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LONDON (Alliance News) - The Parkmead Group PLC Thursday said revenue was considerably lower in the first half of the current financial year due to the fall in oil prices, but said its loss was still narrower thanks to a reduction in costs and a lack of impairments.
The oil and gas company, which has assets in the Netherlands and the UK, said its pretax loss in the six months to the end of 2015 amounted to GBP4.6 million, a huge improvement from the GBP17.0 million loss a year earlier despite reporting a hefty drop in revenue in the period.
Revenue fell by around a third to GBP7.0 million from GBP10.1 million due to oil prices almost halving in the period to USD48 a barrel from USD91, but the absence of a GBP12.9 million impairment that was booked last year and a drop in finance costs to GBP395,000 from GBP2.3 million helped shrink its loss in the period.
The lack of impairments and a reduction in cost of sales to GBP11.1 million from GBP16.9 million meant gross loss for the first half narrowed to GBP4.1 million from GBP19.7 million, leading onto an operating loss of GBP4.3 million compared to GBP17.4 million a year earlier.
Parkmead did not provide its full production figures for the period, but provided an update on its Diever West gas field in the Netherlands that began producing at the start of the period.
Diever-2, the first well to be brought online from the field, is outperforming and produced an average of 30.0 million cubic feet per day in February, equal to around 5,100 barrels of oil.
Parkmead did not state how much the well was producing during the recently completed half, but that February figure can be compared to the initial flow achieved at the well of 29.0 million cubic feet per day, or 5,000 barrels of oil.
After bringing the Diever West field into production only 14 months after discovering gas, Parkmead said it will now try to enhance production from its four onshore gas fields in the Netherlands, which will include drilling new wells at the Geesbrug and Wijk en Aalburg gas fields to maximise production.
Parkmead is hoping increasing production will help mitigate lower oil prices, and can boast very low cost production from its fields.
"Parkmead is increasing the group's overall gas production in the Netherlands through a low-cost, onshore work programme. This will act as a natural hedge to the current low global oil prices," said Executive Chairman Tom Cross.
"The new production from Diever West and the additional Geesbrug well are forecast to more than quadruple Parkmead's net gas production in the Netherlands," he added.
All four fields have an average operating cost of only USD14 per barrel - providing a very healthy margin even at current Brent prices that were trading a smidgen below USD40 per barrel on Thursday morning.
The new Diever West field boasts an even lower cost of only USD12 per barrel.
"The group is in a strong position, both operationally and financially, at a challenging time in the global oil and gas industry," said Cross. "Our acquisition-led growth strategy has resulted in six deals for Parkmead since repositioning the business as an independent oil and gas company in 2011, and we intend to build on this excellent track record."
Parkmead reported a cash balance of GBP29.6 million at the end of 2015.
Parkmead shares were trading up 3.2% to 64.00 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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