Hibiscus Petroleum Berhad (HIBISCS) Earnings Call Transcript & Summary

Hi. Good evening, everyone, and thank you for joining our Quarter 2 Financial Year 2025 Hibiscus Petroleum's Results Briefing. I'm Lily Ling, VP of Corporate Development, and I'm here with Dr. Kenneth Pereira, our Managing Director; Joyce Vasudevan, Head of Corporate Finance; C.Y, our CFO; Dr. Pascal Hos, our Country Head, Malaysia and Vietnam; and Mohammed Farroukh, our Country Head of Brunei, as our recently acquired Brunei asset contributes for the first time this quarter. And from my team, Andrew Fernandes, Adila Alias, and Noor Zehan. Our results were released earlier today, and you can access on our website 2 things: the corporate and business update, CBU, for a deep dive into our financial and operational performance. These briefing slides, which are also shared in this Teams chat. Let's get straight to it. Over to you, C.Y, to start the presentation because hey, who doesn't like numbers, right?

So good afternoon, everyone, and thanks for joining us. I'll run you through some key numbers and some key attainment during the quarter and in certain areas, we will compare it to the previous number. So this first slide, it summarizes 2 very important metrics, our total sales for the quarter and also our production attainment. So total sales, as you can see, it has increased by over 50% to 2.6 million barrels of oil equivalent. This is the first quarter we incorporated [Technical Difficulty] results after we completed the acquisition on the 14th of October 2024. And so I'll go on to the middle bar. So what happened during this quarter is that we have improved in many areas in terms of production and in terms of operating efficiency -- operational efficiency. So in PM3, we have delivered sustained performance from our H4 reservoirs, and we have -- and also better performance because we completed the planned shutdown in the previous quarter where we had a shutdown for almost up to 12 days. In North Sabah, our performance did improve in the St Joseph field. And also, we experienced contribution, the first contribution since October 2024 from our 2 infill wells in SF30. In the U.K., we also improved in terms of production capabilities because we completed the turnaround after having completed turnaround in the preceding quarter and also resolved certain operational issues that we reported last quarter by October 2024. So all in all -- and of course, Brunei, we incorporated the 2.5 months impact. One thing to note is that during the current quarter in Brunei, yes, we did include 2.5 months of performance, but it did not include any sales of [Technical Difficulty] so only gas during the [Technical Difficulty]. We'll go through that in detail later, but that is somewhat compensated a little bit by -- or somewhat sort of offset slightly with lower prices obtained for our oil and gas sales in the current quarter. The next page illustrates the key areas in the P&L, so revenue, EBITDA and profit after tax. The better operational performance has underpinned better profit margins. Revenue -- starting from revenue. Revenue has increased by a significant amount by 37% from MYR 477 million to about MYR 650 million in the December quarter. We have higher oil price -- I mean, higher volume for both crude oil and gas. And in addition, all segments have improved, except maybe for just North Sabah. The other thing is in EBITDA, so even before normalization, our profits at the EBITDA level has gone up by about 130% from MYR 150 million to MYR 240 million thereabouts. There's a little box at the right, at the top corner, where we have highlighted that if we have normalized 1 transaction in this area, that would have given us a 55% increase in EBITDA. And that's a well that we have written off for prudence. Now we drilled this well in the PM327 PSC in Peninsular Hibiscus. And based on the well results and after having performed our internal assessment, we took a prudent view on the results. And hence, we wrote off up to MYR 17.5 million in the December quarter. That does not really mean the operator, which is PETRONAS has done the same thing. We do not know. But we have taken a very prudent stand on this particular activity. So we wrote it off. But if you add it back, our profit -- our EBITDA margin is about MYR 360 million. One thing to note as well is in the previous quarter, if you remember, we did charge close to MYR 20 million net to the group unrealized ForEx losses. That's because the foreign exchange -- the U.S. dollars rate went down to about 4.2 in -- as of September, but it has increased now back to about 4.4-ish. And so there is a corresponding gain that we have recognized up to MYR 16 million in the current quarter. So for PAT, in addition to the one-off normalized that I just mentioned earlier on the Rosebay well in Peninsular Malaysia, we had a one-off charge this quarter, and that came from the EPL regime in the U.K. You will also recall last time, we did highlight that some changes were being considered by the government in the U.K. And 2 of the 3 changes that were proposed, 2 changes were brought into effect on the 1st of November 2024. The impact is MYR 7.3 million. I will go into a little bit more -- or perhaps maybe a good time to do it. There are 2 changes that were brought into place. The first one is the dropping off an uplift of 29% for capital allowance purposes in the EPL, and