The Pegagau oil palm estate was established by the Department of Agriculture (DoA) in 1966 at Semporna District. Originally the scheme was founded by Haji Mohd Noor Bin Othman a leader from the Bajau fishing community who had established a village in Pegagau in the 1950s. This village included about thirty families, and because of their interest in agriculture the government through the DoA allocated them land which was initially called Menteritip Village. When the Pegagau settlement scheme was started, it attracted about 172 settlers from the islands around the Semporna District. In 1969, the SLDB took over the management of the Pegagau scheme from the DoA. During the corporatization of the SLDB on November 26, 1996 the management was transferred to Sawit Kinabalu Bhd., but when the SLDB was reformed in 2001, the Pegagau Estate was returned back to the SLDB in 2002 when the leasing system was first introduced to the settlers.