AIM quoted oil and gas companies Parkmead (LON:PMG) and Deo Petroleum (LON:DEO) have signed a strategic alliance to pursue joint opportunities and collaborate together on a 50:50 basis in three specific areas within the UK Central North Sea. The collaboration arrangements will initially last until December 2013 and see the companies work together in the anticipated UKCS 27th Licensing Round as well as looking at joint acquisition opportunities in the identified areas. The parties have also agreed, subject to the necessary regulatory consents, that during the application, bidding and exploration phases Parkmead will act as exploration operator for the partnership, and following commercial discovery DEO will assume the role of development operator.

Until last October Parkmead was one of the lowest profile oil and gas companies on the market, holding just a 2.06% stake in AIM peer Faroe Petroleum (LON:FPM) . However, the appointment of ex-Dana Petroleum boss Tom Cross as executive chairman sparked investor interest and saw the company’s share price leap from around 1.6p to 32p by the end of 2010 before falling back. The shares moved up this morning by 1.25p to 17.25p. Meanwhile, DEO Petroleum re-joined AIM last November in a reverse takeover involving the purchase of a 42.08% working interest in certain licence areas in UK Central North Sea from Nexen. In January, Faroe joined DEO in the venture by buying a 28% stake in the licence area, which includes Perth Core, Perth North, Perth Beta Terrace and Perth Beta East. Shares in DEO rose by 5.5p to 52.5p.

Mr Cross said: “This strategic partnership is a win-win for both companies and we are very pleased to be working with DEO, whose core skills are entirely complementary to Parkmead’s. Our combined teams share a deep understanding of the North Sea and this collaboration will allow both companies to create and accelerate significant value for our respective shareholders.”

David Marshall, DEO’s chief executive added: “We are delighted to join forces with Parkmead in pursuing opportunities in these key areas of the UK Central North Sea. The strategic partnership offers DEO the opportunity to expand into areas beyond our core Perth assets, where our existing relationships are strong and unchanged. The Parkmead Group has an outstanding team of industry professionals with a proven track…

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