Posted: 25/03/22

Parkmead, the independent energy group focused on growth through gas, oil and renewable energy projects, is pleased to report its interim results for the six-month period ended 31 December 2021.

 

 

HIGHLIGHTS

 

Revenue tripled, gross profit up 389% and profits recorded at operating and pre-tax levels

 

•  Revenue tripled to £4.6 million for the period (2020: £1.5 million) as the Company benefited from the continued increase in gas prices
• Gross profit increased by 389% to £3.8 million (2020: £0.8 million), demonstrating the high-quality nature of Parkmead's onshore Netherlands assets and strong operating leverage
• Gross profit margin increased to 82% (2020: 50%)
• Operating profit achieved of £1.9 million (2020: £1.1 million loss) or 1.7p on a per share basis
• Profit before tax of £1.3 million (2020: £1.4 million loss)
• Well capitalised, with cash balances of US$32.2 million (£24.1 million) as at 31 December 2021, equivalent to 22.1 pence per share
• Net cash generated from operating activities of £1.7 million (2020: £0.3 million used in operating activities)
• Total assets of £80.5 million at 31 December 2021 (2020: £86.8 million)
• The strong recovery in gas prices continued during the period with prices in June 2021 of around €25/MWh, increasing to around €95/MWh in December 2021
• Due to ongoing geopolitical events, the current gas price has reached €160/MWh in March 2022; Parkmead is 100% unhedged

 

New two-well drilling campaign in the Netherlands; gas royalty acquisition proving highly beneficial

 

• Firm budget agreed for the 'LDS' two-well drilling campaign from the Diever site
• The LDS project will target a combined Pmean GIIP of 37.2 billion cubic feet ("Bcf"), in the prolific Rotliegendes reservoirs found on the licence
• Papekop gas development has successfully progressed through the concept select gate and is now in the permitting stage; planned gas development targeting 35.6 Bcf of gross reserves with oil upside
• Acquisition of Netherlands gas royalty completed in July 2021 for a consideration of €565k, doubling Parkmead's effective financial interest from 7.5% to 15% in the Grolloo, Geesbrug and Brakel gas fields
• Parkmead is benefitting strongly from this gas royalty deal, completed ahead of the recent increase in energy prices
• Low-cost onshore gas portfolio in the Netherlands produces from four separate gas fields with an average field operating cost of just US$8.6 per barrel of oil equivalent, generating strong cash flows
• Average netback over the six-month period to 31 December from the Netherlands of approximately $72.9 per barrel of oil equivalent
• Average gross production for the period across the Group's Netherlands assets was 22.2 MMscfd, approximately 3,810 barrels of oil equivalent per day ("boepd")

 

Oil price upside from Perth project; excellent progress on large Skerryvore prospect

 

• Every $10/bbl increase in the long-term oil price assumption adds approximately £130 million to the modelled P50 post-tax NPV of the Perth field development alone
• Parkmead is assessing commercial offers received for the potential tie-back of the Greater Perth Area ("GPA") and is in discussions with operators in the GPA vicinity where new opportunities have arisen
• GPA has the potential to deliver 75-130 million barrels of oil equivalent ("MMBoe") on a P50 basis
• Extension to the Skerryvore licence has been successfully awarded to Parkmead (as operator) and joint venture partners
• Completed reprocessing of Skerryvore 3D seismic, allowing final rock physics and inversion scopes to begin
• Multiple exploration and development activities centred around Skerryvore prospect in 2021/22
• Skerryvore's main prospects are three stacked targets, at Mey and Chalk level, which together could contain 157 MMBoe

 

Operational wind farm acquired, delivering immediate electricity revenue

 

• Acquisition of 1.5MW onshore wind farm in Scotland through purchase of Kempstone Hill Wind Energy Limited ("KHWEL") for £3.29 million in cash (post period end)
• The Kempstone Hill wind farm provides power for up to 1,000 homes and has an attractive inflation-linked, Feed-in Tariff through until 2036
• Electricity is sold through a power purchase agreement which provides valuable upside through rising wholesale electricity prices
• It is expected that annual PPA redetermination will capture increased electricity prices
• This acquisition significantly increases Parkmead's presence in the renewable energy and electricity markets

 

Substantial oil and gas reserves

 

• 2P reserves of 45.6 MMBoe as at 1 March 2022 (45.7 MMBoe as at 1 March 2021)

 

Well positioned for further acquisitions and opportunities

 

• Parkmead is actively evaluating further acquisition opportunities in each of its areas of activity, renewables, gas and oil

 

 

Parkmead's Executive Chairman, Tom Cross, commented:

 

"I am delighted to report excellent growth in the six-month period to 31 December 2021. We have delivered a tripling of our revenue, led by our high-quality Dutch assets and the significant rise in gas prices.

 

The innovative royalty deal we completed last summer is proving to be highly advantageous and is adding considerable value to Parkmead. Parkmead is 100% unhedged and is directly benefitting from these additional gas sales at higher prices.

 

We now plan to increase our activity in the Netherlands with a firm drilling campaign planned for 2022/23.

 

Parkmead's acquisition of the Kempstone Hill wind farm provides another revenue-generating asset to the Group, which has a long-life and a very steady stream of cash flow. This operational wind farm is complementary to our earlier stage, high-upside renewable energy projects.

 

Our team continues to carefully evaluate further potential gas, oil and renewable energy acquisitions that would enhance our existing business.

 

Parkmead is well positioned for the future. We have excellent UK and Netherlands regional expertise, strong financial discipline, and a growing portfolio of high-quality assets. The Group will continue to    build upon the inherent value in its existing interests with a balanced, acquisition-led, growth strategy to secure opportunities that maximise future value for our shareholders"

 

 

Enquiries:

 

  

The Parkmead Group plc       +44 (0) 1224 622200

 

Tom Cross (Executive Chairman)

 

Ryan Stroulger (Chief Financial Officer)    

 

 

finnCap Ltd  (NOMAD and Broker to Parkmead)      +44 (0) 20 7220 0500

 

Marc Milmo / Seamus Fricker - Corporate Finance

 

Andrew Burdis / Barney Hayward - ECM

 

 

Please see the full pdf version of the announcement here, or in the Financial Reports section of the website.