North Sea oil firm Lochard Energy is being acquired by Aberdeen-based Parkmead Group in an all-share deal worth £14.5milion, the companies announced yesterday.
They said they had agreed terms for Lochard to change hands for about 4.9p a share.
Parkmead revealed two months ago it was considering 12 potential acquisitions, including four companies.
It said it had a multimillion-pound war chest after an equity placing of nearly £20million at the end of last year, while other sources of funding at the firm’s disposal included a £4million shareholder loan.
Executive chairman Tom Cross said yesterday the acquisition of London-based Lochard was Parkmead’s most exciting and important deal to date, and would boost production by more than 400%.
He added: “The combination of Parkmead and Lochard will create a stronger, more diversified portfolio of assets balanced across the UKCS (UK continental shelf) and the Netherlands.
“Furthermore, the addition of Lochard’s production will enable Parkmead to deliver its ambitious growth plans.”
Both firms are listed on the Alternative Investment Market.
The takeover is subject to shareholder approval, but Parkmead said it already had irrevocable undertakings or letters of intent from investors holding 40.1% of Lochard’s stock.
It follows Parkmead’s acquisition of fellow Aberdeen company Deo Petroleum in a £12.7million deal last year, first production in the Netherlands and successful drilling on the Platypus gas field in the UK southern North Sea.
Also in the past year, Parkmead was awarded 25 blocks across the UKCS as part of the 27th offshore licensing round.
Lochard, which put itself up for sale last September, said its future would be best served by becoming part of a larger group.
Chairman Clive Carver said: “We are, therefore, delighted to have found in Parkmead a company whose management team have a successful track record of building an E&P (exploration and production) company and creating value for shareholders.
“Parkmead is of a size and quality that will enable it to continue to source and fund exciting exploration prospects and development opportunities at a time when funding for smaller exploration companies remains difficult.”
Urging its shareholders to approve the takeover, Lochard, whose main asset is 10% in Ithaca Energy’s Athena field, said the terms were fair and reasonable.
Lochard – the owner of Zeus Petroleum – has 50% stakes in five other blocks in the UK North Sea.
Parkmead shares closed down 3% at 12.25p last night.
Parkmead Group has its roots in a company, Interregnum, that was created as a technology bank but diversified into a business focused on turnaround and corporate-finance activity.
The name changed to Parkmead in May 2006 and by September of the following year it had turned its focus on oil and gas.
It announced its acquisition of a 3.07% share in Aberdeen-based oil and gas explorer Faroe Petroleum for £4.124million in December 2007, saying it represented a strategic stake and two years later, moved its HQ to the Granite City after buying Aberdeen University spinout oil and gas consultant Aupec in a deal worth more than £4million.
Tom Cross was chief executive at Aberdeen-based Dana Petroleum at the time of his appointment to Parkmead’s board as a non-executive director in late 2006. He was also a director of Aupec at the time of its takeover.
Mr Cross resigned from Dana late in 2010 after its £1.67billion takeover by South Korea’s national oil company, becoming Parkmead’s chairman soon after.
He collected more than £34million from the sale of his shares in Dana, which he had founded in 1994 with a small group of investors and less than £300,000 of seed capital.
Mr Cross and “affiliates” currently own 27.19% of Parkmead.
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