Hibiscus Petroleum announces details of East Ras el Ush Concession Award
Hibiscus Petroleum Berhad is pleased to announce that its wholly-owned subsidiary, Gulf Hibiscus Limited (“Gulf Hibiscus”), has been awarded the South East Ras El Ush concession (“Block 2”) in Egypt by the Ganoub El-Wadi Petroleum Holding Company (“Ganope”), an entity of the Ministry of Petroleum, Arab Republic of Egypt (“Award of the Concession”).
The award was made pursuant to the successful submission of a bid by Gulf Hibiscus, together with its partner, Pacific Oil Limited (“Pacific Oil”), for a joint equal ownership of the concession. Pacific Oil will be the operator of the concession, to leverage on its management team’s experience in Egypt.
Block 2 is an offshore exploration block located in the southern Gulf of Suez, the most prolific petroleum province in Egypt. The block covers an area of 68 square kilometres with water depth of up to 75 metres, and is surrounded by development leases.
Block 2 also contains the discovered West Ashrafi field, which is included in the above Award of Concession, and may be developed with a production tie-in to the nearby existing onshore infrastructures. Two wells previously drilled in the West Ashrafi field had tested commercial oil and gas.
The award is subject to the execution of a definitive agreement. Gulf Hibiscus’ financial exposure to undertake the minimum work commitment is estimated to be approximately USD8 million over the first 4 years (first exploration phase).
Background of the Parties:
Gulf Hibiscus, a company incorporated in Labuan, is a wholly-owned subsidiary company of Hibiscus Petroleum. The principal activity of Gulf Hibiscus is investment holding, providing project management, technical and other services to oil and gas concessions.
Pacific Oil was incorporated as a special purpose vehicle, registered in Seychelles, to pursue oil and gas, exploration and production opportunities predominantly in Africa. In July 2013, Pacific Oil was awarded a Petroleum Exploration License in the Republic of Malawi.
Rationale for Acceptance of the Award:
The acceptance of the Award of the Concession, subject to the execution of a definitive agreement, provides the Company an opportunity to explore and develop in an area which is one of the oldest producing basins in the world. The basin has more than 1,900 drilled wells with a total of 123 producing fields and an annual production of approximately 180 million barrels of oil.
Risk factors in relation to the Award of the Concession (following execution of a definitive agreement) include operational and execution risks in relation to exploration and production of oil and gas assets, and any changes to economic or regulatory conditions. The Company has the experience, expertise and track record to undertake matters in relation to the Award of the Concession.
Effects on the Issued and Paid-up Capital of the Company:
The Award of the Concession will have no effect on the issued and paid-up capital of the Company.
Directors’ and Major Shareholders’ Interest or Persons Connected:
None of the directors of Hibiscus Petroleum or its major shareholders and persons connected with a director or major shareholder of the Company have any interest, direct and/or indirect, in the Award of the Concession.
The Board of Directors of Hibiscus Petroleum, after having considered all aspects of the Award of the Concession, is of the opinion that acceptance of the Award of the Concession (subject to the execution of the definitive agreement) is in the best interest of Hibiscus Petroleum and its subsidiary companies.
(Hibiscus Petroleum Press Release)