Parkmead, the Aberdeen-based independent oil and gas explorer, has reported a gross profit of £700,000 in its interim results to 31 Dec 2016 – compared to a loss of £4.1 million in the previous period.
With assets in the Dutch and UK North Sea, AIM-listed Parkmead doubled stakes in the Polecat and Marten oil fields to 100% in the UK Central North Sea in August 2016, which are jointly estimated to hold over 90 million barrels of oil in place.
It also increased stakes in the Perth and Dolphin oil fields to 60.05% in September 2016, building oil reserves. Perth and Dolphin are at the core of Parkmead’s Greater Perth Area (GPA) oil hub project which has been fully appraised, with a combined total of 17 wells drilled, and has expected recoverable reserves and contingent resources of approximately 104 million barrels of oil
The Polecat and Marten fields have the potential to be highly valuable to Parkmead as, given their close proximity to Perth, they could be jointly developed as part of the Greater Perth Area project.
A new ‘minimal platform’ concept at the Platypus gas field is set to further increases the value of this development.
The Platypus joint-venture partnership is currently working towards optimising the export route for Platypus ahead of finalising an offtake agreement, with various export options available given the large availability of infrastructure in the UK Southern Gas Basin.
In Holland, Parkmead’s low-cost onshore gas portfolio in the Netherlands produces from four separate gas fields with an average operating cost of $14-barrel of oil equivalent. Its Netherlands gas production increased more than six-fold during the full financial year.
Tom Cross, Parkmead Executive Chairman, said: “We have increased gas production from our Netherlands portfolio through an onshore work programme, which has resulted in Parkmead moving into gross profit.
“This is an outstanding achievement for Parkmead at a time when global oil prices have remained low. Our gas production acts as a natural hedge in this low oil price environment.
“We are well-positioned to take advantage of the ongoing lower oil price and the opportunities that are arising from this. We have excellent regional expertise, significant cash resources, and a growing, low-cost gas portfolio on which to base our acquisition-led growth strategy going forward.”
WH Ireland analyst Brendan Long commented: “Parkmead has delivered a solid set of operational results which stands in stark contrast to many North Sea companies who have reported significant losses over calendar year 2016.
“The company’s capital discipline has translated through to a strong financial position, with ample financial flexibility to exploit new opportunities that might arise.
“The year-end cash balance amounted to £26.7 million – with no debt – due principally to the better than expected operational results.”