that has stopped. So now capital allowance is restricted to just 100%. It was 129%. Now it's back -- it's down to 100% in terms of the availability for tax offset in the form of capital allowance of CapEx and expenditure incurred. The second is incrementing the EPL rate from 35% to 38%, so 3% increase. The first change did not result in any impact to the P&L. It's just a matter of not having the ability to increase -- I mean, to go to an offset of 129%. But the second one, the increase from 35% to 38% has resulted in us having to recognize a noncash deferred tax liability of MYR 7.3 million. So that has been taken up in this current quarter's books. In summary, just across revenue, EBITDA and PAT, the impact from the Brunei assets for 2.5 months was revenue of MYR 81 million, EBITDA of MYR 57 million and PAT of MYR 15 million. And again, we don't condensate for the quarter, okay? So fairly solid performance for the quarter. The next page illustrates the margins. We compare our average selling price for each of the assets and across the group and also its OpEx per BOE or per barrel. The top 3 bars are for the assets in Malaysia, so PM3, North Sabah and Kinabalu. Very healthy. Despite a little bit of a drop in the selling prices, we are hovering around 50% to 60% profit margin, EBITDA margin during the quarter. You can see also across all these quarters that we have reported, there is a very high level of consistency and predictability to a certain extent despite the fluctuations in OpEx per BOE and also in the average selling prices. So it does signify that the business in Malaysia is sustainable and it remains profitable. In Anasuria, after having recovered from last quarter's drop in production because of the shutdown, our profit margin has now shot up back to 70%, very high despite oil prices below $80. And the good news is Block B MLJ in Brunei, again, we don't condensate, so I keep repeating it because it's a very important thing to note is that even without condensate, our profit margin is 70%. I think it is -- I would like to highlight that when condensate comes into play or when it's recorded in the P&L in some of the quarters, we expect to have condensate sales of up to about 3x -- 3 on 3 in 3 quarters in a particular calendar year. So when that -- when those revenues are recorded, the cost of sales are very -- the related costs are very, very low because the only thing that gets captured as cost of sales for condensate is basically the logistics cost, and that is not high at all. So the cost that we have recognized in this quarter is for the entire production and is supported in terms of revenue only from gas, and that brings about 70%. So what it means is throughout the entire group's profile in various countries, Malaysia, U.K., Brunei have demonstrated that [Technical Difficulty] profitable in every single asset throughout all these 3 jurisdictions under various tax environment and operating environment. Then I'll move on to the next page, which breaks down key components of balance sheet. Naturally, after taking in the impact of our acquisition of the Brunei asset in October, total assets have increased. To be precise, the Brunei assets brought in MYR 1.8 billion increment to total assets -- total assets line. And that's the reason why it's gone up by quite a bit. However, if you look at shareholders' funds, if you compare to 30th June, which was the last financial year, it has gone down a little bit by MYR 147 million despite this increase in total assets. And the sole reason for that really is the fluctuation in the U.S. dollars compared to the Malaysian ringgit. As at 30th June 2024, that rate was 4.72. And as at 31st December 2024, it was 4.47. Hence, we had to revalue some of all of our U.S. dollars denominated assets and liabilities and the combined impact for the 6 months is a drop in MYR 147 million, but this does not impact the balance sheet -- the P&L. It hits to other reserve -- other shareholders' equity, okay? But that explains why there's a drop. The cash balance has gone down, and that's quite easily explained. It is really because we have used close to about MYR 320 million -- about MYR 324 million of our internal generated funds to part finance the acquisition of the Brunei asset, which was paid in October. And that is the main reason why it has gone down. But there's nothing to be alarmed about because we have collected -- I mean, just for information, if you look at the balance sheet, you'll see that our trade receivables balance is fairly high. And out of that, we collected up to -- close to MYR 300 million, which represents obviously proceeds from the optics of oil and gas in January alone and a further maybe MYR 200 million at least up to this stage in February. So MYR 0.5 billion was collected during this -- close to MYR 0.5 billion has been collected in these 2 months actually. So a lot of timing, but that low cash balance does not really pose any concern. The debt balance draw down. We drew down a term -- I mean the debt balance consists of a couple of elements, a term loan that has been drawn down and revolving credit facility as well during the current period. I think with that, what I would like to introduce you to Mohammed Farroukh. He is joining us for the first time this quarter. He is the Country Manager for our Brunei asset. So Farroukh will run you through some of our operational key items in Brunei.

