Further to the announcement on the acceptance of the Letter of Intent on 30 May 2014, DIALOG Group Berhad (“DIALOG”) is pleased to announce the completion of the farm-out agreement between its wholly owned subsidiary, Dialog Resources Sdn Bhd (“Dialog Resources”) and ROC Oil (Sarawak) Sdn Bhd (“ROC”) for 20% participating interest in the Production Sharing Contract for the three fields D35, D21 and J4, located offshore Sarawak, Malaysia (“PSC”), which will reduce ROC's participating interest in the PSC to 30%.
The farm-out is after the satisfactory completion of due diligence, documentation and having obtained PETRONAS’ approval as well as joint venture approval.
Following the farm-out, the participating interests of the PSC Contractors will be:
PETRONAS Carigali Sdn Bhd (40%)
E&P Malaysia Venture Sdn Bhd (10%)
Roc Oil (Sarawak) Sdn Bhd (30%)
Dialog Resources Sdn Bhd (20%)
PETRONAS Carigali Sdn Bhd (“PCSB”) is the Operator of the PSC and retains responsibility for operations and maintenance of the facilities. PCSB has, in addition to ROC’s participation in the PSC, appointed ROC as the PSC Development Manager.
The field re-development and enhancement of oil recovery consist of:
1. Phase 1 – commenced in early 2014 is designed to increase oil production rate and enhance the Fields production potential through a series of intervention activities and facility debottlenecking projects. Phase 1 has a minimum work commitment of US$70 million.
2. Phase 2 - is expected to significantly expand the production and overall recovery potential from the Fields. Phase 2 is subject to a Field Development Plan (“FDP”) sanction, following completion of a series of studies designed to prove the reservoirs’ responses to re-pressurisation and tertiary recovery. Completion of the study work and the subsequent FDP approval process are planned during 2015. Phase 2 has a minimum work commitment of US$50 million and full Phase 2 cost estimates will be refined during the study period.
The PSC terms are designed for field re-development and enhancement of oil recovery to commercially encourage progressive incremental oil development over the full life of the PSC, which expires on 31 December 2034.
Rationale and Prospects
DIALOG’s participation in the PSC is part of DIALOG’s strategy to grow its upstream assets and to continue to develop its upstream capabilities in the oil and gas activities which include the rejuvenation and re-development of mature oil fields and the development of marginal 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, particularly in relation to the provision of upstream engineering & operations and maintenance services.
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.
Please refer to the attachment for further details of the announcement.
This announcement is dated 5 September 2014.
