REG - Parkmead Group (The) - Preliminary Results Statement 2024
26/11/2024 07:00
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RNS Number : 5902N Parkmead Group (The) PLC 26 November 2024
26 November 2024
The Parkmead Group plc
("Parkmead", "the Company" or "the Group")
Preliminary Results for the year ended 30 June 2024
Parkmead, the independent energy group focused on growth through gas, oil and
renewable energy projects, is pleased to report its preliminary results for
the year ended 30 June 2024.
HIGHLIGHTS
Excellent operating performance maintains strong financial position
· Profit after tax for the period of £4.9 million (2023: £42.3
million loss) driven by increased operational output across the portfolio and
a material reduction in tax liabilities
· Revenue for the period of £5.7 million (2023: £14.8 million)
fell from the prior year due to lower average realised gas price of
€34.23/MWh (2023: €105.73/MWh) offset by increases in both gas and
electricity production
· Gross margin of £3.4 million (2023: £12.5 million) reflecting
the low-cost nature of the portfolio
· There are no remaining offshore liabilities as at 30 June 2024
· Parkmead's balance sheet strengthened by 33% during the year with
net assets increasing to £19.6 million (2023: £14.7 million)
· The Group maintains healthy cash reserves of £9.5 million
providing appropriate financial flexibility to pursue further investment
opportunities (2023: £11.6 million)
Increased production onshore Netherlands driven by the successful development
of LDS-01
· Gross production for the period across the Group's Dutch assets
increased to 3.3kboe/d (2023: 3.0kboe/d)
· Diever-02 has performed steadily since it was successfully
brought back on stream in February following the full recovery of LDS-01
reserves, which outperformed the Operator's post well high case
· Parkmead recently negotiated a unitisation of the VDW-A prospect
which sits partially on its Drenthe VI concession, marking a critical step on
the path for the partners to make a Final Investment Decision on this
attractive target in 2025
· During the year, a full review of prospectivity was completed by
the Drenthe VI partners. Opportunities have now been high-graded with the
largest prospects being progressed
· Technical work has continued on the Geesbrug field where there is
potential for two further wells. The Drenthe V partners anticipate making a
final investment decision on these opportunities in the second half of 2025
UK offshore portfolio enhanced through successful 33(rd) round award of the
Fynn Beauly discovery
· Parkmead accepted the award of licence P2536, consisting of
blocks 14/5a, 14/20d and 15/11a, along with its sole partner Orcadian Energy
(50% working interest)
· These blocks contain seven undeveloped discoveries, including the
material Fynn Beauly accumulation (gross resource estimate 292mmboe)
· Good progress has been made on the Company's operated Skerryvore
prospected (50% working interest)
· Parkmead believes there is excellent value in its UK offshore
portfolio and continues to focus on work streams to progress its interests in
these assets
Continuing steady cash flow generated at Parkmead's operated Kempstone Hill
wind farm
· Electricity generation at Kempstone Hill increased to 2,570MWh in
the year (2023: 2,446MWh) resulting in revenue for the period of £0.6 million
(2023: £0.7 million) with the increased electricity generation offset by
lower electricity prices
· The asset has continued to perform strongly post year-end, with
uptime averaging 99% between July and September 2024
Major wind farm opportunity at Pitreadie
· The Group continues to progress discussions with a major European
renewable energy developer regarding the development opportunity at Pitreadie
for a wind farm of up to 100MW
· Negotiations are continuing in respect of a formal joint venture
agreement ahead of approaching local planning authorities to progress this
important project
Progressing plans to deliver shareholder value
· Parkmead is in discussions regarding a potential transaction that
would involve a sale of its UK offshore assets
· The Company continues to evaluate acquisition and investment
targets across both the UK renewable energy and international E&P sectors
Parkmead's Executive Chairman, Tom Cross, commented:
"We have delivered another year of strong operational results, which has led
to a healthy profit for the Group and earnings of over four pence per share.
Parkmead continues to benefit from its balanced portfolio, and in particular
its exposure to the UK renewables market which the new UK Government sees as a
key area for growth. We welcomed the removal of the de facto ban on onshore
wind energy developments across England which may unlock a range of investment
opportunities.
As set out at the time of the interims, Parkmead has a valuable long term
asset in its UK offshore oil licences and its UK ring fence tax loss pool.
The Company is in ongoing discussions as it seeks to deliver shareholder value
from this asset.
