CIMB Research said it expects meaningful earnings accretion from FY27 onwards as production ramps up.
PETALING JAYA: Dialog Group Bhd
’s onshore plant turnaround activity for Petroliam Nasional Bhd (PETRONAS) is progressing as planned, with meaningful earnings contribution expected from the second half of the group’s financial year ending June 30, 2026 (FY26) onwards.
Following a recent meeting with the board, CIMB Research said preparatory works for the projects have already commenced, adding that the oil and gas services provider is currently engaging with clients to finalise the scope and execution timelines.
“While further details such as the facilities involved and estimated contract value were not disclosed, our findings indicate that the current turnaround assignments are likely tied to PETRONAS’ Kertih facilities.
“Our assumption is supported by PETRONAS’ 2025 to 2027 Activity Outlook, which lists a Cluster 3 plant turnaround in Kertih scheduled for the fourth quarter of this year; and Dialog’s established operating presence and proven track record in major downstream hubs such as Kertih, Melaka and Gebeng during past maintenance cycles.”
With no cost overruns anticipated, CIMB Research said earnings for FY26 are expected to be supported by steady maintenance and turnaround activity at higher rates following the renewal of Dialog’s three-plus-two-year master service agreement with PETRONAS in July 2024.
“We project profit contributions from maintenance and turnaround activity at RM37.5mil for FY26, rising to RM51.2mil in FY27 and RM53.7mil in FY28, compared with normalised annual contributions of between RM20mil and RM25mil for maintenance work prior to the renewal.
“Overall, we view the contract renewal and ramp-up in turnaround activity as key earnings catalysts that will support recovery in Dialog’s downstream segment.”
Additionally, the research house said Dialog had said that the Baram Junior Cluster (BJC) small field asset production-sharing contract (PSC) was progressing well.
“Overall field development work progress, budgets, and the timeline are within expectations and on track to achieve first gas by January 2027, aligning with the original field development and abandonment plan approved by PETRONAS earlier this year.
“The engineering and fabrication phases are largely advancing as scheduled, with key long-lead items already procured and offshore installation works expected to commence by mid-2026.”
From a financial standpoint, the research house said Dialog’s share of the project’s total development cost of US$235mil amounts to approximately US$165mil for its 70% participating interest, to be funded progressively over FY25 to FY27.
CIMB Research added that it expects meaningful earnings accretion from FY27 onwards as production ramps up.
“Based on Dialog’s disclosed reserves of 137 billion standard cubic feet of gas and two million barrels of oil equivalent (boe), we estimate a total recoverable resource of approximately 24.8 million boe.
“Based on a 10-year production life and average realised price assumptions of US$26.1 per boe for gas and US$65 per boe for oil, the field could generate cumulative revenue of about RM3.1bil over the production period.”
