core values - "TEPAT":

• Tenacious
• Environmentally Responsible
• People Focused
• Agile
• Trustworthy

Operational Updates

Health Safety Security & Environment ("HSSE")

Our initiatives to combat the spread and impact of the COVID-19 pandemic within our organisation continue, with various measures being taken, both on land and offshore, at North Sabah and Anasuria to ensure continuous sustainability of the Group's operations. For North Sabah, the measures include daily update meetings which are conducted with Senior Management to discuss the status of the pandemic and its impact to our operations as well as the halting of all non-essential activities to minimise exposure risk to our personnel. Strict safety procedures, while transporting personnel by helicopter and crew boats, are also being practised. Notwithstanding the above, it has been observed that vaccination programmes are driving a drop in infection and hospitalisation rates both in the UK and Malaysia.

Beginning January 2022, our personnel have returned to their respective workplaces albeit under strict worksite COVID-19 control protocols, aligning to the COVID-19 standard operating procedures from the Malaysian National Security Council and Health Ministry. Risks to personnel and plant due to COVID-19 continue to be assessed regularly at all locations, and immediate actions are taken to address emerging issues to safeguard the health, safety and well-being of our personnel. The Business Continuity Team is continuing to monitor changes in the state and national COVID-19 policies for updates, and will cascade any changes in our work basis when warranted.

A Hearts and Minds ("H&M") program was introduced in North Sabah in the Current Quarter. This highly interactive program provides a structured approach designed to instil behavioural and safety culture changes with the intent of achieving a workforce with sustained changes towards inherent safety mindfulness. Two selected H&M modules were successfully cascaded at all locations, including our offshore facilities and the Labuan Crude Oil Terminal ("LCOT") in CY2021. The H&M program is set to continue to be cascaded through CY2022 to early CY2023.

Awards

With COVID-19 mitigation measures in place, both the North Sabah and Anasuria assets have been performing satisfactorily. We are pleased to disclose the following awards and achievements for safety and production operations in Malaysia:

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North Sabah Operations:

• Petronas Focused Recognition Award - Awarded in November 2021 for successfully completing the MPM Integrated Assurance activities with no reported incident or accident, contributing to increased stakeholder confidence by improving internal systems and controls.
• 5 Star Rating Award given to LCOT by the Chief Government Security Office, commending the high commitment and priority towards safety and security in protecting national interests and for being one of 15 national assets receiving a 5-star award.

Production

Malaysia South China Sea

North Sabah PSC: Production Operations

The table below provides a summary of key operational statistics for the North Sabah asset, based on the 50% participating interest held by SEA Hibiscus Sdn Bhd ("SEA Hibiscus"), for the Current Quarter and for the prior three financial quarters:

				October to	July to		April to		January to
			Unit	December	September		June		March
				20212	2021		2021		2021
Average uptime	%	92	81		95		95
Average gross oil production		bbl/day	16,305	14,368		17,281		17,796
Average net oil production		bbl/day	5,937	5,185		6,394		6,585
Total oil sold		bbl	587,374	565,292		608,006		599,948
Average realised oil price1		USD/bbl	75.15	75.01		72.07		60.46
Average OPEX per bbl		USD/bbl	13.06	19.14		15.67		10.91
	(unit production cost)

Figure 3: Operational performance for the North Sabah asset.

Notes to Figure 3:

1. The average realised oil price represents the weighted average price of all Labuan crude sales from SEA Hibiscus.
2. Figures for the period October 2021 to December 2021 are provisional and may change subject to the PSC Statement audit and that they are pending PETRONAS's review.

The average uptime of the North Sabah production facilities of 92%, achieved during the Current Quarter, is higher than that reported for the financial quarter ended 30 September 2021 ("Preceding Quarter"). Consequently, average gross oil production increased by 13.5% during the Current Quarter when compared to the Preceding Quarter. This is primarily attributable to the completion of planned maintenance activities in the Preceding Quarter. Average OPEX per bbl for North Sabah decreased to USD13.06 due to a reduced level of the planned maintenance activities in the Current Quarter and higher crude oil production.

A total of 587,374 bbls of oil, net to SEA Hibiscus was sold at an average oil price of USD75.15 per bbl. The average oil price realised in the Current Quarter was similar to the price secured in the Preceding Quarter.

In terms of expenditure, costs related to specialised studies, production maintenance and support services during the Current Quarter resulted in a capital expenditure of RM6.2 million net to SEA Hibiscus.

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