Tom Cross highlights appetite for North Sea deals

The Aberdeen-based company wrote £13m off the value of the Athena field to reflect what it described as the collapse in the Brent crude price, from $115 per barrel in June last year to around $65 at the end of the financial year. The price has fallen to around $45/bbl in recent weeks.

Parkmead made £1.2m profit in the year to June 2014.

However, Mr Cross appears to remain confident the price fall since then has opened up possibilities for Parkmead, where the oil and gas entrepreneur hopes to repeat the success he enjoyed at Dana Petroleum.

“Parkmead is well positioned to take advantage of the lower oil price environment and the opportunities that are arising from this,” said Mr Cross, who used acquisitions to help build Dana into a £1.9 billion business.

Three months after stating that Parkmead was eyeing 10 potential deals in the UK and the Netherlands, Mr Cross said his team is evaluating acquisition opportunities.

Mr Cross’s confidence reflects the view that firms that have strong balance sheets are well placed to take advantage of the fact the oil price fall has created challenges for many firms, including those with hefty debts to service.

Sector watchers have noted a raft of North Sea assets have been put up for sale by companies that want to raise cash and may be prepared to sell at much lower prices than they would have expected to realise amid the industry’s boom years.

In March Mr Cross said the oil price fall would allow potential buyers to make “cheeky offers”.

After raising £13m from investors in May to allow it to move quickly Parkmead had around £41m cash at 30 June.

Mr Cross has highlighted the sharp fall in the cost of work such as drilling seen recently in the North Sea, where services firms are trying to hang on to business.

“Parkmead and its co-venturers have worked hard to reduce operating costs across the entire asset portfolio to reflect the substantially altered macro environment,” said Mr Cross yesterday.

He said Parkmead had made considerable progress against a challenging backdrop with a strategy that involves exploring for new deposits of oil and gas and developing existing finds.

Parkmead announced that it has achieved first gas from the Diever West field in the Netherlands, which it said would provide an important additional revenue stream.

“The new gas production from Diever West will act as a natural hedge to the low oil price environment at this key stage in Parkmead’s growth,” said Mr Cross, who noted the field was found only 14 months ago.

He added that key progress had been made during the year to June towards a joint development of the Perth, Dolphin and Lowlander fields off Scotland. Parkmead expects recoverable reserves from the joint development will be over 80 million barrels of oil, double the initial recoverable reserves of Perth as a standalone project.

Parkmead’s exploration specialists have identified two new exploration targets on acreage West of Shetland that was awarded to the company in the 28th UK Licensing Round in July.

Mr Cross said Parkmead will continue to invest heavily in licensing round applications, in the UK and overseas.

He said Parkmead’s revenues remained relatively strong at £18.6m in the year to June, down from £24.7m in the preceding period.

Parkmead has completed a series of acquisitions since Mr Cross took charge in November 2010, including the £14.7m takeover of Lochard Energy in 2013. This gave Parkmead a stake in the Athena field.

Last month the chairman of London-based Serica Energy, Tony Craven Walker, said it planned to expand aggressively in the North Sea amid the crude price slump, which he thought might be good news for the area.

Mr Craven Walker said the price fall could prompt majors to sell off North Sea assets, putting fields under the control of firms that would be more inclined to invest in them.