TOM Cross is returning to the North Sea after his latest venture bought a stake in a gas find made by his former company Dana Petroleum in the days when he was running it.
The oil and gas entrepreneur is excited enough about the find and a neighbouring prospect that he is lending £8 million of his own money to fund the deal by the Parkmead Group.
Mr Cross made around £60m when Korea National Oil Corporation bought Dana Petroleum for £1.9 billion in September last year, following a hostile bid.
He took charge at Parkmead soon after and said he planned to turn the Aberdeen firm into an exploration and production company like Dana, which built a big North Sea business through acquisitions and exploration success.
Shares in Parkmead Group rose 20% in early trading yesterday following news that the company has agreed its first E&P asset purchase.
AIM-listed Parkmead said it had completed an important step in the first stage of its development by agreeing to acquire a 15% interest in three blocks in the UK Southern North Sea from a subsidiary of the US giant, ExxonMobil.
The blocks contain the Platypus gas field, discovered by Dana in April last year. They also include the Possum gas prospect.
Dana operates the relevant blocks.
“The Platypus and Possum areas are a valuable addition to Parkmead. We know the geotechnical aspects of these blocks intimately and believe they contain the potential for significant upside,” said Mr Cross.
Some geoscientists who worked on the discovery at Dana now work for Parkmead.
The acquisition reflects Mr Cross’s enthusiasm for the North Sea, which he came to know well at Dana.
In April Mr Cross said the hike in North Sea taxes in the March Budget was bad news for the industry, but might help Parkmead by reducing the price of assets.
Yesterday he said Parkmead was already in advanced talks about another potential acquisition in the North Sea.
The price of the deal with ExxonMobil’s XTO UK unit was not disclosed.
Parkmead said Mr Cross, along with “entities affiliated to him” had provided a loan of £8m to the company.
“The loan will be utilised to satisfy the consideration for the acquisition and for the ongoing development of the assets acquired, including drilling. It will also be used for funding general working capital and future corporate purposes,” said Parkmead.
The company will pay interest at 2.5 percentage points over the benchmark London interbank rate over the two year term.
Mr Cross said he provided the loan so that Parkmead could complete the deal before a forthcoming well is drilled on Platypus.
“I’ve got money in the bank. It was quicker for me to lend it and get the deal done,” he said.
However, Mr Cross added that Parkmead had varied funding sources in place.
He said he expected to be able to work well with Dana, despite last year’s war of words with KNOC.
“There was no bitterness. Our job was to get the best price for shareholders which we did. They paid a premium to get what they wanted,” said Mr Cross.
Shares in Parkmead eventually closed up 16%, 2p, at 14.75p. They had traded at 1.6p before Mr Cross’s appointment as executive chairman was announced in October last year.
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