The Group's robust financial position provides Parkmead with a distinct
advantage as we seek to further enhance shareholder value through acquisition
opportunities across the Group."
The Parkmead Group plc +44 (0) 1224 622200
Tom Cross (Executive Chairman)
Andrew Smith (Executive Director - Business Development)
Cavendish Capital Markets Limited +44 (0) 20 7220 0500
Marc Milmo / Seamus Fricker - Corporate Finance
Iain MacArthur - Sales
Chairman's Statement
Parkmead is pleased to present a strong set of results for the year ended 30
June 2024.
Against the challenging backdrop of uncertainty over the future of the UK
offshore oil & gas industry, our strategy of diversifying our asset base
has proven its worth. Our UK onshore renewables portfolio has provided a
platform for the Group to continue to perform in a sustainable manner, despite
the political headwinds faced by the offshore industry. Renewable energy has
grown to become a more substantial part of our overall revenue, totalling 12%
in FY24 compared with 6% in the prior year. It complements our low carbon,
natural gas production in the Netherlands.
During a turbulent period, the Group has successfully delivered earnings per
share of 4.52p and a healthy profit after tax of £4.9m. Our strong financial
position and broad asset base positions Parkmead well, relative to some
companies who are facing an existential threat in the form of ambiguous energy
policy from the UK government. Our assets in the Netherlands provide a hedge
against the potential spectre of no significant future exploration or
development activity being allowed on the UKCS.
Parkmead is well positioned to exploit growth opportunities during the next
phase of the Company's development as we look to realise value from our UK
offshore assets and continue to build upon our UK renewable and onshore
international E&P portfolios.
Netherlands E&P
Parkmead's non-operated portfolio of onshore gas fields in the Netherlands has
continued to perform well. Gross production across the portfolio increased 10%
year-on-year to 3.3kboepd (thousand of barrels of oil equivalent per day).
This increase was primarily due to the success of the LDS-01 discovery on the
Group's Drenthe VI concession which was brought onstream during the period.
This prolific gas well outperformed the operator's post well high case, with
the reserves now fully recovered. This allowed the restarting of production
from Diever-02 which has performed strongly since being brought back online in
February 2024.
The outlook for the Drenthe VI concession is particularly exciting, with
numerous attractive prospects being progressed through the permitting process.
Parkmead recently agreed the unitisation of the VDW-A prospect, which sits
partially on its Drenthe VI concession, ahead of a potential Final Investment
Decision being taken by the partnership in 2025.
On the Company's important Papekop development, work is ongoing to secure a
suitable export route, with a decision anticipated in the next few months.
Once approved this will enable the partnership to progress the project into
detailed engineering design during the course of 2025.
The Drenthe V partners are continuing to evaluate the potential for further
development drilling on the Geesbrug field. This includes two wells, one
within the main Geesbrug structure and the second targeting Geesbrug West
which is now understood to be disconnected from the rest of the field. Recent
technical work by the operator has calculated that significant in-place
volumes of 158Bcf remain at Geesbrug and Geesbrug West.
During the period, work continued to re-establish production from the
Brakel-01 well. There remains potential for gas production to restart at the
well through further well intervention or alternatively by side-tracking the
existing well. Parkmead is currently exploring both options alongside the
operator, Vermillion.
At Drenthe IV, the late life Grolloo field continues to produce economically.
The field is expected to reach COP during 2025.
UK Renewables
Kempstone Hill Wind Farm
Our operated wind farm at Kempstone Hill has continued to perform strongly
during the year, generating 2,570MWh (FY23: 2,446MWh) of electricity and
revenue of £0.6m (FY23: £0.7m). Higher average wind speeds during the year
resulted in stable electricity production despite a decline in operational
uptime which averaged 90% during the year (FY23: 98%) due to the shutdowns
associated with upgrades made to Turbine 2 during the second half of FY 24.
Post completion of these works the site has performed exceptionally well, with
uptime averaging 99% between July and September 2024. Following the year-end,
the Group successfully negotiated an updated Purchase Price Agreement covering
the site for the twelve month period ending 30 September 2025 at an average
export price of 88.50£/MWh, in line with prevailing market rates.
