Parkmead Announces Preliminary Results for the Year Ended 30 June 2021

Source: 11/26/2021, Location: Europe

Parkmead, the UK and Netherlands focused independent energy group, is pleased to report its preliminary results for the year ended 30 June 2021.


Revenue momentum from increased gas prices; strong financial position
- Revenue for the period was £3.6 million (2020: £4.1 million), with a 33% increase in the second half compared to the first half reflecting the strong recovery in gas prices from the COVID-19 pandemic lows
- Gross profit increased by 39% to £1.8 million (2020: £1.3 million), showing the robustness of Parkmead’s gas assets and continued improving efficiency
- Gross margin increased from 31% to 49%
- Well capitalised, with cash balances of £23.4 million (US$31.6 million) as at 30 June 2021
- Parkmead has seen the benefit of the strong climb in energy prices and are 100% unhedged. From lows of around €5.0/MWh in July 2020 prices have rebounded strongly, with Dutch TTF prices reaching around €75.0/MWh in November 2021
- Excellent revenue generation since period end, €3.0 million of revenue generated in the first four months of FY 2022, 355% higher than the equivalent four months last year
- Parkmead's Netherlands assets remain very low cost to operate, and were uninterrupted by lockdown restrictions introduced by the Dutch Government
- Non-cash impairment charge recorded of £10.9 million relating primarily to relinquishment of the Platypus licence at the pre-development stage
- Parkmead maintains strict financial discipline with very low operating costs

Acquisition of Netherlands gas royalty and potential drilling campaign in 2022
- Acquisition of Netherlands gas royalty completed in July 2021 for a consideration of €565k, satisfied through a part cash payment and part of the remaining 2021 net revenue from the Geesbrug gas field
- The revenue associated with this royalty for just the year to 30 June 2020 was €325k, delivering a relatively short payback
- Through this acquisition, Parkmead’s effective financial interest doubled from 7.5% to 15% in the Grolloo, Geesbrug and Brakel gas fields - Gross production at the Group’s Netherlands assets for the financial year averaged 30.3 million cubic feet per day (“MMscfd”), which equates to approximately 5,212 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
- Average netback per barrel of oil equivalent for the last two months from the Netherlands (September and October 2021) of €48.3
- Partnership analysing a potential two-well drilling campaign next year from the Diever site, targeting LDS-A and LDS-B
- Drilling would target 22.7 Bcf of gross gas resources, on a P50 basis, in the prolific Rotliegendes reservoirs found on the licence (CoS of between 40 and 49%)
- Papekop gas development has successfully progressed through the concept select gate; planned gas development targeting 35.6 Bcf of gross reserves with oil upside

Renewables Growth Strategy
- Two successful sales of separate areas of non-core land from UK renewable energy portfolio achieved an aggregate cash consideration of £4.0 million, representing a substantial 82% of the original Pitreadie net consideration
- Sites with the largest renewable energy potential have been retained and high-graded
- Technical studies are already underway on a specific location within the Group’s onshore land portfolio for the potential development of a large wind farm
- This area of land lies adjacent to the Mid Hill Wind Farm which encompasses 33 Siemens wind turbines with a generating capacity of around 75 megawatts
- Other renewable opportunities exist across the Group’s asset portfolio
- Considering further acquisition opportunities to expand the Group’s renewables portfolio

UK North Sea licence refocus
- New project secured through successful award of Fynn licence in the Central North Sea (Parkmead 50% and operator), containing two undeveloped discoveries and a prospect in the Piper Formation
- Fynn Beauly is a very large oil discovery extending across multiple blocks and is estimated to contain oil-in-place of between 602 and 1,343 million barrels, with our licence containing a section of the discovery to the south holding oil-in-place of between 77 and 202 million barrels
- Fynn Andrew is wholly contained on the licence and holds 50 million barrels of oil-in-place on a P50 basis
- Addition of these blocks adds 34.4 million barrels of 2C resources to Parkmead
- Extension to the Skerryvore licence has been successfully awarded to Parkmead (as operator) and joint venture partners
- Completed reprocessing of Skerryvore 3D seismic, allowing final rock physics and inversion scopes to begin
- Multiple exploration and development activities centred around Skerryvore prospect in 2021/22
- Skerryvore’s main prospects are three stacked targets, at Mey and Chalk level, which together could contain 157 million barrels of oil equivalent (“MMBoe”)
- Relinquishment of Playtpus licence by Parkmead and the remaining joint venture partner following the very late withdrawal of the majority partner and operator
- Parkmead continues to assess draft commercial offers received for the potential tie-back of the Greater Perth Area (“GPA”) project, which has the potential to deliver 75-130 MMBoe on a P50 basis
- For the Perth field development alone, every $10/bbl increase in the oil price adds approximately £130 million to the P50 post-tax NPV of the project

Substantial gas and oil reserves and resources
2P reserves of 45.5 million barrels of oil equivalent (“MMBoe”) as at 30 September 2021 (45.7 MMBoe as at 30 September 2020)

Evaluating further acquisitions and opportunities
- Nine acquisitions, at both asset and corporate level, have been completed to date
- Parkmead actively evaluating further acquisition opportunities in renewables, gas and oil in line with its strategy to build a balanced portfolio of assets

Parkmead’s Executive Chairman, Tom Cross, commented:
“I am pleased to report an important year of progress for Parkmead, despite the year being significantly disrupted by the COVID-19 pandemic. The substantial rise in gas prices post year end is also creating strong momentum for the Group. We intend to capitalise on this by further balancing the Group’s operations to include other energies.

The innovative royalty deal we completed in July enhances our gas interests in the Netherlands and adds significant value to Parkmead. This growth step adds to our portfolio of high-quality energy projects delivered through acquisitions, organic growth and active asset management.

The successful divestment of non-core land areas is a testament to the team's ability to ensure value is generated from its assets. Parkmead has already identified a number of possible locations for renewable energy opportunities within the Group's high-graded onshore acreage.

Our team is carefully evaluating further potential gas, oil and renewable energy acquisitions that would complement our existing business.

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