TOM Cross has said the Parkmead Group he runs is eyeing seven acquisition targets in the UK North Sea as the fall in the oil price creates opportunities for the firm to make some cheeky offers.
The oil and gas entrepreneur said the Aberdeen-based Parkmead Group is also mulling bids for five targets in the Netherlands and expects to complete deals this year.
Mr Cross said the sharp fall in the oil price has created great opportunities for Parkmead to continue with the rapid fire expansion drive it has mounted since he took charge.
He believes Parkmead can use acquisitions to help it repeat the success of Dana Petroleum, which grew into a leading North Sea player under his leadership. Mr Cross netted around £57m from the sale of his holding in Dana when the company was bought by Korea National Oil Corporation for £1.9 billion in 2010.
"The key thing is as the oil price comes off companies in particular have individual circumstances where perhaps they are breaching banking covenants or they don't have a clean balance sheet," said Mr Cross.
With £39m cash at 31 December and no debt, Mr Cross said Parkmead has a strong, clean balance sheet.
"It means we can step in and acquire things where other people are struggling."
He added: "As the oil price falls you can go and make some cheeky offers."
Parkmead executives have extensive experience of building and developing oil and gas portfolios meaning the company is well placed to win the official approvals required to compete deals.
Mr Cross said Parkmead is "running detailed numbers on 12 situations". These could result in the company acquiring companies or individual assets.
He declined to give details but said seven of the situations are in the UK North Sea while five are in the Netherlands.
Parkmead is in contact with eight banks that provided debt for Dana. These could help it amass a significant war chest for deals.
Mr Cross highlighted the company's enthusiasm for gas assets, which it can use to provide some protection against oil price volatility.
In the company's interim results, Parkmead noted it has developed a portfolio of gas fields in the Netherlands that have low operating costs. These generate what it described as a robust revenue stream.
Parkmead has completed six acquisitions since Mr Cross took charge in 2010.
Mr Cross also stressed that exploration work in the UK and Netherlands formed an important part of the growth strategy.
He noted that drilling rates had fallen by around 50 per cent since November giving the company scope to do a lot more work without increasing its exploration budget.
The company was awarded six new oil and gas licences in the latest UK round. It made a gas find in the Netherlands in September.
Parkmead made a £15m loss after tax in the six months to December, compared with a £2.6m profit in the same period of 2013, as the sharp fall in the price of crude weighed on the firm.
The company has cut the valuation of the Athena oil field in the Moray Firth by £12.9m to reflect the impact on the field of the oil price fall.
Athena is Parkmead's main producing field. The company acquired a total 30 per cent holding in two deals it agreed in 2013.
However, Mr Cross said Athena was a tremendous investment.
He said Parkmead had received pay back of the investment it made in Athena within months of acquiring the holding.
Mr Cross noted the £12.9m impairment recorded in respect of Athena was a non-cash accounting charge.
He said: "The modern approach is to impair hard... when the oil price goes up we will be impairing it back up again."
The company recently completed work on the field that will boost the profitability of production.
Parkmead had £10.1m revenues in the first half, compared with £9.9m last time.
Analysts at SP Angel investment bank wrote: "Throughout all of the portfolio management and exploration, the one thing that is clear is that the lessons that have been learned in the development and disposal of Dana Petroleum are being applied to great success here."
The Numis brokerage said Parkmead's financial performance remains highly levered to Athena production rates, operational costs and the oil price in the short term. It said first half production averaged 1,850 barrels oil equivalent daily with 1,600 boed coming from Athena.
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