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Interim Results for the six-month
period ended 31 December 2019
Parkmead, the UK and Netherlands focused energy group, with four business areas, is pleased to report its interim results for the six-month period ended 31 December 2019.
Strong financial position and robust producing assets, despite current low gas price environment
- Well capitalised, with cash balances of US$33.6 million (£25.9 million) as at 31 December 2019 (2018: £23.6 million), equivalent to 23.9 pence per share
- Total asset base increased by 11% to £88.8 million at 31 December 2019 (2018: £79.9 million)
- Net assets increased to £70.1 million at 31 December 2019 (2018: £66.6 million)
- In September 2019 the Company issued 9,645,669 new ordinary shares as part of the renewable energy acquisition of Pitreadie Farm Limited ("Pitreadie")
- Parkmead maintains strict financial discipline with very low operating costs
- Revenue for the period was £2.1 million (2018: £5.3 million), principally due to the considerable reduction in gas prices
- Gross profit achieved of £0.8 million (2018: £3.8 million)
- Gas prices have fallen from highs of approximately €25.7/MWh in October 2018 to lows not seen in over a decade of around €8.6/MWh in February 2020 due to the oversupply of Liquefied Natural Gas (LNG) into the European market
- Parkmead's Netherlands assets remain very low cost to operate
- Netherlands gas production, plus benchmarking & economics consultancy, provides positive operating cash flow to Parkmead of £0.9 million in the period
Strategic move into renewable energy opportunities; significant wind farm potential
- Studies are being conducted on the Group's acquired onshore land for the potential development of a large wind farm
- One of the large areas of land acquired by Parkmead lies adjacent to the Mid Hill Wind Farm which encompasses 33 Siemens wind turbines with a generating capacity of around 75MW
- Other renewable opportunities exist within the acquired land base
- Renewable energy opportunities accessed through strategic acquisition of Pitreadie, where a gain on purchase was recorded of £0.36 million
- Parkmead's early commitment to building a balanced energy business through its focus on gas, widely seen as the primary transition fuel, pre-empted the recent energy transition debate
- Member of Vision 2035 which aims to provide a roadmap to a lower carbon energy mix
Increased activity across Netherlands portfolio; multiple new opportunities identified
- Exit gross production at the Group's Netherlands assets averaged 39.9 million cubic feet per day ("MMscfd") for December 2019, approximately 6,868 barrels of oil equivalent per day ("boepd")
- The Brakel field was brought back to full production during the period following the completion of a work programme
- Gross Brakel production reached 3.0 MMscfd, approximately 516 boepd, during the period
- Concept selection planning at the Papekop oil and gas discovery has begun, a proven field with 24.2 million barrels ("MMBbl") of oil-in-place and 39.4 billion cubic feet ("Bcf") of gas-in-place
- Further production enhancement work planned on Parkmead's Netherlands portfolio, including compression optimisation work at Grolloo during 2020 to maximise production, plus development planning at the Ottoland oil and gas discovery
- Multiple exploration opportunities exist around Diever West, such as the Boergrup and De Bree prospects, both of which contain stacked targets with similar characteristics to Diever West
- A new seismic reprocessing project began in Q4 2019, which will help define and high-grade the extensive prospectivity around Diever West
- Dynamic reservoir modelling suggests Diever West held initial gas-in-place of approximately 108 Bcf, more than double the post-drill static volume estimate of 41 Bcf
Significant progress on Skerryvore, GPA and Platypus oil and gas projects
- New seismic purchased in Q3 2019 covering the Skerryvore prospect and surrounding area, which is being reprocessed throughout 2020 to mature the collection of prospects
- Skerryvore's main prospects are three stacked targets, at Mey and Chalk level, which together could contain 157 million barrels of oil equivalent ("MMBoe")
- Parkmead is in commercial discussions with the Scott field partnership, including CNOOC, in order to potentially agree terms for a tie-back of the Greater Perth Area ("GPA") to the Scott facilities
- Parkmead is also holding discussions with a number of leading, internationally-renowned service companies in relation to the GPA project
- Field Development Plan draft and Environmental Statement submitted to the OGA and OPRED, respectively, for the development of the Platypus gas project in the UK Southern North Sea
- Selected development concept is a subsea tie-back to the Cleeton platform and commercial discussions are ongoing
Substantial oil and gas reserves and resources
- 2P reserves of 45.7 MMBoe as at 1 March 2020 (46.0 MMBoe as at 1 March 2019)
Well positioned for further acquisitions and opportunities
- Eight acquisitions, at both asset and corporate level, have been completed to date
- Parkmead is actively evaluating further growth opportunities, including wider energy-related opportunities
Parkmead's Executive Chairman, Tom Cross, commented:
"I am pleased to report excellent progress in the six-month period to 31 December 2019 across the Group, despite our revenues being impacted by the low gas price environment. Parkmead has delivered growth in its asset base whilst retaining financial strength. This creates a very good foundation from which to build and gives us confidence that we will remain robust in the context of broader global uncertainty brought about by the COVID-19 pandemic.
Through a strategic acquisition, we are evaluating a number of renewable energy opportunities. Renewable energy is directly in line with Parkmead's business plan, broadening and enhancing the Group's energy asset base.
Potential has been identified for a large wind farm project on the Group's newly acquired land.
We are also pleased with the advances made within the Greater Perth Area project. The Group is in discussions with a number of leading, international service companies and oil companies in relation to driving forward the GPA project.
The team at Parkmead continues to work intensively to evaluate and execute further value-adding opportunities which could provide additional upside for the Group.
Parkmead is well positioned for the future. We have excellent UK and Netherlands regional expertise, significant cash resources, 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 securing opportunities that maximise long-term value for our shareholders."
For enquiries please contact:
The Parkmead Group plc +44 (0) 1224 622200
Tom Cross (Executive Chairman)
Ryan Stroulger (Chief Financial Officer)
Arden Partners plc (Financial Adviser, NOMAD and Corporate Broker to Parkmead) +44 (0) 20 7614 5900
Instinctif Partners Limited (PR Adviser to Parkmead) +44 (0) 20 7457 2020
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