TOM Cross has made his biggest move yet in his attempt to build another major North Sea firm by agreeing the £14.5 million takeover of Lochard Energy by the Parkmead Group he runs.
The Aberdeen oilman, who built Dana Petroleum into a £1.9 billion business, has won a recommendation from the Lochard board for a deal which will allow Parkmead to increase production by 400%.
"This is the most exciting and important deal for Parkmead to date" said Mr Cross, who made around £57m when Korea National Oil Corporation bought Dana in 2010.
The all-share move on Lochard continues the consolidation process in the North Sea, in which the ranks of smaller players are being thinned out.
It should result in a big increase in the cash Parkmead generates and pave the way for more acquisitions.
Aim-listed Parkmead said: "The board believes that Parkmead, as enlarged by the Acquisition, will be more likely to be successful in completing further acquisitions as it seeks to build further value-adding assets and interests in the North Sea and beyond."
In March, Mr Cross said the Parkmead team was "probably looking at 12 things" on the acquisition front.
Subject to court and shareholder approval, the deal will allow Mr Cross to accelerate efforts to repeat the success he enjoyed with Dana at Parkmead.
Like Dana, Parkmead's strategy involves developing North Sea assets that are too small to interest the majors and trying to make fresh finds. It previously acquired production in the Netherlands with the intention of reinvesting the cash generated from the output.
Lochard has a 10% stake in the Athena field 110 miles north-east of Aberdeen. The Ithaca-operated field is producing around 1100 barrels oil daily for Lochard.
Parkmead expects to increase its proved and probable reserves by 10%, to around 25.2 million barrels oil equivalent, by adding Lochard's 2P reserves of approximately 2.3 mmboe at December 31.
Lochard also has interests in North Sea exploration acreage.
The proposed deal is the fourth agreed by Mr Cross since he became executive chairman of Parkmead in November 2010.
Shares in Parkmead Group traded at 1.38p in October 2010 before it announced Mr Cross would become executive chairman.
They surged above 30p in December 2010 since when the company has raised funds by issuing shares.
The shares closed down 0.375p at 12.25p yesterday.
The biggest deal agreed previously by Mr Cross at Parkmead was last year's £12.7m all-share acquisition of Deo Petroleum, which brought a 52% stake in the undeveloped Perth field.
Parkmead won licences to operate 25 blocks in the 27th UK licensing round last year.
Clive Carver, chairman of Aim-listed Lochard, said Parkmead's management team have a track-record of building an exploration and production company and creating shareholder value.
While a number of firms have said they want to acquire North Sea assets, the valuation placed on Lochard by the Parkmead deal is around £7m lower than the £22m market capitalisation the company had in September.
However, the proposal has won irrevocable undertakings and a letter of intent in respect of 119,937,864 Lochard shares representing, in aggregate, approximately 40.1% of its ordinary share capital.
The takeover is to be completed through a court-sanctioned scheme of arrangement expected to become effective in July.
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