AmInvest Research Reports

Dialog Group - New small field prospect in Baram

Publish date: Wed, 18 Jan 2023, 09:45 AM
0 7,273
An official blog in I3investor to publish research reports provided by AmInvest research team.

All materials published here are prepared by AmInvest. For latest offers on AmInvest trading products and news, please refer to:

Tel: +603 2036 1800 / +603 2032 2888
Fax: +603 2031 5210

Office Hours
Monday to Thursday: 8:45am – 5:45pm
Friday: 8:45am – 5:00pm
(GMT +08:00 Malaysia)
  • Dialog’s wholly-owned Dialog Resources has signed the Baram junior cluster small field asset production sharing contract (PSC) with Petronas and Petroleum Sarawak Exploration & Production (PSEP). Dialog Resources will take a 70% participating interest and operatorship of the PSC while PSEP is entitled for the remaining 30% ownership.
  • We also understand that the 14-year PSC entails a 2-year pre-development phase for Dialog Resources and PSEP to finalise the field development plan as well as a 2-year development phase with the first commercial production expected by the end of the phase.
  • The production phase will follow thereafter for the remaining 10 years or up to the expiry of the contract, whichever is earlier.
  • Also note that the PSC includes feasibility studies (encompass 3D seismic data reprocessing, specialised studies and resource assessment) during the predevelopment phase. Based on the outcome of the studies, a field development and abandonment plan will be developed to determine the feasibility and commerciality of the exploration block.
  • We are mildly positive on this fresh PSC prospect, which aims to grow the group’s presence in the upstream exploration and production segment (which accounted for 20-25% of FY22 EBIT). This also comes after the completed acquisition of a Thailand onshore producing asset namely the Concession L53/48 back in October 2022.
  • In addition, its other upstream assets, including the 100%-owned Bayan oilfield services contract and 20% interest in D35/D21/J4 PSC, are also consistently contributing long-term recurring income to the group. Despite limited disclosure, our back-of-envelop calculations suggest that total investments in the upstream operations may have amounted to RM2.2bil.
  • Nevertheless, since the PSC’s details will only be revealed upon the completion of feasibility studies, we maintain our forecasts for now.
  • We reiterate BUY on Dialog Group with an unchanged sum-of-parts based fair value of RM3.38/share, which reflects an unchanged 3-star ESG rating. This implies a CY23F PE of 29x, 6% lower than its 5-year average of 31x.
  • Dialog currently trades at an attractive CY23F PE of 22x, well below its 5-year mean of 31x.

Source: AmInvest Research - 18 Jan 2023

Related Stocks
Be the first to like this. Showing 0 of 0 comments

Post a Comment