Posted: 18/05/15

Parkmead, the UK and Netherlands focused independent oil and gas group, is delighted to announce that it has raised approximately US$21.1 million (£13.44 million) through a placing of 11,200,000 new Ordinary Shares (the “Placing Shares”) at 120 pence per share (the “Placing Price”). The Placing Shares have been placed with certain institutional and other investors (the "Placing").

 

The Placing, which has been undertaken by Charles Stanley Securities, is conditional, inter alia, on admission to trading on AIM of the Placing Shares (“Admission”).

 

Background to and Reasons for the Placing

 

The Company has built a strong platform for future growth and has been actively executing its accelerated strategy to become a key E&P player in the North Sea.

 

The last 18 months have proved to be an excellent period for Parkmead, one which saw strong progress across the Group's growing oil and gas portfolio. In the Netherlands, a new onshore gas field was discovered at Diever West and the discovery is expected to be tied into existing facilities by the end of 2015 under a fast track development programme. A number of enhanced production opportunities are available across Parkmead's existing Netherlands portfolio which the Company intends to capitalise on, with the aim of significantly increasing its net gas production.

 

In November 2014, Parkmead was awarded six new licences covering a total of nine offshore blocks in the UK 28th Licensing Round, which meant that Parkmead ranked fourth in the total number of licenses awarded by DECC in the first tranche of this licensing round. These new licences contain opportunities across the Central and Southern North Sea areas and will all be operated by Parkmead. The awards, which include new exploration prospects as well as proven discoveries, built upon Parkmead securing eight new licences covering a total of 30 offshore blocks in the UK 27th Licensing Round awards. The latest licence awards take Parkmead's total number of oil and gas blocks across the UK and the Netherlands to 61, with 48 of those operated by the Group. These new licences complement Parkmead's strong existing asset base of oil and gas production, exciting exploration prospects and the major Perth, Dolphin and Lowlander (“PDL”) oil development.

 

Three of the new 28th Round licence awards significantly increase Parkmead’s asset base in the vicinity of the Company’s wider Perth area project and the work carried out by the Parkmead team on the Dolphin oil discovery has confirmed that this discovery can be included in the PDL project. Following the signing of Heads of Agreement in August 2014, Parkmead and its partners in the PDL project have been actively working together to realise the opportunity from this area to maximise oil reserves and financial returns from PDL and the wider regional area. The fully appraised PDL fields currently have a total of 13 wells drilled and are estimated to contain approximately 80 million barrels of recoverable oil. In addition, there are a number of satellite fields in the vicinity which could be tied into PDL and the Company is engaging with field operators in the area.

 

Good progress has also been made on the Company’s interest in the producing Athena field where Parkmead is the largest shareholder. The P4 well workover was successfully completed in late 2014 and, in March 2015, Parkmead and its partners on the Athena field entered into an amended FPSO contract with BW Offshore (UK) Limited (“BW Offshore”), the provider and operator of the Athena FPSO vessel. The net effect of the new agreement was a significant reduction in the field operating costs, which increases the cash flow generated from the field in the current oil price environment.

 

Capital requirements and financial strength are key topics for companies in the oil and gas sector, especially those with a high level of licence commitments and/or large debt repayments. The Parkmead management team has taken a disciplined approach to guard its financial strength and this has meant that it is funded to meet its current capital commitments and therefore in a good position to capitalise on opportunities that are becoming available as a result of lower oil prices.

 

The current environment in the oil & gas sector is undoubtedly generating significant corporate opportunities. There has already been active consolidation in the sector as companies seek to benefit from scale (with one of the largest transactions being Royal Dutch Shell plc’s recommended offer for BG Group plc) and a number of divestments and asset sales as companies are actively reviewing their portfolios and considering exits for their non-core assets. In addition, a number of companies are finding themselves in a distressed situation given capital structures that are not suited to the current oil price environment.

 

The Board of Parkmead believes that through its management team’s track record of acquisitive growth, it is well positioned to capitalise on these opportunities in the sector because of:

 

• Its extensive industry knowledge and in-depth expertise in the North Sea;
• Its strong industry relationships, both corporately and politically; and
• The strength of the Company’s balance sheet.

 

Given Parkmead’s track record and its stated strategy of continued acquisitive growth, the Board of Directors believe that by adding cash to its balance sheet, Parkmead will strengthen its ability to act expeditiously as and when opportunities arise over the next few months.

 

Use of Proceeds

 

The proceeds of the Placing will be employed to give the Company greater flexibility to take advantage of the current M&A environment in the oil and gas sector. The Board of Directors is aware of a number of potential opportunities that will complement the Company’s existing portfolio of assets and continue to deliver against the Board’s stated strategy of creating a balanced portfolio of oil & gas assets with material production in the UK and Netherlands.

 

Details of the Placing

 

The Placing will raise gross proceeds of approximately US$21.1 million (£13.44 million) through the issue by the Company of 11,200,000 new Ordinary Shares at a price of 120 pence per share.

 

The Placing Price represents a discount of just 1.4 per cent. to the closing mid market price of 121.75 pence per share on 15 May 2015, being the last practicable date prior to the announcement of the Placing.

 

The Placing is conditional upon:

 

• the Placing Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and
• Admission.