Good afternoon. I will go through some highlights of Brunei operations. Starting with HSE. Brunei asset has been performing very strongly with a 25-year LTI record and maintaining that good performance last quarter with zero lost time injury and also a zero recordable incident. We continue to remain vigilant to ensure our activities are conducted safely and in compliance with all governing standards and procedures. The asset is also ISO14001 certified, the international standard for environmental management systems. And we have zero Tier 1 and Tier 2 process events, which means zero major leaks that may [ power skills ]. The opportunity to move with Brunei asset from TotalEnergies on 14 October 2024, the transmission has been smooth and seamless. Business and production operations continuity were achieved without major issues. And one of the key activities last quarter was also the well intervention campaign, so we successfully had intervention activity on MLJ3-03 well, resulting in higher-than-expected gains for both gas and condensate. The activities for 2025, this year will be a busy year with a few major non-routine activities lined up. We will continue with the well intervention campaign. We plan to start early in April to ensure we can complete the scope and realize the production gains earlier in the year. We will also be having our major full field shutdown, which normally happens every 4 years. This will be done in 2 stages in September and October to cater to the LPC project schedule activities. The LPC project, which is our major capital project, is currently ongoing and picking up, I think, activities, and we target to start up by November 2025. At the same time, we are continuously looking at other block opportunities in Brunei and we'll be keen to participate in Brunei bid rounds. On product sales, as mentioned by C.Y, we had no condensate update last quarter. We sold around 2,700 million standard gas net at an average price of USD 4.65 per Mscf. The average net production rate was around 7,000 BOE per day and our unit production cost was around $7.90 per barrel. Production for the quarter was lower than forecast, mainly due to 9-day total production shutdown caused by BLNG unplanned shutdown. And -- but on a positive note, as mentioned earlier, we executed our well intervention campaign with higher-than-expected gains. Under the recent development for the LPC project, which is our [ BJ ] capital project is in progress right now. These are the numbers as at end of quarter. Pleased to report that as per last week the latest numbers, we have reached around 750,000 hours without lost time injury, and we are at around 70% project completion. And as for the compressor is underway right now and expected to arrive at Brunei around early March '25.

Okay. A snapshot of the P&L for Brunei. I think the key metrics have been highlighted by Farroukh. But in this -- on this page, what would be worth noting is that the gross profit margin even without condensate is high at 75%. And hence, accordingly, the EBITDA margin is also fairly high, [ actually some of it. ] You have to take note that we are actually still undergoing certain activities, conducting certain activities to transition the company and the operations into Hibiscus and -- quite naturally, with all of our acquisitions, we do have to incur some costs relating to this transition to these activities. In this particular period, we incurred about MYR 4.5 million that's been taken up in these numbers. So what you see here has offset the MYR 4.5 million -- has included the MYR 4.5 million cost that we have incurred. I'll go through the tax line. So the tax regime in Brunei for oil and gas operations is 55% tax rate. So what you see here, the ETR, the effective tax rate of 55.7% is fairly consistent. So nothing abnormal in this rate, okay? So in summary, what all this means is in 2.5 months with our condensate sale, we have achieved -- and with the one-off to a certain extent, all transition costs that we have incurred, we are still able to report 19% profit margin at the PAT level. Okay. The next section would be on Malaysian operations and Pascal...

