1. INTRODUCTION
DIALOG Group Berhad ("DIALOG") is pleased to announce the signing of the RAJA Cluster Small Field Asset Production Sharing Contract ("RAJA Cluster SFA PSC") between Petroliam Nasional Berhad ("PETRONAS") through Malaysia Petroleum Management ("MPM"), and Dialog Resources Sdn Bhd ("Dialog Resources"), a wholly owned subsidiary of DIALOG. Under this contract, Dialog Resources will assume 100% participating interest and the role of operator for the RAJA Cluster SFA PSC.
The 14-year contract comes with a 2-year pre-development phase that allows Dialog Resources to finalise the field development plan and move into a subsequent 2-year development phase with first commercial production expected by the end of the development phase. The production phase will continue for the remaining 10 years or up to the expiry of the contract, whichever is earlier.
The RAJA Cluster SFA PSC includes minimum work commitment during the pre-development phase which will encompass a technical feasibility study, 3D seismic data reprocessing, and specialised studies. A field development and abandonment plan will be developed to determine the feasibility and commerciality of the asset and submitted to PETRONAS for approval. DIALOG will issue a subsequent announcement once the field development and abandonment plan has achieved Final Investment Decision ("FID") and received approval from PETRONAS.
Rationale and Prospects
DIALOG's strategy is to grow its upstream business and continue to develop its upstream capabilities in the oil and gas activities which include new field development, rejuvenation, and re-development of mature oil and gas fields. This is expected to create a robust platform for generating long term sustainable revenue from oil and gas production.
The increased upstream activities will provide further opportunities for DIALOG to participate in the provision of services in the value chain of the field development cycle.
The strengthening of the upstream capabilities will lead to an increase in DIALOG's sources of sustainable and recurring income in the future and reinforces DIALOG's position as a leading integrated technical service provider.
The participation in RAJA Cluster SFA PSC is in line with DIALOG's strategy to continue to expand and diversify across the upstream, midstream, downstream and renewable businesses of the energy sector, thereby increasing opportunities for synergies within DIALOG Group. DIALOG will remain focused and steadfast in the pursuit of diversification across the energy sector to strategically position the Group to weather different economic and oil price cycles, which is in line with the Group's strategy of generating long term recurring income.
2. DETAILS OF THE RAJA CLUSTER SFA PSC
2.1 SCOPE OF WORK
The scope of work of the RAJA Cluster SFA PSC would be the pre-development study, development and production of discovered resources over the full life of the RAJA Cluster SFA PSC followed by abandonment upon its expiry.
The scope of studies for pre-development phase will encompass a technical feasibility study, 3D seismic data reprocessing, and specialised studies. These studies will feed into a field development and abandonment plan to determine the feasibility and commerciality of the asset.
Details of which have been set out in the section above.
2.2 THE RAJA CLUSTER SFA PSC PERIOD
DIALOG's participation in the RAJA Cluster SFA PSC will take effect from 2 December 2024 for a duration of up to 14 years.
2.3 INFORMATION ON PETRONAS
Petroliam Nasional Berhad ("PETRONAS") is a global energy and solutions partner with presence in over 50 countries. Driven by its purpose to enrich lives for a sustainable future, PETRONAS continues to expand its portfolio in conventional and unconventional resources, and a diverse range of fuel, lubricant and petrochemical products.
PETRONAS manages petroleum resources through MPM which is entrusted to act for and on behalf of PETRONAS in the overall management of Malaysia's petroleum resources throughout the lifecycle of upstream oil and gas assets. MPM is the governing body for the country's petroleum development since PETRONAS was established in 1974.
2.4 INFORMATION ON DIALOG RESOURCES
Dialog Resources is a wholly owned subsidiary of DIALOG, whose principal activities are petroleum development, appraisal and production operations. DIALOG is a leading integrated technical service provider to the energy sector, in Malaysia and internationally.
3. FINANCIAL EFFECTS
The effect on the share capital and gearing will be determined upon the finalisation of the development phase. However, the Board is mindful to maintain a healthy gearing level. The RAJA Cluster SFA PSC is not expected to have any effects on the share capital and substantial shareholders' shareholding of DIALOG and is not expected to have any material effects on the earnings, net assets and gearing of DIALOG for the current financial year ending 30 June 2025. However, it is expected to contribute positively to the future earnings of DIALOG group.
4. RISKS
Risk factors affecting RAJA Cluster SFA PSC include but are not limited to minimum work and financial commitments amounting to USD3 million during pre-development phase, potential reservoir risks due to complex subsurface geology and execution risks, such as availability of skilled manpower, technical expertise and materials, changes in prices of materials, and changes in political, economic, financial market and regulatory conditions. DIALOG will undertake all the necessary efforts to mitigate the various risk factors identified.
5. INTERESTS OF DIRECTORS, MAJOR SHAREHOLDERS AND PERSONS CONNECTED WITH THEM
None of the directors of DIALOG, major shareholders of DIALOG and/or persons connected with them have any interest, whether direct or indirect, in the RAJA Cluster SFA PSC.
This announcement is dated 5 December 2024.