Dialog’s latest purchase marked the third acquisition in HBP after completing the group’s first and second purchases on August 27, 2019, and December 13, 2019 respectively, which resulted in Dialog D&P owning a 95 per cent stake.
KUCHING: Analysts laud Dialog Group Bhd (Dialog), through wholly-owned subsidiary Dialog D&P Sdn Bhd, for acquiring the balance five per cent equity interest in Halliburton Bayan Petroleum Sdn Bhd (HBP) from Asia Energy Services Sdn Bhd for RM7.5 million.
HBP, an independent technical service contractor which has an oilfield services contract with Petronas Carigali, would become Dialog’s indirect wholly-owned subsidiary, it said.
“This is in line with the group’s strategy to continue expanding and deepen its upstream investments, as well as increase its opportunities for synergies with the group’s integrated technical services,” the oil and gas service provider said in a filing with Bursa Malaysia.
Dialog said it also planned to change HBP’s name to Dialog Bayan Petroleum Sdn Bhd.
The latest purchase marked the third acquisition in HBP after completing the group’s first and second purchases on August 27, 2019, and December 13, 2019 respectively, which resulted in Dialog D&P owning a 95 per cent stake.Upon completion of the acquisition,
HBP provides contractor services required to enhance the recoverable reserves from the Bayan field, located offshore Bintulu, Sarawak, with a term of 24 years (up to 2036) under the oilfield services contract signed with Petronas Carigali .
Dialog said it remained optimistic on the prospects for Bayan Field and was confident that HBP would continue to contribute positively to the group’s results, in line with its strategy of generating long-term recurring incomes.
While the earlier acquisitions were transacted at attractive price earnings of nine times in 2019 versus Dialog’s 29 times currently, AmInvestment Bank Bhd (AmInvestment Bank) understood that HBP remains profitable in 9MFY21 despite the oil demand downturn during the Covid-19 pandemic. Also, HBP is currently debt-free.
Recall that HBP provides technical services to enhance oil recovery at the Bayan field, offshore Bintulu, Sarawak under
“HBP’s Oilfield Services Contract (OSC) with Petronas Carigali offshore Bintulu originally arose from a 50:50 joint venture with US-based oil field service provider Halliburton in 2017. It now has an unexpired term of 15 years until 2036,” it reiterated.
“Besides sharing enhanced production from the OSC, Dialog aims to expand the specialist services needed by this upstream operation, further synergising with the group’songoing strategy of developing a long-term recurring income structure which has a portfolio of upstream, mid-stream and downstream activities.
“Nevertheless, we are neutral on this relatively small acquisition, which will not have any significant impact on the group’s earnings and net gearing levels.”
Dialog currently trades at a FY22 price earnings of 25 times, well below its five-year peak of 39 times.
“We view its higher-than-peer premium as justified given Dialog’s long-term recurring cash flow generating businesses underpinned by the Pengerang development’s multi-year value re-rating bonanza and low net gearing levels.”