Pitreadie Wind and Solar Projects
As set out at the interim results, Parkmead is in advanced commercial
discussions with a major renewable energy developer regarding a potential
joint venture whereby Parkmead would participate in a significant wind farm
development of potentially up to 100MW. These discussions include cost sharing
arrangements for essential pre-planning work streams including ongoing
ornithological surveys and wind monitoring using installed LiDAR equipment.
Parkmead is looking to finalise the negotiations around a joint venture
agreement ahead of the parties approaching local planning authorities to
progress this important renewable energy development. The team is also
studying the potential for a solar farm to coexist alongside the wind farm
project.
Brachmont Solar Opportunity
Parkmead's renewable energy team is analysing the potential to develop a solar
energy farm in the Brachmont area, where conditions appear favourable.
UK Offshore Oil Licences
Fynn Beauly
Post period end, Parkmead was pleased to accept the award of the major Fynn
Beauly discovery as part of the UK's 33rd offshore licensing round. Licence
P2634 is situated in the Outer Moray Firth and comprises blocks 14/15a, 14/20d
and 15/11a. Parkmead (50% interest and operator) believes this licence
contains one of the UK's largest undeveloped discoveries. This heavy oil
accumulation has been proven by three wells and is estimated to contain
oil-in-place of between 740 million and 1.33 billion barrels.
A key feature of the Fynn Beauly field is the highly aromatic nature of the
crude, which Parkmead has confirmed through review of oil analyses from the
historic discovery wells. Aromatic feedstock is essential for oil refineries
to produce premium-quality needle coke which can be turned into synthetic
graphite, a critical component of lithium-ion battery anodes required in
electric vehicles.
Skerryvore
A significant amount of progress has been made on the planning of the next
stage in the development of the Company's Skerryvore licence. A new well
location (30/13c-M) has been agreed by the partners on the licence to optimise
penetration of the Mey and Tor reservoir targets whilst avoiding potential
shallow gas hazards. The well design has been simplified to a dual-target
vertical wellbore to allow for more cost-efficient operations without
compromising on the geological requirements. Pore pressure and fracture
gradient prediction studies have been completed and the data acquisition plan
is now in place. Site survey planning has also commenced as the partners look
to enable the drilling of this high-impact exploration well.
Gamma East
As a result of the negative investment environment created by successive UK
governments through ambiguous energy policy and a series of changes to the
fiscal regime, Parkmead has elected not to progress the Gamma East prospect
further. The Group has notified the NSTA of its intention to relinquish
licence P218, in which Gamma East is located, and this is being progressed.
P1293 Abex
During the year, the final subsea removals were successfully carried out on
P1293. The required work scopes were completed safely and on budget. Following
this the joint venture proactively carried out a post decommissioning seabed
survey, after which it is the view of the operator that all commitments have
now been fulfilled on the licence. Once confirmed by the regulator, Parkmead
will have no further exposure to UK offshore abandonment costs.
UK Oil & Gas
Parkmead believes that it holds quality assets in its UK offshore licences. It
is however cognisant of the current headwinds facing the UK North Sea E&P
sector and also the increasing capital required to fully develop such licences
into production. Furthermore, Parkmead recognises that it has a valuable asset
in its UK Ring Fence tax loss pool that could be used against future UK
production. Parkmead is therefore in discussions regarding a potential sale of
its UK offshore position, as it looks to deliver shareholder value from these
assets. These discussions are ongoing.
Financial performance
Parkmead has delivered a healthy profit after tax of £4.9m (FY23: loss of
£42.3m) as a result of strong operating performance, and a tax credit to the
income statement following a reduction in previous estimates of Netherlands
tax liabilities, including the Netherlands windfall tax. This is equivalent to
a basic earnings per share of 4.52p (FY:23 loss per share of 38.74p).
Group turnover for the year was £5.7m (FY23: £14.8m). The year-on-year
decrease was due to a fall in gas prices from the historic highs which arose
as a result of the war in Ukraine. The average realised gas price in the
period was €34.23/MWh (FY23: €105.73/MWh).
Operating costs have remained stable compared with the prior year at £2.3m
(FY23: £2.2m) leading to a gross profit for the period of £3.4m (FY23:
£12.5m). Administrative expenses have remained closely controlled at £1.8m
(FY23: £1.8m). Exploration expenses for the period totalled £0.3m and
related primarily to costs on licence P218 (FY23: £33.0m).