Thanks, C.Y. Let me walk you through the 3 major PSCs in Malaysia. So overall, all 3 had quite good performance in quarter 2. I'll start off with the Kinabalu. We had 1 offtake in Kinabalu. We sold a little over 300,000 barrels at a realized price of $82. The net production rate is slightly higher than the previous quarter, although the gross production rate is slightly lower than the previous quarter. This is simply due to the entitlement, essentially how many cost barrels we get back because of our spending over the last quarter. And as you can see, according to that, the net OpEx per barrel is higher than the previous quarter. So the main activity was the -- we actually took down 2 of the wells -- production from 2 of the wells to install what's called electrical submersible pumps, and this is to enhance production from these wells. So this is both the CapEx that was expended for that and slightly higher OpEx. The work has been completed. So the wells are both producing. The performance can be still improved a little bit, but overall, it was successful. Okay. Next, on the PM3 CAA, I think all metrics were better than in the previous quarter. Yes, so we had 2 offtakes for oil. We sold 620,000 barrels at an average realized price of $75, and we sold 4,600 MMscf of gas at an average price of $5.46. The production rate -- the net production rate was slightly better than the previous quarter, and the net CapEx per barrel came down quite a bit as well. Part of the good sustained production rate, I think, C.Y I mentioned it earlier already, is the continued strong performance from the H4 reservoirs. Some of you may recall, this is a project that we've been completing over the last few years. And late last year, we completed the final well, which is a water injector, which turned out to be the longest well ever drilled in Malaysia. Overall, the whole project is performing quite well. The other part of the good performance is the fact that the demand for gas, particularly on the Vietnam side has been very, very strong, especially towards the end of the year, and that led to us exporting 34% more gas than projected previously. Essentially, the OpEx per barrel is due to both the higher production and the lower production costs. In terms of CapEx, we spent about MYR 15 million in the quarter. That's to replace the turbo compressor and the power turbine and some smaller minor CapEx projects. Just to preempt some questions, I'm sure you're going to ask the PSC extension. It's in the final stages at the moment. We're just waiting on 1 final approval. And we've been told that should be forthcoming any time now. All right. Last, North Sabah. So North Sabah also had an offtake in the second quarter. We sold 300,000 barrels, 300,000 barrels at realized price of $77.80. The average net production rate was better than previous quarter. It used be -- previous quarter was affected by the -- one of the main compressors in the St. Joseph field being down that was rectified and production came back. But also, we got some of the production from the newly drilled SF30 wells. This is the SF30 waterflood Phase 2 project. We continue drilling there. As you see, the CapEx that we spent in the last quarter was MYR 112 million. So this project will continue drilling until the end of next month. And then the last part of the project is the installation of the water injection facilities, which is slated for end of [Technical Difficulty] in that September time frame.

I'll just summarize some of the key notable areas from an operational perspective in the U.K. And so this would refer to the Anasuria cluster asset. A good quarter overall. Last quarter, we had the offshore -- we have the offshore turnaround, yes, for about 38 days. The FPSO was shut down for about 38 days. And we also reported last quarter when we wanted to get back online after that campaign, there were a couple of issues that we -- operational issues that we encountered. One was resolved in September and the other one was the oil contamination issue was fully resolved sometime towards the end of October. So consistent with that observation, if you look at the net production rate, it has shot up from about 1,000 BOE per day to about 1,819 barrels of oil equivalent per day. So very good recovery. OpEx per barrel as a result, dropped from $85 per BOE to USD 31. So we do expect this asset to hover around just between the mid-20s to 30 in terms of OpEx per BOE in a normal quarter, so we are almost back to where we want it to be. Uptime -- it's not highlighted on this page, but uptime has improved from 46% to 78%, uptime of the FPSO, and so that's another key area that has provided the underlying conditions that allow us to report such good numbers in production. We expect to sell -- this quarter, we sold about 134,000 barrels of oil. And in the coming quarter, because we are back to where we want it to be in terms of facilities performance, we expect to be about -- the cargo should be about close to 170,000 barrels of oil, our share. Not a lot of CapEx spend in the current quarter, just about MYR 4 million, and that's purely upgrade and replacement of facilities on the Anasuria FPSO. So Joyce, for the next section.

[ We'll start with ] financial year 2025 guidance. This is for the dividends and sales. We had a good half year, first half 2025 in terms of operating cash flows. We achieved MYR 1.2 billion in terms of operating cash flows versus MYR 559 million first half of the previous year. So as a result of that, you can see that for first half this year, we are declaring MYR 0.05. We declared MYR 0.03. Last quarter, we declared MYR 0.02. So all in all, it's MYR 0.05. So when we compare that to first half last year, that's an increase of MYR 0.01. Last half year, we declared MYR 0.04. And we've given a dividend guidance for financial year 2025 of MYR 0.08 to MYR 0.10, depending on the oil is between $70 to $80. That translates to dividend yield of 5% to 6% per annum. And as you know, our dividends, we have been declaring dividends year-on-year, and it's been an increasing trend. We've increased dividends every year since our maiden dividend in 2021. In terms of sales of oil, condensate and gas, in financial year 2024, we gave a guidance -- sale guidance of 7.5 million to 7.8 million barrels of oil equivalent. We exceeded this in terms of actual numbers of 7.85 million barrels of oil equivalent. So this year, we are providing a sales guidance of 9.1 million barrels of oil. That's 17% increase from last year. And as you can see, we are on track. We've hit the -- we came up 47%. And you may remember that quarter 1, we had planned shutdowns, so our sales were lower, and we expect to catch up for the rest of the 9.1 million barrel target.

