Parkmead tumbles on exit from Platypus

HIGHER gas prices lifted second-half revenues at Parkmead, but news of a multimillion pound hit on its Platypus project in the North Sea saw the energy group’s shares marked sharply lower in yesterday’s trading.

Aberdeen-based Parkmead, led by oil boss Tom Cross, said the substantial rise in global gas prices since the end of its financial year on June 30 has created “strong momentum” going forward. Mr Cross added that the firm, which is expanding into renewable energies, is “well-positioned” for the future.

Investor sentiment was however weighed down by news that Parkmead has relinquished the licences for Platypus back to the Oil and Gas Authority (OGA). This accounted for the majority of a £10.9 million impairment charge.

Earlier this year, Parkmead agreed in principle to become the operator on Platypus after Dana Petroleum – which was built up by Mr Cross before he sold it to KCOC in 2010 – suddenly exited. The project was thought to hold recoverable reserves of up to 105 billion cubic feet of gas.

Parkmead said despite “intensive and prolonged discussions” with the OGA, suppliers and the owner of the platform that would host Platypus gas as a tie-back, it was unable to agree suitable terms for an extension of the licence.

There was a 33% increase in revenues in the second half compared to the first, taking the total for the 12 months to the end of June to £3.6m, down from £4.1m the previous year.

Cash generation since then was described as “excellent”, with €3m (£2.54m) generated in the first four months of the current financial year, up 355% on the same period a year ago. The company noted that it remains unhedged for 100% of its gas production, allowing it to fully reap returns from gas prices that more than trebled between June and October.

Shares in the Aim-listed group closed 7p lower yesterday at 40p, a decline of nearly 15%.