Khamis, 26 Disember 2013

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The Star Online: Business

Hibiscus: Cost of Oman well will be capitalised

Posted: 26 Dec 2013 08:00 AM PST

PETALING JAYA: Hibiscus Petroleum Bhd, which saw its share and warrant prices plunge to a three-month low of RM1.53 and RM1.02, respectively, has announced that its unit responsible for the oil drilling programme in Block 50 Oman would be capitalising the cost of the Masirah North North 1 (MNN 1) well and not be writing it off at this stage.

In an announcement to Bursa Malaysia, the company said: "Until and unless the area is abandoned (and as there are no plans to abandon the area currently), there is no requirement for costs to be written off.

"In this event, Hibiscus would not be recognising its share of the cost of the MNN 1 well in its income statement at this time."

Hibiscus owns 35% in Lime Petroleum Plc, which in turn has a 64% stake in Masirah Oil Ltd, the entity which holds the rights to the Block 50 concession.

The special-purpose acquisition company (SPAC) told the stock exchange that the total estimated cost incurred by Masirah for the recently drilled MNN 1 well was approximately RM60mil.

"Hibiscus and Lime have both adopted the full cost method of accounting, wherein the oil and gas (O&G) expenditure incurred is accumulated in respect of each identifiable area of interest and capitalised (and not expensed) to the extent certain conditions are satisfied," it added.

It also said it was too premature to conclude on potential impairment, if any, due to its plan to drill the second well in the near future.

"The impact of the MNN 1 well's result on the impairment assessment would be fully evaluated by Lime/Masirah, and the results would be disclosed in Lime's audited consolidated financial statements for the financial year ending Dec 31, 2013," it said, adding that the results of its assessment would be disclosed in its next quarterly report.

The total estimated cost of the second exploration well is expected to be approximately RM83mil, likely to be fully funded by cash already available in Masirah.

O&G analysts contacted by StarBiz said the selldown in Hibiscus shares and warrants was due to negative sentiment, following results that well number one was not commercially viable and that it might have to write off the asset.

The mother shares plunged 42.91% from the peak of RM2.68 on Dec 13, while its warrants dived 51.66% from RM2.11. Yesterday alone, the stock lost 31 sen, or 16.85%, while the warrants fell 30 sen, or 22.73%.

In an earlier report, RHB Research said Hibiscus shares could be worth as low as RM1.18 if its drilling campaign in Oman Block 50 ended in failure.

Its Singapore Exchange-listed joint-venture partner Rex International Holdings Ltd, which provided the proprietary technology to detect potential oil reserves, also fell 5.5 cents to 58.5 cents.

Separately, Bloomberg quoted an analyst from United Overseas Bank Ltd as saying the Oman block was one of Rex International's major assets, and hence the great amount of attention on the development and significant drop in share price.

Rex International said the data from the coring and logging programmes would be used to better understand the area's geology, and that the drilling of the second exploration well in the area would start within two weeks, according to the report.

While some observers expected the sentiment on the first SPAC to possibly spill over to other listed SPACs, Sona Petroleum Bhd was traded unchanged at 44.5 sen, while its warrants dipped 0.5 sen to 26 sen.

CLIQ Energy Bhd, on the other hand, fell marginally to 65.5 sen, while its warrants were one sen lower at 37 sen.

Japan inflation rate tops 1% for the first time in 5 years

Posted: 26 Dec 2013 06:59 PM PST

TOKYO: Japanese consumer inflation topped 1% in November for the first time in five years, making steady headway under the central bank's efforts to achieve a 2% inflation target via aggressive monetary stimulus.

Factory output rose for a third straight month, retail sales jumped and job availability hit a six-year high, other data showed on Friday, adding to growing signs the recovery in the world's third-largest economy is gathering momentum.

Still, analysts remain doubtful of whether inflation will accelerate quickly enough to meet the BoJ's ambitious target, set in April, of 2% inflation in roughly two years.

"Consumer prices show signs of being pushed up by the weak yen, so we're still looking at cost-push inflation. It remains to be seen how strongly wages will rise," said Yasuo Yamamoto, senior economist at Mizuno Research Institute in Tokyo.

The core consumer price index, which includes oil products but excludes volatile costs of fresh food, rose 1.2% in November from a year earlier, government data showed on Friday, roughly in line with a median market forecast for a 1.1% increase.

That was the fastest pace of growth since a 1.9% increase in October 2008, when a spike in global commodity prices pushed up import costs.

In a sign of broadening inflation, the so-called core-core inflation index – which excludes food and energy prices and is similar to the core index used in the US – rose 0.6% in the year to November. That marked the second straight month of gains and the biggest increase since August 1998.

Factory output rose 0.1% in November, less than a median market forecast for a 0.4% increase, although manufacturers surveyed by the government expect production to rise in December and January.

The BoJ launched an intense burst of monetary stimulus in April, pledging to accelerate inflation to 2% in roughly two years via aggressive asset purchases in a country mired in prolonged deflation.

Japan's economic growth slowed in the third quarter due to soft exports after outpacing its G7 counterparts in the first half of this year.

Analysts expect the economy to pick up again as consumers try to beat a sales tax hike in April next year, although they worry about the damage the higher tax could do to the economy in the latter half of next year.

BoJ Governor Haruhiko Kuroda has repeatedly said the pain from the sales tax hike will be temporary and will not derail the path towards achieving the bank's 2 percent price target.

He has also said wages, which have barely risen for years in Japan, need to rise for the BoJ to achieve its price target and for household spending to sustain strength.

In a sign of a tightening job market, the jobs-to-applicants ratio improved to 1.00 in November, meaning one job was available for each job seeker, from 0.98 in October.

This was the strongest demand for workers since the ratio was 1.01 in October 2007, as demand for real estate and other services led to labour shortages at some non-manufacturers.

Retail sales rose 4.0% in November from a year earlier, exceeding a median forecast for a 2.9% increase, partly due to demand ahead of a planned increase in the sales tax next year – Reuters. 

Textron to buy Beechcraft for US$1.4bil

Posted: 26 Dec 2013 06:44 PM PST

NEW YORK: Textron Inc, maker of Cessna planes, said it will buy aircraft maker Beechcraft Corpfor about $1.4 billion in cash, in a deal that sees Textron expand its aviation business.

Shares of Textron were up about 3 percent in extended trading after the announcement of the deal.

Beechcraft emerged from bankruptcy protection in February and was seeking buyers for its jet plane business which has been losing money.

Textron, which also makes the Bell helicopter, said it plans to finance the deal through a combination of available cash and up to $1.1 billion in new debt.

The deal is one of the largest after a U.S. budget agreement that experts say could set off the most robust series of mergers and acquisitions in the aerospace and defense sector in years.

In case Beechcraft is able to find a higher bidder, it will be liable to pay a termination fee of $48 million to Textron, Beechcraft said in a statement.

Credit Suisse and Morgan Stanley acted as financial advisors to Beech Holdings. JP Morgan served as financial adviser to Textron.- Reuters


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