Okay. Let me close off the formal part of the presentation. I think as a company, we are just where we thought we would be. Our production is -- we were thinking we were going to be around 28,000 to 29,000 barrels of oil equivalent a day around this time, and that's exactly where we are. And we are moving towards 33,000, 35,000 barrels of oil equivalent per day number towards the end of the year. So on target to reach what are our targets for 2025. And as you can see, the numbers we are now producing, and this is a net number. We are producing actually about -- nearly 100,000 barrels of oil equivalent a day at this point in time, so we are operating these assets. 97% of the assets we operate, we operate these assets. We have other joint venture partners. And therefore, they take their share, and this is our net production. 100,000 barrels a day -- an operation of about 100,000 barrels a day oil equivalent is not a small operation. It is a large operation involving about 1,000 people actually. You can see our sales volume numbers also on target and allowing us to kind of -- we think we are achieving our target of 9.1 million barrels of oil for the financial year. And everything seems to be on target. As Joyce mentioned just now, first half of the year, for us, the most important metric that we follow is the net cash generated from operating activities. It's the most important number for us, and that's sitting at about MYR 1.2 billion for the first 6 months. So overall, quite happy with the way the operations are going, the dividends. We are, with the strong cash flow, able to accelerate declaration of dividends. We are doing some share buybacks. The volumes are where they want to be. And as Andrew mentioned, just now, we've seen a 15%, isn't it, Andrew, decrease in oil price from quarter-to-quarter, but all our numbers are up. So I think overall, really happy with the quarter. We are looking forward to PM3 extension. When that comes through, that will add considerable value to our Peninsular Malaysia operations. Brunei has started really well. I mean, MYR 15 million net profit for the quarter. That's from 66 days of production after taking a MYR 4 million transition cost charge, okay? So that looks like there will be a number in the MYR 25 million, MYR 26 million in a proper full quarter kind of thing. And bear in mind what C.Y said, no condensate sales. The condensate -- the cost of production for condensate has been taken up, but the revenues have not been taken up. So again, a further opportunity for upside. I think just the overall, I mean, overall, we've got opportunities in U.K. Teal West is coming up. It's a year of project execution. And also, we have to think about the fact that we are managing all of this, keeping our gearing levels at a reasonable level. That's another thing. And we are fully funded for activities that we are undertaking. At around $60, $65 oil price, we are fully funded for everything we're doing this year. So overall, I can't say we are unhappy with performance. We are kind of like taking over. We can't speak much for the equities market. I mean that has a life of its own. But in terms of operations, we are on plan, actually, I would say. So happy to take your questions. Can we go back again to Slide 7? I think C.Y mentioned it just now. But these are the assets that these are primary assets, PM3, North Sabah, Kinabalu, Anasuria and now Brunei. And you can see the performance since 2019 in all of these assets, except Kinabalu 2022 and PM3 also comes in 2022, when we acquired those assets. But all of those assets, positive cash flows, good EBITDA margins, different jurisdictions, giving us more resilience as a company and strong operations actually, and we operate 97% of all of this. So U.K. as well, things are -- there seems to be a change in sentiment in the U.K. now with all the political developments, the American siding with the Russians and everyone is feeling very insecure in the U.K., in Europe actually generally. So I think that's good because I think the dependency that Europe has had on the U.S. for LNG is now not a given actually. So if you have got gas and -- oil and gas like what the U.K. has, I don't think it's very smart to actually just shut it down, okay? I think what you want to be doing is to try to become more energy independent. So even though we've had a pretty tough time in the last 3 years in the U.K. with all these taxes, EPL and all of that, the energy profits levy in the U.K., we feel it's going to -- this whole political environment is going to cause a little bit of a reset with that. And I think that will be positive. There are going to be some -- there's going to be some volatility because of this energy profits levy charges into the P&L actually. It's all deferred tax related. C.Y alluded to it just now. But just imagine it as being entirely noncash, and we need to just stress this a lot. It's entirely noncash. It's something that you take a charge on and then it gets unwound over the following quarters. It's just one of these accounting anomalies that because of the specific conditions of the energy profits levy, there are some charges you have to take to your P&L and then you unwind it quarter-on-quarter afterwards. So it's just a process actually. So don't -- if it comes in, don't worry about it too much. It's noncash. It doesn't -- the most key line for all of us at this point in time in a world that's in the current state actually is net cash generated from operating activities. That's what keeps you going actually, your cash flow. So the rest of the accounts are, there are so many things that go into it, which are noncash nowadays. It's -- sometimes you can misunderstand it easily. So I think I'll just leave it there, and then we can take some questions. Can we do that?

