TOM Cross has made his biggest move in his attempt to build another Dana Petroleum as he prepares to capitalise on the plunge in the price of North Sea assets following the Budget tax increase in March.

Eight months after Korea National Oil Corporation paid £1.9 billion for the Dana oil and gas business which he built over 14 years, Mr Cross has teamed up with veterans of the North Sea to mount a quickfire campaign to build a portfolio of assets off the coast of Scotland.

The Parkmead Group, which Mr Cross runs, has formed a strategic alliance with Aberdeen-based DEO Petroleum to scour three undisclosed areas of the central North Sea for acquisitions and exploration opportunities.

Led by David Marshall, a former head of the Oilexco North Sea business, DEO focuses on acquiring undeveloped discoveries in the mature province.

Shares in both firms surged roughly 10% in early trading as investors concluded the alliance would help them get things done.

Mr Cross, who made about £57 million from Dana’s sale to KNOC, said the alliance is already in talks to acquire a number of assets.

He came to know the areas it is targeting during his time at Dana, which built a big North Sea business through acquisitions and success with the drill bit.

While the Government sparked an outcry by raising the tax rate payable on North Sea profits by 12 percentage points in the Budget, Mr Cross said it is the ideal time to expand in the region. Parkmead has been eyeing opportunities for some time.

“The bad news is out there. On the deals that we were working on we deliberately had not completed any as we knew that the Budget was coming and something was likely to happen.

“All that has happened is that the price has come down on some opportunities by 25%,” he told The Herald.

Mr Cross revealed the increase would encourage majors that want to rationalise their portfolios to get on with deals.

He believes the alliance could generate big returns on investments made even if the price of crude falls substantially.

“Reserves will still be very profitable at below $75 (£46) a barrel (compared with around $112 (£69) yesterday),” said Mr Cross. As the Government has indicated that tax rates will be reduced if crude prices fall below $75 (£46) a barrel, Mr Cross said there is protection on the downside.

By working with DEO, Parkmead hopes to repeat the success that Dana had enjoyed through working with Venture Production, which was bought by Centrica for £1.3bn in 2009.

The two firms achieved big increases in production on acreage that they bought from majors, after making finds and developing new fields. Parkmead will lead on exploration while DEO will focus on developing and operating fields.

“It means we can get after a lot more and we can accelerate as we will share the workload,” Mr Cross explained.

The partners expect to be able to fund investments using debt.

“We have got a line of banks ready to fund us,” Mr Cross said.

Parkmead also plans to invest in other areas. For DEO, Mr Marshall said: “Parkmead Group has a proven track record of identifying excellent exploration and appraisal targets.

“DEO’s core expertise in development and production makes this a very strong joint venture grouping.”

AIM-listed DEO bought a 42% stake in three central North Sea licences, including the undeveloped Perth discovery, from Nexen for £10.5m in October.

After oil prices retreated yesterday, shares in Parkmead closed up 0.25p, 2%, at 16.25p.

They traded at 1.6p before Mr Cross’s appointment as executive chairman was announced in October.

Meanwhile, shares in DEO closed up 6%, 3p, at 50p.