Dialog's RAJA Cluster project boosts upstream growth visibility

KUALA LUMPUR: Dialog Group Bhd's final investment decision for the RAJA Cluster small field asset production sharing contract is expected to provide greater visibility on its growing upstream portfolio.

Public Investment Bank Bhd (PublicInvest) said based on the project's US$81 million (RM330.29 million) value, development cost is estimated at about US$13.30 per barrel of 2P reserves, which appears manageable given Dialog's balance sheet.

"At this juncture, Dialog does not disclose the production profile and operating cost," PublicInvest said in a note.

Yesterday, Dialog announced that it had received approval from Petroliam Nasional Bhd, through Malaysia Petroleum Management, for the field development and abandonment plan.

Assuming initial production of 3,000 barrels per day and an oil price of US$65 per barrel, PublicInvest said the project could contribute RM30 million to RM50 million in additional earnings in Dialog's financial year 2029 (FY29).

This could rise to RM50 million to RM70 million in FY30, its first full year of production.

"These estimates remain preliminary and are subject to the actual production profile and operating cost," it said.

The firm maintained its "Neutral" call on Dialog and raised its target price to RM2.10 from RM2.07 to reflect the development.