Preliminary Results for the year ended 30 June 2020

  • Nov 20, 2020
  • Parkmead Group

Parkmead, the UK and Netherlands focused independent energy group, with four business areas, is pleased to report its preliminary results for the year ended 30 June 2020.

HIGHLIGHTS 

Strong financial position and robust producing assets, despite low gas price environment

Well capitalised, with cash balances of £25.7 million (US$33.4 million) as at 30 June 2020

Total asset base increased by 9% to £89.8 million at 30 June 2020 (2019: £82.3 million)

Net assets increased to £71.3 million at 30 June 2020 (2019: £68.3 million)

Revenue for the period was £4.1 million (2019: £8.3 million), reflecting the record-low gas prices seen during the year

Gross profit achieved of £1.3 million (2019: £5.7 million), showing the robustness of Parkmead’s gas assets

Net profit before tax and non-cash impairment charges was £0.8 million

Gas prices have fallen from highs of approximately €25.7/MWh in October 2018 to lows not seen in over a decade to around €5.0/MWh in June 2020 due to the oversupply of Liquefied Natural Gas (LNG) into the European market and the unprecedented effect of COVID-19

Gas prices have since rebounded strongly to approximately €14.0/MWh in November 2020

Parkmead's Netherlands assets remain very low cost to operate, and were uninterrupted by the lockdown restrictions introduced by the Dutch Government in March

Netherlands gas production, plus benchmarking & economics consultancy, provides positive operating cash flow to Parkmead

Parkmead maintains strict financial discipline with very low operating costs

Significant wind farm potential; high-grading of renewables portfolio underway

In September 2019, the Company acquired Pitreadie Farm Limited (“Pitreadie”) as part of its expansion into renewable energy

Studies 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

High-grading of renewables portfolio underway with expected divestments of non-core acreage

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 acceleration

Revenue-generating renewable energy opportunities continue to be analysed by Parkmead as it seeks to build out its renewable energy portfolio 

Excellent 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

Early-stage reprocessing work showing positive improvements in seismic image quality, at the Mey Sandstone reservoir level in particular

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 agree terms for a tie-back of the Greater Perth Area (“GPA”) to the Scott facilities

Parkmead is also in discussions with other operators in the vicinity where new opportunities have arisen during the year

Infrastructure studies completed in 2020 have confirmed that there are no technical hurdles to produce Perth oil from the wells all the way through to the onshore facilities 

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

Parkmead and the Platypus partners have obtained an extension to the Platypus licence to take account of COVID-19 delays

Multiple new opportunities identified across Netherlands portfolio

Gross production at the Group’s Netherlands assets for the financial year averaged 38.3 million cubic feet per day (“MMscfd”), which equates to approximately 6,608 barrels of oil equivalent per day (“boepd”

Low-cost onshore gas portfolio in the Netherlands produces from four separate gas fields with an average field operating cost of just US$9.9 per barrel of oil equivalent, generating strong cash flows 

The Brakel field was brought back to full production during the period following the completion of a work programm

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

Multiple further opportunities exist around Diever West, such as Boergrup and De Bree, both of which contain stacked targets with similar characteristics to Diever West

Boergrup well permitting and planning is underway

A new seismic reprocessing project began in Q4 2019, which will help define and high-grade the extensive prospects 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

Substantial oil and gas reserves and resources

2P reserves of 45.7 million barrels of oil equivalent (“MMBoe”) as at 30 September 2020 (46.0 MMBoe as at 30 September 2019) 

Well positioned for further acquisitions and opportunities

Eight acquisitions, at both asset and corporate level, have been completed to date

Parkmead actively evaluating further acquisition opportunities in renewables, gas and oil

Parkmead’s Executive Chairman, Tom Cross, commented:

“I am pleased to report on an important year of progress for Parkmead. Despite revenues being impacted by the low gas price environment, Parkmead has delivered growth in its asset base whilst retaining financial strength. This creates a strong foundation from which to build and Parkmead remains robust in the context of broader global uncertainty brought about by the COVID-19 pandemic.

Following our first strategic acquisition in the renewable energy arena, we continue to evaluate further 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 a part of the Group’s onshore acreage.

Further advances have been 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 to secure opportunities that maximise future value for our shareholders.” 

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