KUALA LUMPUR: Hibiscus Petroleum Bhd, a Special purpose acquisition company is buying Talisman Pty Ltd, which includes a 25 per cent working interest in the Kitan producing oil field located in Bonaparte Basin within the Asutralia-Timor Leste joint petroleum development area (JPDA) for US$18 million.
It said the Kitan oil field would contribute significant net cash to the company in the second half of this year.
"At current oil prices, this will allow HIbiscus to book its first operating profit in 2014," the company said in a statement to Bursa Malaysia.
In the statement, Hibiscus announced that its wholly-owned subsidiary, Timor Hibiscus Ltd has executed a share sale agreement for the acquiisition of 100 per cent of the shares in Talisman Resources (JPDA 06 105) Pty Ltd, a wholly-owned subsidiary of Toronto Stock Exchange and New York Stock Exchange listed Talisman Energy Inc.
"The assest of the company acquired include a 25 per cent stake in Kitan oil field," it said.
According to Hibiscus, the Kitan field was discovered in 2008 and started production three years later. Wood Mackenzie estimates 17 million barrels of remaining reserves as at Janaury 1, 2014 (4.25 million barrels net to Hibiscus).
It also said the average production rate in 2014 is expected to be 10,000 barrels of oil per day of which 2,500 barrels of oil per day would be net to Hibiscus due to its 25 per cent stake in Talisman Pty Ltd.
According to Hibiscus, the acquisition is being funded using the equity capital raised through the conversion of Hibiscus warrants which are due for conversion by July 2014.
Commenting on the deal, Hibiscus managing director Dr Kenneth Pereira said the acqusiition of a producing asset represents a key milestone under Hibiscus' portfolio balancing strategy.
"After evaluating many producing assets over the course of the past three years, we believe we have finally found a target that has a manageable risk profile with many areas of upside potential at a reasonable price.
"We also look forward to working with reputable international exploration and production (E&P) companies as partners in extratcing further value from this assets.
"We bid for this asset using certain base assumptions, while taking into consideration potential value accretion from future development and infill drilling projects," he said.
Acording to Hibiscus, the Kitan oil field is operated by Italian integrated energy company Eni. The field is in the Bonaparte Basin within the Australia-Timor Leste JPDA, about 550km north east of Darwin, Australia.
The field is developed by a subsea production system with three subsea wells tied back to the Glas Dowr Floating Production Storage Offloading Unit.
Eni owns a 40 per cent stake in the asset, while the remaining 35 per cent is held by Japanese oil and gas E&P company, Inpex Corporation.
Under the deal, Hibiscus will acquire Talisman's stake of the oil field with an effective date of January 1, 2014 with all existing assets and liabilities as well as absorb the risk of well projects to be executed post-agreement, upon completion of the transaction.