Hibiscus 1H26 offtake momentum likely to slow down on softer prices

PETALING JAYA: Hibiscus Petroleum Bhd’s offtake momentum in terms of its production of barrels of oil equivalent (boe) is expected to slow down in the first half of financial year 2026 (1H26).

Hong Leong Investment Bank (HLIB) Research expected the offtake momentum to remain sluggish in 1H26, pressured by softer average oil prices and the strengthening of the ringgit against the US dollar.

“On the macro front, oil price risks remain skewed to the downside amid demand uncertainties from tariff headwinds, with slowing demand growth underscoring weakening consumption trends driven by trade uncertainties and structural shifts,” it added.

Looking ahead, management has revised down its first quarter financial year 2026 (1Q26) offtake outlook to 1.9 million barrels of oil equivalent (Mboe) versus 2.2 Mboe, reflecting lower expected gas contributions alongside minor adjustments to oil liftings.

Furthermore, Petroliam Nasional Bhd’s (PETRONAS) 1H25 results showed a cut in group capital expenditure to RM17.7bil (versus RM25.7bil in 1H24), which could indirectly affect Hibiscus given its reliance on PETRONAS-operated production sharing contracts, the research house said.

HLIB Research is maintaining its “hold” call on Hibiscus with a higher sum-of-the-parts target price of RM1.56 from RM1.53 previously.

CGS International (CGSI) Research said it was slashing its financial year 2026 (FY26) forecast core net profit by 58% as the Teal West field development in the UK and the North Sabah waterflood project would only begin incremental oil production contribution after mid-year 2026 or early FY27, according to the company’s latest guidance at its results briefing on Aug 29.

The Teal West development is a UK North Sea conventional oil project, operated by Anasuria Hibiscus UK (a subsidiary of Hibiscus Petroleum).

The key downside risk on Hibiscus was potential lower oil prices as the Organisation of the Petroleum Exporting Countries and its allies had raised its production quotas since April 2025, which could hurt the company’s profitability, according to the research house.