RE: Simon Thompson17 Apr 2018 21:39
cont......
2) - Perth and Dolphin fields
Bearing this in mind, Parkmead has increased its interests in licences P218, P588 and P2154 in the Moray Firth, which contain the Perth and Dolphin fields, from 60.5 per cent to 100 per cent to boost its 2P reserves by 17.9m barrels of oil. The company also signed an agreement with Nexen Petroleum, a subsidiary of the China National Offshore Oil Corporation, to begin a detailed engineering study for the potential commercialisation of Perth and Dolphin by way of a sub-sea development tie-back via Nexen�s Scott platform that�s located 10km away.
Interestingly, initial work indicates that the required modifications to Scott could be relatively limited, thus offering potential to significantly reduce capital expenditure to bring the project on stream as well as lowering operating costs. True, Parkmead�s Greater Perth Area (GPA) fields have high levels of sulphur, but so does the Buzzard field in the Outer Moray Firth where Nexen is operator and has a 42 per cent interest, so the company has experience of dealing with this issue.
Moreover, Parkmead has also commissioned a new reservoir study that could potentially lead to a substantial increase in the recovery factor of oil volumes at the Perth field, which currently stand at 197m barrels of oil for core Perth and 498m barrels including the northern areas of the field. It goes without saying that the Perth and Dolphin fields are a valuable asset, representing around 60 per cent of Panmure Gordon�s valuation of all the fields in Parkmead�s portfolio.
My take on the aforementioned developments is that they clearly improve the chance of the GPA fields being commercialised, a factor that�s not being reflected in Parkmead�s share price, which is half of Panmure Gordon�s risked NAV estimate of 85p a share.
I would also highlight some positive news from the Diever West gas field in the Netherlands in which Parkmead holds a 7.5 per cent interest. The field came on stream in November 2015 and averaged 5,340 barrels of oil equivalent per day (boepd) in the first six months, and has been exceeding expectations since then. In fact, in February this year the field averaged 7,833 boepd and new dynamic monitoring suggests it has around 18.6m barrels of oil equivalent of gross gas-in-place, or 108bn cubic feet. That�s more than double the original estimate.
In addition, Parkmead's low-cost onshore gas portfolio includes three other fields in the Netherlands that have an average operating cost of just $10 (�7.1) per barrel of oil equivalent. The profitable gas production from Diever West, and Parkmead's wider portfolio of gas fields in the Netherlands, provide important cash flow to reduce cash burn while the company makes progress with its licences in the North Sea, any one of which has potential to create substantial investment upside for shareholders. Buy.
end
Sign In
Follow the stocks