[Operator Instructions]

Dr. Ken, this is Raymond here again. The -- I noticed that the reserves and resources slide is missing this time around.

Yes. I think we didn't reset our numbers to 1st January. I think we are waiting on a, I think, revised set of numbers from Brunei. So we have a CPR from Brunei from pre-acquisition, but it may change hopefully favorably because once we took over the asset 4 months ago, 3 months ago, we actually saw some data that we have not seen during the due diligence, which we think may have hopefully a favorable impact. And therefore, we will -- we are looking at the data now, and we didn't want to put something out today and then change it by the next quarter actually. So we will -- you will see one, hopefully, C.Y by next quarter, I hope. We have given ourselves until the middle of the year, but it might be the next quarter, just depending on how it goes. But hopefully, we will see something. Nothing else has changed actually. None of the other assets have changed, just to be reduced by the amount we produced over the quarter. That's about it, Raymond. But just to say, when we took over Brunei, we got our hands on some relevant data, which we had not seen before and, hopefully, has a favorable impact, hopefully. We're working on it now.

Okay. I mean the increase in the reserves is roughly in what kind of ballpark percentage for Brunei?

I don't want to -- okay, there's always 2C and 2P business. Sometimes things are classified as 2C, so I don't want to say something that I may regret later. But yes, because you get some 2Ps, you may lose some 2Cs, et cetera. So we'll just hold off and give it to you.

The report is not ready yet.

Yes, the report is not ready yet, and it would be in the form of a CPR. So I don't want to undermine the work of the third party.

You can use the existing...

Yes, you can -- the existing one is valid. As anything that happens, it will be for the betterment.

So Raymond, you can actually find it on our investor presentation slides also on our website. Everyone will have that also the summary of all our assets. That will still be valid. Raymond, anything else? Otherwise, we'll move on to Raymond Pang. He's asking what is the company's revaluation policy on its assets?

Only impairments. C.Y doesn't allow us to revalue upwards. He's too tough for us actually. He's always holding a stake called impairment. I'm waiting for the carrot. Where is the carrot, C.Y?

No, I think -- but to answer the question, Raymond, the -- from a monetary perspective, carrying value on the balance sheet, we do not do that because that's not permitted actually under the accounting standards. So you don't increase your valuation from management's side. But I think what the early discussion was on the reserve, which is the underlying asset, which is actually more important if you think about it because that really signifies how much growth you have created in these assets after we have taken them over. So in that aspect, what we do is we do have -- it's either 1 or 2 ways. One is you have an external party competent person's report. Once that is ready and -- completed and ready, we announce that every time we have a report like that of that nature. And then that would form a way to sort of restate your reserve profile for each of the asset. The second thing is, in fact, sometimes there may be a major event. For example, it could be bad -- it could be good or it could be bad. And if any of that major event were to occur, then it is keen to a trigger event perhaps. And then we will have to either go for a third-party report. And if -- failing which, we do have qualified internal technical experts that would have the accreditation and the license and also qualification as part of, again, reporting standards that we will have to -- then we can leverage on that. So it's not always a third party that we can rely upon for this sort of work. We can do it in-house because we do have these talents available. So either one of -- but if there is no -- if there isn't any major event that signify that we should do work like this, then we would normally just follow what we have done in the most recent analysis. But for Brunei, I can't call out just now. Brunei, we just took over. We have now in hand firsthand information with the talents that we have -- we are working with that came to us from -- when we took over the acquisition, we took over the asset from Total. So that's something that's akin to a trigger event. So we are now reassessing that completely, so that's the policy we have.