Parkmead continues to maintain a strong balance with sheet with gross assets
of £27.3m (FY23: £28.6m). Cash and cash equivalents decreased in the year to
£9.5m (FY23: £11.6m) primarily due to decommissioning expenditure of c£2.8m
in the period on Athena. This was mainly incurred in the first half of the
year.
Our modest financial debt has continued to reduce with £0.8m outstanding at
30th June 2024 (FY23: £0.9m). This small debt was inherited as a result of
the acquisition of Kempstone Hill Wind Energy Limited.
Outlook
Parkmead remains in a position of relative financial strength due to our
Netherlands gas and UK renewable income streams, healthy cash balances and
carefully controlled costs. In addition, the Group has no further exposure to
UK offshore abandonment liabilities.
As set out above, we believe that there is an opportunity to deliver
shareholder value from the work we have done to date in accumulating and
progressing our UK offshore licences. Furthermore, Parkmead continues to
progress its attractive hopper of organic growth initiatives, such as the
Pitreadie wind development opportunity, whilst expanding our broad portfolio
of natural gas targets in the Netherlands. We are also focused on
complementing our organic growth by exploring opportunities to expand the
Group's asset base through selective acquisitions. We firmly believe that oil
& gas will continue to play an important role in the global energy mix and
we are continuing to assess international E&P investment opportunities, as
well targeting the acquisition of further cashflow generating renewable energy
assets onshore UK to deliver value for our shareholders.
Tom Cross
Executive Chairman
26 November 2024
Group statement of profit or loss and other comprehensive income
for the year ended 30 June 2024
Jun-24 Jun-23
Continuing operations Notes £'000 £'000
Revenue 5,720 14,769
Cost of sales (2,302) (2,237)
Gross profit 3,418 12,532
Exploration and evaluation expenses 4 (300) (33,009)
Impairment of property, plant and equipment - (13,030)
Gain / (loss) on sale of assets (2) 36
Administrative expenses 2 (1,780) (1,753)
Operating profit/(loss) 1,336 (35,224)
Finance income 148 192
Finance costs (412) (267)
Profit/(Loss) before taxation 1,072 (35,299)
Taxation 3,870 (7,035)
Profit / (loss) for the period attributable to the equity holders of the 4,942 (42,334)
Parent
Profit / (loss) per share (pence)
Basic 3 4.52 (38.74)
Diluted 3 4.07 (38.74)
Group statement of financial position
as at 30 June 2024
2024 2023
£'000 £'000
Non-current assets
Property, plant and equipment: development & production 4,049 4,503
Property, plant and equipment: other 5,603 5,600
Goodwill 1,084 1,084
Exploration and evaluation assets 2,481 1,966
Total non-current assets 13,217 13,153
Current assets
Trade and other receivables 1,632 941
Interest bearing loans 2,936 2,936
Inventory - 16
Cash and cash equivalents 9,486 11,576
Total current assets 14,054 15,469
Total assets 27,271 28,622
Current liabilities
Trade and other payables (1,877) (2,673)
Decommissioning provisions - (2,773)
Current tax liabilities (3,053) (2,263)
Total current liabilities (4,930) (7,709)
Non-current liabilities
Trade and other payables (760) (942)
Loans (668) (767)
Windfall taxation - (2,374)
Deferred tax liabilities - (641)
Decommissioning provisions (1,269) (1,529)
Total non-current liabilities (2,697) (6,253)
Total liabilities (7,627) (13,962)
Net assets 19,644 14,660
Equity attributable to equity holders
Called up share capital 19,688 19,688
Share premium 83,625 83,625
Merger reserve 3,376 3,376
Retained deficit (87,045) (92,029)
Total Equity 19,644 14,660
Group statement of changes in equity
for the year ended 30 June 2024
Share capital Share premium Merger reserve Retained deficit Total
£'000 £'000 £'000 £'000 £'000
At 30 June 2022 19,688 83,625 3,376 (49,695) 56,994
Loss for the year - - - (42,334) (42,334)
Total comprehensive loss for the year - - - (42,334) (42,334)
At 30 June 2023 19,688 83,625 3,376 (92,029) 14,660
Profit for the year - - - 4,942 4,942
Total comprehensive income for the year - - - 4,942 4,942
Share-based payments - - - 42 42
At 30 June 2024 19,688 83,625 3,376 (87,045) 19,644
Group statement of cashflows
for the year ended 30 June 2024
2024 2023
Notes £'000 £'000
Cashflows from operating activities
Continuing activities 4 1,516 11,414
Taxation paid 753 (4,881)
Net cash generated by operating activities 2,269 6,533
Cash flow from investing activities
Interest received 109 192
Acquisition of exploration and evaluation assets (414) (519)
Disposal of property, plant and equipment - 654
Acquisition of property, plant and equipment: development and production (187) (950)
Acquisition of property, plant and equipment: other (549) (87)
Decommissioning expenditure (2,809) (16,983)
Net cash (used in) investing activities (3,850) (17,693)
Cash flow from financing activities
Interest paid (180) (136)
Lease payments (239) (229)
Repayment from loans and borrowings (99) (88)
Net cash (used in) financing activities (518) (453)
Net (decrease) in cash and cash equivalents (2,099) (11,613)
Cash and cash equivalents at beginning of year 11,576 23,263
Effect of foreign exchange rate differences 9 (74)
Cash and cash equivalents at end of year 9,486 11,576
Notes to the financial information for the year ended 30 June 2024
1. Basis of preparation of the financial information
The financial information set out in this announcement does not comprise the
Group and Company's statutory accounts for the years ended 30 June 2024 or 30
June 2023.
