Cheap Dutch gas sees Parkmead swing to profit

UK and Netherlands-focussed independent energy group Parkmead posted its preliminary results for the year to 30 June on Friday, reporting gross profit of £1.2m for the period, swinging from a £4.6m loss in the 2016 financial year.

The AIM-traded company said it had a “strong” total asset base of £82.2m as at 30 June, adding that it had maintained “strict financial discipline”.

It also remained well-capitalised, with cash balances of $34.3m (£26.4m) as at period end, as well as a balance sheet free of debt.

Parkmead’s low-cost Netherlands gas production was providing positive cash flow to the company, the board said, with all revenues from Netherlands production received in euros, mitigating recent currency fluctuations.

On the operational front, Parkmead said new dynamic reservoir modelling suggested Diever West had approximately 108 billion cubic feet of gas-in-place volumes, which is more than double the post-drill static volume estimate of 41 Bcf.

The group had thus substantially increased production from its Diever West gas field by perforating the Akkrum reservoir formation.

“2017 has been an important year of progress for Parkmead,” said executive chairman Tom Cross.

“The group moved into gross profit as a result of increased gas production and the cost reduction programme in the UK.

“This is an outstanding achievement for Parkmead at a time when global oil prices have remained low.”

Cross said Parkmead's gas production acted as a “natural hedge” in the challenging oil price environment.

“We are delighted to have significantly increased production at the Diever West gas field, which increases Parkmead's cash flow.

“New reservoir modelling indicates that Diever West could be more than double the size originally expected.”

Cross said the company was also pleased to have been able to increase its stakes in core areas of its portfolio during the year, particularly around the Greater Perth Area oil hub in the UK North Sea, where Parkmead strengthened its position.

The group is in discussions with “leading international service companies” and oil companies with regards to the Greater Perth Area, Cross added.

“The team at Parkmead is working intensively to evaluate and execute further value-adding opportunities which could provide additional cash flow to the company.

“Parkmead is analysing both oil and gas, and wider energy sector opportunities, which could broaden and enhance the group's revenue stream.”

Cross added that Parkmead was “well-positioned” for growth.

“We have excellent regional expertise, significant cash resources, and a growing, low-cost gas portfolio.

“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.”