1. INTRODUCTION
DIALOG Group Berhad (“DIALOG”) is pleased to announce today’s signing of Baram Junior Cluster Small Field Asset Production Sharing Contract (“BJC SFA PSC”) between Petroliam Nasional Berhad (“PETRONAS”), Dialog Resources Sdn Bhd (“Dialog Resources”) and Petroleum Sarawak Exploration and Production (“PSEP”) a wholly owned subsidiary of Petroleum Sarawak Berhad (“PETROS”). Dialog Resources will take on 70% participating interest including the operatorship of the BJC SFA PSC while PSEP will take on the remaining 30% participating interest.
The 14 years contract comes with a 2-year pre-development phase that allows Dialog Resources and PSEP to finalise the field development plan and move into 2-year development phase with first commercial production expected by the end of the phase. The production phase will continue for the remaining 10 years or up to the expiry of the contract, whichever is earlier.
The BJC SFA PSC includes feasibility studies during the pre-development phase. The scope of these studies will encompass 3D seismic data reprocessing, specialized studies, and resource assessment. Based on the outcome of the studies, a field development and abandonment plan will be developed to determine the feasibility and commerciality of the asset. DIALOG will make subsequent announcement once a field development and abandonment plan has achieved final investment decision.
Rationale and Prospects
DIALOG’s strategy is to grow its upstream assets and to 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 services provider.
The participation in BJC 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 BJC SFA PSC
2.1 SALIENT TERMS OF THE BJC SFA PSC
(a) SCOPE OF WORK
The scope of work of the BJC SFA PSC would be the pre-development study, development and production of discovered resources over the full life of the BJC SFA PSC followed by abandonment upon its expiry.
The scope of studies for pre-development phase will encompass 3D seismic data reprocessing, specialized studies, and resource assessment. Based on the outcome of the studies, a field development and abandonment plan will be developed to determine the feasibility and commerciality of the asset.
Details of which have been set out in the section above.
(b) THE BJC SFA PSC PERIOD
DIALOG’s participation in the BJC SFA PSC will commence immediately for a duration of up to 14 years.
2.2 INFO ON PETRONAS
PETRONAS is a global energy group with presence in over 50 countries and they produce and deliver energy and solutions that power society’s progress in a responsible and sustainable manner.
PETRONAS manages petroleum resources through Malaysia Petroleum Management ("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.
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 BJC 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 2023. However, it is expected to contribute positively to the future earnings of DIALOG group.
4. RISKS
Risk factors affecting the BJC SFA PSC include but are not limited to 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 and regulatory conditions. Dialog Resources, a wholly owned subsidiary of DIALOG, has proven track record for its capability in near field exploratory appraisal, development and operation of BJC SFA PSC, and the provision of specialist technical services. Nevertheless, DIALOG will undertake all the necessary efforts to mitigate the various risk factors identified.
5. DIRECTORS’ AND MAJOR SHAREHOLDERS’ INTERESTS
In so far as the directors of DIALOG are able to ascertain, 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 BJC SFA PSC.
This announcement is dated 17 January 2023.
