Serica Energy (AIM:SQZ) has bought up assets put up for sale by its North Sea rival Parkmead Group (AIM:PMG) in what has been hailed as a “great deal” for the buyer.
Serica will pay Parkmead £14 million for its business, Parkmead (E&P) Limited, which has a 50% stake in two licences, Skerryvore and Fynn Beauly.
A “contingent” part of the deal worth another £120m relies on whether Serica can get field development plans approved on the assets.
The deal marks an end to Parkmead founder Tom Cross’s latest North Sea venture.
Cross, who is well known for building and then selling Dana Petroleum to the Korea National Oil Corporation for £1.6 billion, recently confirmed he was putting his business up for sale to focus to renewables and international markets instead.
Announcing the deal, Cross said he planned to purse the “next phase” of his company’s fortunes aiming for natural gas, renewable energy and “international” oil and gas firms outside the North Sea.
He said: “Through the sale of these UK offshore oil licences we have no further capital investment requirements, whilst retaining a very attractive share of the upside should any developments at Skerryvore or Fynn Beauly proceed.
“The addition of the near-term, firm £14m cash consideration, together with Parkmead’s existing cash, means the group is well-funded to pursue the next phase of its growth plans in natural gas, renewable energies and international E&P.”
Panmure Liberum’s Ashley Kelty hailed it as a “great deal” for Serica as tax losses make it attractive.
He said: “This is a great deal for SQZ as the deal gives SQZ some future development upside, but the key aspect is the large pool of tax losses which will greatly reduce the effective tax rate of the company.
“Even if Skerryvore and Fynn Beauly aren’t developed the tax losses alone make this an astute deal.
“It also transfers the assets to a company which has the balance sheet and skills to develop the fields, and is good for the potential of the UK North Sea.”
According to Serica, these amount £197m of ring-fence corporation tax (CT) losses, £181m of supplementary charge tax (SCT) losses, £1 million of Energy Profits Levy (EPL) losses and £12 million of activated investment allowances.
Recommended for you
