Dialog's RAJA Cluster project boosts upstream growth visibility

KUALA LUMPUR: The final investment decision for Dialog Group Bhd's RAJA Cluster small field asset production sharing contract is set to enhance the visibility of the company's expanding upstream portfolio, according to Public Investment Bank Bhd (PublicInvest). The project's value of US$81 million (RM330.29 million) suggests an estimated development cost of around US$13.30 per barrel of 2P reserves, which is considered feasible considering Dialog's financial position.

PublicInvest currently lacks details about the production profile and operating cost of the project. However, the firm announced that Dialog has received approval from Petroliam Nasional Bhd (PETRONAS) for the field development and abandonment plan, following a meeting between the two entities. With an initial production capacity of 3,000 barrels per day and an oil price of US$65 per barrel, the project is projected to contribute RM30 million to RM50 million in additional earnings for Dialog in financial year 2029 (FY29), and this estimate may increase to RM50 million to RM70 million in the first full year of production, FY30.

These figures are based on preliminary estimates and are contingent upon the actual production profile and operating cost. Despite this uncertainty, PublicInvest has maintained a Neutral rating on Dialog, while upgrading its target price to RM2.10 from the previous RM2.07, reflecting the potential benefits of the development.