PETALING JAYA: Dialog Group Bhd
’s RAJA Cluster Small Field Asset project could lift its earnings by approximately 4% from the financial year 2029 (FY29) onwards after production commences, BIMB Research estimates.
The research house said the project is expected to see first oil in FY29, offering a new source of recurring upstream income over the production life of the asset.
“RAJA represents a modest but meaningful addition to Dialog’s earnings growth profile, particularly as contribution from the project should coincide with the progressive ramp-up of its other recent investments,” it said.
The group’s RAJA Cluster Small Field Asset Production Sharing Contract recently reached a final investment decision after securing approval from Petroliam Nasional Bhd for the field development and abandonment plan.
The development, valued at US$81mil, holds an estimated 6.1 million barrels of oil equivalent of proved and probable (2P) oil reserves, the research house said.
First production is targeted to be within two years, and is expected to continue for the remaining 10 years of the contract duration.
“We view the development positively as it expands Dialog’s upstream portfolio beyond its existing Baram Junior Cluster,” BIMB Research said.
The research house has maintained a “buy” rating on the stock, and raised the target price to RM2.40 from RM2.25 previously to reflect the RAJA Cluster’s value and its incremental contribution to the group’s medium-term earnings growth.
MBSB Research noted that Dialog is set to capture 100% of production revenue from the project, providing a high-margin recurring income over the 10-year production window.
It added that a strengthening upstream capability also complements the group’s midstream and downstream assets, helping protect against single-segment economic downturns.
The research house projected Dialog’s revenue growth to add around 3% to 5% once commercial production commences.
Assuming the approximate 6.1 million stock tank barrels are extracted evenly over the 10-year period, annual peak production will average approximately 600,000 barrels or about 1,600 to 1,800 barrels per day, it said.
“This would roughly contribute to a 5% to 10% uplift in Dialog’s net earnings throughout the production phase,” it added.
Despite this, the research house noted predicted earnings increments heavily hinge on prevailing crude oil prices, as well as potential enhanced oil recovery plans towards the end of the phase.
Beyond oil and gas prices volatility, other risks to the project flagged include subsurface complexity of marginal fields, which could underperform initial 2P volume estimates, as well as supply chain and weather disruptions.
