Dialog Group Berhad has secured PETRONAS approval to proceed with the development of the RAJA Cluster oil field following a final investment decision (FID) valued at US$81 million (approximately RM330 million), according to MBSB Investment Bank.
The project, undertaken under the RAJA Cluster Small Field Asset Production Sharing Contract (SFA PSC) signed in December 2024, is expected to span 14 years, with commercial oil production targeted following a two-year development phase.
MBSB said the project’s pre-development phase, including 3D seismic data reprocessing and resource assessments, has been completed, establishing approximately 6.1 million stock tank barrels of proved and probable (2P) reserves.
The remaining project tenure will involve commercial extraction of hydrocarbons, with the production phase expected to run for approximately 10 years.
Project Could Lift Dialog’s Earnings By Up To 10%
MBSB expects the RAJA development to contribute positively to Dialog’s earnings once commercial production begins, potentially increasing group revenue by 3% to 5%.
Assuming the estimated 6.1 million barrels of reserves are extracted evenly over 10 years, annual production would average approximately 600,000 barrels, equivalent to 1,600–1,800 barrels per day.
The research house estimated that the project could lift Dialog’s net earnings by 5% to 10% during the production phase, depending on prevailing crude oil prices and potential enhanced oil recovery activities.
However, it expects no earnings contribution in FY2027, with the benefits anticipated from FY2028 onwards as the project progresses towards commercial production.
Existing Offshore Expertise To Support Development
MBSB said Dialog intends to deploy the Tarpon platform system, a lighter and lower-cost alternative to conventional wellhead platforms, for the RAJA development.
The system is considered suitable for the project’s shallow-water location, where water depths are below 100 metres, helping to improve the economics of developing smaller oil fields.
The research house said Dialog could leverage its experience operating the Baram Junior Cluster, alongside its existing engineering, fabrication and offshore project implementation capabilities, to manage development costs and operational efficiency.
Dialog is also expected to capture 100% of production revenue from the RAJA project, providing an additional recurring income stream that complements its existing midstream storage terminal and downstream businesses.
Nevertheless, MBSB highlighted potential risks from complex subsurface conditions, crude oil price volatility, offshore cost inflation and supply chain disruptions.
The research house maintained its BUY recommendation on Dialog with an unchanged target price of RM2.57.
It also left its earnings forecasts unchanged pending greater certainty over the project’s commercial production timeline and first oil.