Alvin from PhillipCapital is asking also, Lily, may I know if the CapEx cost and the write-off for PM327 will be capitalized or expensed?

The MYR 17.5 million that I spoke about earlier that has been written off in the current quarter, that is for the second exploration well, Rosebay, and that was taken off the books. After some internal assessment, and we took a prudent view of that outcome. And hence, we took it off -- we wrote it off. There was a carrying -- there is a carrying value in 327 because when we acquired the -- when we took over the -- or when we farmed into the license, there have been some expenditure incurred, and those are still in our balance sheet. That, I think, accumulates a total to about close to slightly above MYR 50 million. So that is still carried in the books. We do see value in this exploration opportunity because there are quite a number of wells that we have not yet drilled between maybe, maybe this year, maybe next year. Our plans are being put in place with the partner, basically PETRONAS. And so we are still assessing that. But yes, there is -- so 327, the one you talked about written off, no longer in the books. It's history now, but there is about just over MYR 50 million that we still have in the balance sheet.

Thanks, C.Y. And the selling price for -- I think, he's asking for the Brunei gas, what's the selling price benchmark, too? Is it according to Asia and not Henry Hub? For Brunei Gas, what's the selling price benchmark, too?

We use the price to BLNG is linked to the LNG price, which is the CIF, which -- the CIF is cargo, insurance, and freight. That's the price that BLNG sells to its customers. So our price, the price of our gas that we sell to BLNG is a percentage of that CIF. In terms of the -- what the CIF is back to, I'm not too sure. We need to check.

I thought it was -- is it not KKM?

JKM. Japan Korean Marker.

Alvin, I hope that answered your question. Any further questions? Or if you want to tell a feedback also on what you think of the results are. I think, Alvin is just saying sorry, I might miss a bit. So is the BLNG sold at Asia LNG prices?

JKM.

Japan Korean...

Japan Korean Marker for LNG.

You mean the Brunei tax rate, I presume, Alvin?

It's just up a bit. This time, he is saying, CapEx are not tax deductible. And he is asking why it's gone up quite a bit?

Are you talking about at the group level? Or is it Brunei? Perhaps it is Brunei. Overall. So inched up a bit -- oh, yes, okay. So there could be at least 2 reasons for that. The first one would be Brunei. So Brunei's taxable income is taxed at a rate of 55%. That's a little bit higher than our overall -- because our overall rate, if you include U.K., U.K. is quite high at 78%. Then you would come to about 40 -- mid-40s. So Brunei is slightly higher than our average prior to this. So that is one reason. I think you also asked another question on Brunei tax. So yes, so 55% on petroleum oil and gas operations in the country. The mechanism to compute the taxable income is not very different from [ PITR ]. So you do get allowance and stuff like that, the types of deductibles or types of taxable income and deductible expenses, I mentioned, are fairly similar. So not too different. I think they have leveraged -- I think the Brunei government has more or less leveraged on the mechanism used for [ PITR ] in many ways. So that's -- but the rate is a bit higher. So that's number one. Secondly, in the previous quarter, we did have a higher write-back -- compared to this quarter, a higher deferred tax asset recognition in the U.K., and that's contributed by the certain activities during the quarter and also an outlook of how the CapEx is going to be incurred. Last quarter, we spent a lot less CapEx in U.K. And this quarter, we did invest more CapEx, and that's really because of the progression of Teal West well. We are not investing a lot comparatively in Anasuria cluster and Marigold at this point. So in the U.K., it's largely Teal West, and you will probably see more of that a little bit more in the next quarter. And that's really, again, is deferred tax again because when you -- this quarter, of course, there's a one-off charge I mentioned, MYR 7.3 million and, of course, higher CapEx charge. So there is a little bit more [ EPL ] that we recognize. If you look at U.K., so those are the main reasons, okay? The other reasons are in Malaysia, they are fairly, fairly consistent, not very big variances. But if you look at U.K., I need to point out that when you look at the U.K. tax, you have to look at the components that make up the total tax amount that is in the QR. You look at the notes, you see deferred tax, corporate tax and all. And it is important to look at because a lot of the tax charge that you see in the U.K. is largely deferred tax, okay, either asset or liability. And that is how the U.K. market -- the U.K. tax computation works. It's very -- it's more complicated. There are a lot more considerations to be -- need to be put in place before you come to a final amount for each quarter. But it is also important since we are on tax in the U.K., it's also important to note that up to today, actually, since we -- since the EPL was incorporate -- was introduced in 2022, up to today, we have not paid a single cent of EPL. We have phased our CapEx very carefully. We have planned our activities very -- to the extent that we can, of course. And until today, we have not been levied a single cent of EPL. So we hope that we will continue with the Teal West investment because that allows a lot more capital allowance to offset against taxable income. Okay. I hope that answers some of the questions.

