Posted: 20/11/20

Parkmead, the UK and Netherlands focused independent energy group, with four business areas, is pleased to report its preliminary results for the year ended 30 June 2020.

 

HIGHLIGHTS 

 

Strong financial position and robust producing assets, despite low gas price environment

 

• Well capitalised, with cash balances of £25.7 million (US$33.4 million) as at 30 June 2020
• Total asset base increased by 9% to £89.8 million at 30 June 2020 (2019: £82.3 million)
• Net assets increased to £71.3 million at 30 June 2020 (2019: £68.3 million)
• Revenue for the period was £4.1 million (2019: £8.3 million), reflecting the record-low gas prices seen during the year
• Gross profit achieved of £1.3 million (2019: £5.7 million), showing the robustness of Parkmead’s gas assets
• Net profit before tax and non-cash impairment charges was £0.8 million
• Gas prices have fallen from highs of approximately €25.7/MWh in October 2018 to lows not seen in over a decade to around €5.0/MWh in June 2020 due to the oversupply of Liquefied Natural Gas (LNG) into the European market and the unprecedented effect of COVID-19
• Gas prices have since rebounded strongly to approximately €14.0/MWh in November 2020
• Parkmead's Netherlands assets remain very low cost to operate, and were uninterrupted by the lockdown restrictions introduced by the Dutch Government in March
• Netherlands gas production, plus benchmarking & economics consultancy, provides positive operating cash flow to Parkmead
• Parkmead maintains strict financial discipline with very low operating costs

 

Significant wind farm potential; high-grading of renewables portfolio underway

 

• In September 2019, the Company acquired Pitreadie Farm Limited (“Pitreadie”) as part of its expansion into renewable energy
• Studies being conducted on the Group’s acquired onshore land for the potential development of a large wind farm
• One of the large areas of land acquired by Parkmead lies adjacent to the Mid Hill Wind Farm which encompasses 33 Siemens wind turbines with a generating capacity of around 75MW
• High-grading of renewables portfolio underway with expected divestments of non-core acreage
• Renewable energy opportunities accessed through strategic acquisition of Pitreadie, where a gain on purchase was recorded of £0.36 million 
• Parkmead’s early commitment to building a balanced energy business through its focus on gas, widely seen as the primary transition fuel, pre-empted the recent energy transition acceleration
• Revenue-generating renewable energy opportunities continue to be analysed by Parkmead as it seeks to build out its renewable energy portfolio 

 

Excellent progress on Skerryvore, GPA and Platypus oil and gas projects

 

• New seismic purchased in Q3 2019 covering the Skerryvore prospect and surrounding area, which is being reprocessed throughout 2020 to mature the collection of prospects
• Early-stage reprocessing work showing positive improvements in seismic image quality, at the Mey Sandstone reservoir level in particular
• Skerryvore’s main prospects are three stacked targets, at Mey and Chalk level, which together could contain 157 million barrels of oil equivalent (“MMBoe”)
• Parkmead is in commercial discussions with the Scott field partnership, including CNOOC, in order to agree terms for a tie-back of the Greater Perth Area (“GPA”) to the Scott facilities
• Parkmead is also in discussions with other operators in the vicinity where new opportunities have arisen during the year
• Infrastructure studies completed in 2020 have confirmed that there are no technical hurdles to produce Perth oil from the wells all the way through to the onshore facilities 
• Field Development Plan draft and Environmental Statement submitted to the OGA and OPRED, respectively, for the development of the Platypus gas project in the UK Southern North Sea
• Selected development concept is a subsea tie-back to the Cleeton platform and commercial discussions are ongoing
• Parkmead and the Platypus partners have obtained an extension to the Platypus licence to take account of COVID-19 delays

 

Multiple new opportunities identified across Netherlands portfolio

 

• Gross production at the Group’s Netherlands assets for the financial year averaged 38.3 million cubic feet per day (“MMscfd”), which equates to approximately 6,608 barrels of oil equivalent per day (“boepd”
• Low-cost onshore gas portfolio in the Netherlands produces from four separate gas fields with an average field operating cost of just US$9.9 per barrel of oil equivalent, generating strong cash flows 
• The Brakel field was brought back to full production during the period following the completion of a work programm
• Concept selection planning at the Papekop oil and gas discovery has begun, a proven field with 24.2 million barrels (“MMBbl”) of oil-in-place and 39.4 billion cubic feet (“Bcf”) of gas-in-place
• Multiple further opportunities exist around Diever West, such as Boergrup and De Bree, both of which contain stacked targets with similar characteristics to Diever West
• Boergrup well permitting and planning is underway
• A new seismic reprocessing project began in Q4 2019, which will help define and high-grade the extensive prospects around Diever West
• Dynamic reservoir modelling suggests Diever West held initial gas-in-place of approximately 108 Bcf, more than double the post-drill static volume estimate of 41 Bcf

 

Substantial oil and gas reserves and resources

 

• 2P reserves of 45.7 million barrels of oil equivalent (“MMBoe”) as at 30 September 2020 (46.0 MMBoe as at 30 September 2019) 

 

Well positioned for further acquisitions and opportunities

 

• Eight acquisitions, at both asset and corporate level, have been completed to date
• Parkmead actively evaluating further acquisition opportunities in renewables, gas and oil

 

Parkmead’s Executive Chairman, Tom Cross, commented:

 

“I am pleased to report on an important year of progress for Parkmead. Despite revenues being impacted by the low gas price environment, Parkmead has delivered growth in its asset base whilst retaining financial strength. This creates a strong foundation from which to build and Parkmead remains robust in the context of broader global uncertainty brought about by the COVID-19 pandemic.

 

Following our first strategic acquisition in the renewable energy arena, we continue to evaluate further opportunities. Renewable energy is directly in line with Parkmead’s business plan, broadening and enhancing the Group’s energy asset base. Potential has been identified for a large wind farm project on a part of the Group’s onshore acreage.

 

Further advances have been made within the Greater Perth Area project. The Group is in discussions with a number of leading, international service companies and oil companies in relation to driving forward the GPA project.

 

The team at Parkmead continues to work intensively to evaluate and execute further value-adding opportunities which could provide additional upside for the Group.

 

Parkmead is well positioned for the future. We have excellent UK and Netherlands regional expertise, significant cash resources, 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.” 

 

For enquiries please contact: 

 

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 / Emily Watts / Matthew Radley – Corporate Finance

Andrew Burdis / Tim Harper – ECM

 

 For full details please find the pdf version of the results here