The financial information has been extracted from the audited statutory
accounts for the years ended 30 June 2024 and 30 June 2023. The auditors
reported on those accounts; their reports were unqualified and did not contain
a statement under either Section 498 (2) or Section 498 (3) of the Companies
Act 2006 and did not include references to any matters to which the auditor
drew attention by way of emphasis.
The statutory accounts for the year ended 30 June 2023 have been delivered to
the Registrar of Companies. The statutory accounts for the year ended 30 June
2024 will be delivered to the Registrar of Companies following the Company's
Annual General Meeting.
The accounting policies are consistent with those applied in the preparation
of the interim results for the period ended 31 December 2023 and the statutory
accounts for the year ended 30 June 2023 and have been prepared in accordance
with UK-adopted International Accounting Standards ("IFRS").
2. Administrative expenses
Administrative expenses include a credit in respect of a non-cash revaluation
of share appreciation rights (SARs) and share based payments totalling
£661,000 (2021: £1,200,000). The SARs may be settled via shares or cash and
are therefore revalued with the movement in share price. The valuation was
impacted by the decrease in share price between 30 June 2023 and 30 June 2024
3. Profit/(loss) per share
Profit/(loss) per share attributable to equity holders of the Company arise
from continuing and discontinued operations as follows:
2024 2023
Profit/(loss) per 1.5p ordinary share from continuing operations (pence)
Basic 4.52p (38.74)p
Diluted 4.07p (38.74)p
The calculations were based on the following information:
2024 2023
£'000 £'000
Profit/(loss) attributable to ordinary shareholders
Continuing operations 4,942 (42,334)
Total 4,942 (42,334)
Weighted average number of shares in issue
Basic weighted average number of shares 109,266,931 109,266,931
Dilutive potential ordinary shares
Share options 12,072,297 -
Profit/(loss) per share is calculated by dividing the profit/(loss) for the
year by the weighted average number of ordinary shares outstanding during the
year.
Diluted profit/(loss) per share
Profit/(loss) per share requires presentation of diluted profit/(loss) per
share when a company could be called upon to issue shares that would decrease
net profit or net loss per share. When the group makes a loss the outstanding
share options are therefore anti-dilutive and so are not included in dilutive
potential ordinary shares.
4. Notes to the statement of cashflows
Reconciliation of operating profit/(loss) to net cash flow from continuing
operations
2024 2023
£'000 £'000
Operating profit/(loss) 1,336 (35,224)
Depreciation 1,027 722
Amortisation and exploration write-off - 32,834
Profit/(Loss) on sale of property, plant and equipment 2 (36)
Provision for share based payments 42 -
Currency translation adjustments (9) 74
Impairment of property, plant and equipment - 13,030
Decreases / (increase) in receivables (691) 1,077
Decrease in stock 16 26
Increase/(decrease) in payables (207) (1,089)
Net cash flow from operations 1,516 (11,414)
5. Approval of this preliminary announcement
This announcement was approved by the Board of Directors on 25 November 2024.
6. Publication of annual report and accounts
Copies of the Annual Report and Accounts will be made available shortly on the
Company's website www.parkmeadgroup.com, along with a copy of this
announcement.
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