David Barclay, divisional director of Brewin Dolphin based in Aberdeen, gives his view on today’s acquisition by Parkmead.
At the beginning of this year there was an immense amount of hope value in the Parkmead share price.
Following the appointment of Tom Cross as chairman the stock moved from 1.5p to close at 29.5p on December 31 last year, which certainly looked a little over-cooked considering the only assets held by the business were a little cash and a 2% equity stake in Faroe Petroleum.
These gains gradually evaporated over subsequent months, with the shares settling into a range of between 11-14p. It is very encouraging therefore to now see Parkmead acquiring assets.
Throughout this year Tom Cross has significantly strengthened his team at Parkmead bringing over a number of key personnel from Dana. This team will know the new assets well, given that Dana is the operator on Possum and Platypus, having a 45% stake.
Over and above this, the news flow from Parkmead has been generally positive this year. In May a strategic partnership was announced between Parkmead and Deo Petroleum, which will undoubtedly be to their mutual benefit in the future, and just last month Mr Cross became executive chairman when Niall Doran departed as chief executive.
Today’s announcement, however, is the most positive and tangible piece of news the market has had on the stock this year, not least because of the method of funding.
Shareholders in Parkmead will no doubt take a lot of comfort from the fact that their new executive chairman is prepared to demonstrate his confidence in the business to the extent that he has extended loan capital to fund the asset purchase.
The market has certainly responded well with the share price rising over 25% in response.
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