I will let us know if there's any further follow-up questions. [ Catherine Marcus ] is asking what's the current breakdown between retail and insti shareholding and also what's the foreign shareholding. Share the latest numbers.

Yes. So as of end Jan, when we do our analysis on a monthly basis, it's roughly 50-50 split for our insti between domestic and foreign. Total foreign is about 45% -- total insti, sorry, it's about 45%, and you have about 21% foreign.

Foreign has been quite consistent, right?

Yes. It's been about 20% to 25% range for the last few years.

We've got some pretty good foreign. I think we have Lazard, Barings, Vanguard. Any more questions? Alvin is asking about the CapEx on maintenance for the next 2 quarters. Is there...

Yes, yes, CapEx for sure. I mean 2025 is fairly high CapEx year, the calendar year, right? So we're finishing the drilling in North Sabah, should finish by the end of next month or early April. But then shortly after that, we will start drilling in PM3. So there's quite a few wells to be drilled there. Of course, not forgetting that Teal West is going to be drilled towards the later part of this year. So quite a bit of CapEx coming up. Maintenance activities, the North Sabah major maintenance campaign will start in the last quarter of the fiscal year this year, but that will be...

But Brunei, we need CapEx mainly for the LPC project, so that's like 80% of the CapEx plan for this year. Maintenance, yes, we have full shutdown this year. That happens every 4 years. So you can imagine additional maintenance budget allocated to this year compared to other. And we also have some asset [indiscernible] for this year.

I think U.K. maintenance, I think you can expect some recurring maintenance activities. Nothing is -- but again, the CapEx for Teal West will become higher, will be higher. March quarter will be higher, but not the highest. But of course, you expect more in the June quarter because that's the quarter where we expect to commence drilling. So that would be a quarter where you expect a little bit more than the other -- than what we have experienced so far and also in March.

Thanks, Alvin. Thanks for all the good questions. And is there anything you want to add on?

No, I think just to say that I think -- from an operations and business performance perspective, I don't think we have -- we are disappointed how things have turned out. It's a little bit unfortunate on how the share price is doing, but it seems that the entire energy sector is taking a little bit of a beating. And we think this will have to turn around sometime soon because just the way things are going on the ESG front because on the ESG front as well, things are -- it's not all about the energy transition to -- the composition is changing, especially. So let's see how it goes. But for us from a -- and we expect also the next quarter, if you take out the noise from the EPL, which could cause some yo-yoing of the results, we think it should be a reasonable quarter as well. And then we'll start seeing the full impact of a full quarter of Brunei results.

I think the feedback that we got so far is also good results, good dividend. So most people are pretty happy. Terence just put in the chat also, at some point, the share buybacks will get the shorts to cover. They seem to be full control of the stock price...

I think we need actually that...

We need your help...

It's -- we are trying to deliver the results, and we are trying to use -- I mean using excess cash to do our share buybacks. That is after allocating what we need to spend on dividends, the minimum dividends as well as investing into our business. But if the shareholders are able to collectively help to -- I mean, go in and to buy the shares because it's so undervalued. That means it frees up more cash for us to pay more dividend.

We have spent over MYR 100 million in the last 5 or 6 months just on share buybacks. Not many companies have the cash flow to do that. So we are a little bit blessed to be able to do it. But that MYR 100 million could have doubled our dividends for the year actually. That's the irony of it. And if our shareholders could help out and take up some shares at these prices, then I think it will be a win-win for everybody and people shorting our share would have to think carefully also.

Thank you for your support and also for your continued support for your time and your questions. Any more questions, feel free to reach out to any one of us. Thank you so much. Take care, and bye-bye.

Thank you. Bye-bye.