 

The Placing Shares represent, in aggregate, approximately 12.8 per cent. of the Company’s existing issued share capital and approximately 11.3 per cent. of the issued share capital of the Company immediately following completion of the Placing (assuming that prior to Admission there is no exercise of options or conversion of SARs under the Company’s existing equity incentive schemes).

 

Application has been made for the 11,200,000 Placing Shares to be admitted to trading on AIM and it is expected that Admission will take place on Thursday 21 May 2015. The Placing Shares will rank pari passu with the existing Ordinary Shares.

 

Following Admission of the new Ordinary Shares, the total issued share capital of Parkmead will comprise 98,929,160 Ordinary Shares. The figure of 98,929,160 Ordinary Shares may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, Parkmead under the Disclosure and Transparency Rules.

 

Tom Cross, Executive Chairman, Ryan Stroulger, Finance Director and Philip Dayer, Non-Executive Director, will subscribe for 83,333, 20,833 and 33,333 Ordinary Shares, respectively, in the Placing.

 

Tom Cross, Executive Chairman of Parkmead, commented:

 

“The current climate in the oil & gas sector is creating a significant number of opportunities, both at an asset and corporate level. This successful placing has put Parkmead in an excellent position to capitalise on these opportunities.”

 

For enquiries please contact:

 

The Parkmead Group plc    +44 (0) 1224 622200

Tom Cross, Executive Chairman

Ryan Stroulger, Finance Director

 

Charles Stanley Securities    +44 (0) 20 7149 6000

Nominated Adviser, Broker & Sole Bookrunner

Marc Milmo

Karri Vuori

James Greenwood

 

Instinctif Partners    +44 (0) 20 7457 2020

David Simonson

Anca Spiridon

 

Notes to Editors:

 

1. Dr Colin Percival, Parkmead's Technical Director, who holds a First Class Honours Degree in Geology and a Ph.D in Sedimentology and has over 30 years of experience in the oil and gas industry, has reviewed and approved the technical information contained in this announcement.
2. Parkmead is an independent, upstream oil and gas company that is admitted to trading on AIM on the London Stock Exchange (symbol: PMG). Parkmead is focused on growth in the oil and gas exploration and production sector, targeting transactions at both asset and corporate levels.
3. In November 2011, Parkmead completed the acquisition of stakes in UK Blocks 48/1a, 47/5b and 48/1c containing the Platypus gas field and the Possum gas prospect. Mapping indicates the potential for Platypus and Possum to contain up to 180 and 100 billion cubic feet of gas in place, respectively.
4. In December 2011, Parkmead agreed to acquire stakes in blocks 47/4d, 47/5d, 47/10c and 48/6c in the UK Southern North Sea, which contained the Pharos gas prospect. These two gas-basin acquisitions were important steps in the first stage of Parkmead’s development as a new independent energy company.
5. In March 2012, Parkmead agreed to acquire a portfolio of Netherlands onshore assets comprising four producing gas fields and two oil fields from Dyas B.V. This acquisition provided the Group with its first producing fields and with future oil developments at Ottoland and Papekop. This acquisition completed in August 2012.
6. In May 2012, Parkmead launched its recommended acquisition of DEO Petroleum plc. As a result, Parkmead now owns 52% and is operator of the UKCS Perth oil field
7. In October 2012, Parkmead was awarded several new licences under the UKCS 27th Licensing Round. The six new licences comprise interests in a total of 25 offshore blocks or partial blocks across the Central North Sea, West of Scotland and West of Shetland.
8. In July 2013, Parkmead completed its recommended offer for Lochard Energy Group plc. This gave Parkmead a 10% interest in the producing Athena oil field.
9. In December 2013, Parkmead agreed to acquire a further 20 per cent. interest in the Athena oil field from EWE VERTRIEB GmbH, trebling Parkmead’s interest in the Athena oil field to 30 per cent.
10. Also in December 2013, in the second tranche of the UKCS 27th Licensing Round, Parkmead was provisionally awarded a further five UK blocks through two new licences in the UK Southern North Sea. That made a total award to Parkmead of 30 UK blocks across eight licences within the UKCS 27th Licensing Round.
11. In January 2014, Parkmead completed a successful oversubscribed placing raising US$66.0 million which provided the Company with increased financial firepower and balance sheet strength.
12. In April 2014, Parkmead completed the acquisition of a 20 per cent. interest in the Athena oil field from EWE VERTRIEB GmbH, trebling Parkmead's interest in the Athena oil field to 30 per cent.
13. In September 2014, Parkmead discovered a new gas field onshore the Netherlands at Diever West.
14. In November 2014, Parkmead was provisionally awarded six new licences in the UKCS 28th Licensing Round, all as operator. The six new licences comprise interests in a total of nine offshore blocks located in the Central and Southern North Sea.
15. Through its wholly owned subsidiary, Aupec Limited, The Parkmead Group provides petroleum benchmarking and economics expertise to a wide range of government bodies and international oil and gas companies. Aupec has to date worked with over 100 governments, national oil companies, majors and independents, across the world, as well as a number of multi-national agencies such as the European Commission and the World Bank. Aupec is currently undertaking an important benchmarking project for a group of the world's largest super-major oil companies.

 

For full details please find the pdf here