Parkmead achieves record full year profits as it moves on North Sea prospects

Parkmead Group (LON: PMG) is toasting a set of “excellent” full year results, with bumper oil and gas prices driving the firm to record takings.

In its preliminary results for the year ended June 30, the Aberdeen company posted profits before tax of £4.0 million, a new personal best.

It was also an about turn from 2021, when Parkmead sank to losses of £13.4m.

Revenue in the year more than tripled to £12.1m, up 236% on the previous year’s figure of £3.6, with the company reaping the rewards of “continued strength in gas prices”.

Despite the positive figures, shares in the firm were down 12% in late afternoon trading, to 59.2p.

Boom time

Gas prices have made the firm’s acquisition of Netherlands gas royalty, completed in July 2021, “highly beneficial” the firm said.

The deal doubled Parkmead’s effective financial interest from 7.5% to 15% in the Grolloo, Geesbrug and Brakel gas fields.

A 250% surge in the price of power also delivered a cash boost to the London-listed company at its Kempstone wind farm near Stonehaven, picked up for £3.3m in February.

Parkmead executive chairman, and North Sea stalwart, Tom Cross, said: “I am delighted to report an excellent year of progress for Parkmead. We have delivered record gas revenue and strong pre-tax profits through our high-quality Dutch assets.

“The innovative royalty deal which we completed last summer is proving to be highly advantageous and is adding considerable value. Parkmead is 100% unhedged and is benefiting from these additional gas sales at higher prices.”

As it stands, Parkmead boasts “substantial gas and oil reserves and resources”, with proven and probable (2P) assets of 45.5m barrels of oil equivalent (boe).

North Sea targets progressing

It also has several prospects on the books, and earlier this year the company increased its stake in the much-anticipated Skerryvore target – potentially home to 157m boe – from 30% to 50%.

Meanwhile, a farm-out process for the Greater Perth Area (GPA) in the Central North Sea was formally launched in September.

Parkmead has a 100% interest in the GPA, which is one of the North Sea’s largest undeveloped projects.

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It “most likely” holds about 55 million barrels of recoverable oil equivalent (MMBoe), and the wider project has the potential to deliver between 75 and 130 MMBoe on a P50 basis.

North Sea operators are being pushed by the UK Government to increase oil and gas flows, with spending relief on new schemes included as part of the UK energy profits levy.

Parkmead praised the mechanism, believing it creates a “powerful investment incentive for major producers” to go after fresh reserves.

On the hunt for acquisitions

It also said it “maintains its appetite for energy acquisitions”, and is “well positioned, with a strong balance sheet, to capitalise on opportunities within in the sector”.

Mr Cross added: “We will be spudding the first of our LDS wells imminently in the Netherlands. This will target new onshore gas resources which, in a success case, will be tied in quickly to production.

“Parkmead has already commenced well planning work on the high-impact Skerryvore project in the UK.

“A strong contribution is being made by the Kempstone Hill Wind Farm, producing 100% renewable energy direct to the grid. This UK onshore wind farm is complementary to the Group’s low-carbon, onshore operations in the Netherlands.

“Our team continues to identify and evaluate further acquisitions that would enhance our existing business.

“Parkmead is well positioned for the future. We have excellent UK and Netherlands regional expertise, strong financial discipline, and a growing portfolio of high-quality assets. The Group will continue to    build upon the inherent value in its existing interests with a balanced, acquisition-led, growth strategy to secure opportunities that maximise future value for our shareholders.”