Profit companies

Benefit from a concession in the North Sea

  • Appoints Corporate Finance Advisory Firm to Manage Greater Perth Area Farm-Out Process
  • Gas prices in Europe hit record highs and 12-month forward curve prices are 131% higher than priced in analysts’ earnings forecasts

Parkmead (PMG:66p), a specialist energy group in the UK and the Netherlands, has appointed a leading energy corporate finance advisory firm, Gneiss Energy, to manage the acquisition process. leasing of its Greater Perth Area Development (GPA) project.

The main Perth field contains 55 million barrels of recoverable oil equivalent (boe) on a very likely P50 basis, while the larger GPA project has the potential to deliver 75-130 million boe (P50 basis) and supply value-added volumes to surrounding infrastructure via the field. life extension. GPA is one of the largest undeveloped oil projects in the North Sea and has been fully appraised. Importantly, the fields have been flow tested at rates of up to 6,000 barrels of oil per day and have produced good quality light crude oil between 37° and 32° API. Reasonably, Parkmead has been in talks with the CNOC-led Scott Field Partnership to explore the terms of an undersea connection through the nearby Scott Platform to generate mutually beneficial benefits for the Scott Partnership. and owners of Perth.

With geopolitical tensions unlikely to subside anytime soon, UK energy security is a priority, with Brent Crude above $100 or three times the operating breakeven point of $35 a barrel of AMP, then the economy and lower oil prices favor a successful farm. In addition, Parkmead directors see “positive investment sentiment emanating from the introduction of the new UK energy profit tax, in which the associated investment allowance of up to 91% has created a powerful incentive for leading producers to invest in new UK North Sea developments.”

Property broker FinnCap has placed a net present value (NPV) of £104m (92p per share) on Parkmead’s interest in the GPA project, so it constitutes a significant proportion of the total NPV at risk brokerage of 164p per share. The directors estimate that every $10 per barrel increase in oil price adds £130 million (115 pence per share) to the after-tax net present value (NPV) of P50 from the GPA project.

The good news gets even better. Indeed, gas prices in Europe have risen again since I highlighted how Parkmead’s low-cost onshore gas portfolio in the Netherlands is profiting from the European energy crisis (“Profiting from the gas crisis in Europe”, July 6, 2022). In fact, Dutch Title Transfer Facility (TTF) gas prices have since reached record highs and future prices now average €185 per MWh in Parkmead’s 2022/23 financial year, more than double €80 per MWh incorporated into FinnCap’s profit estimates. A massive revenue upgrade is on the cards.

Although Parkmead’s share price has risen 30% in the past month, the shares are still trading at an unwarranted 60% discount to analysts’ NAV estimates. To buy.

Simon Thompson was named Journalist of the Year at the 2022 Small Cap Awards.

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