The Parkmead Group will write off its Perth oil development in a non-cash one-off impairment of approximately £33 million because of “unprecedented challenges” in the hydrocarbon sector.
ISSUES
In its business review, the company said it had re-evaluated its direction following “volatile oil and gas prices, ageing infrastructure and rising capital and operating costs”.
Parkmead also cited delays, curtailments and cancellations of new field developments caused by “sharp increases” in taxation in the past 12 months, loss of key equipment and human resources from the UK North Sea and “lack of appetite from traditional funding sources to support oil and gas projects”.
As a result the company will not extend licences P588 and P2154 containing the “challenging” Perth discovery in the UK Moray Firth.
Problems include handling sour gas with ageing nearby infrastructure, extensive transportation, engineering and processing studies and commercial negotiations.
Recent revised development capital costs for Perth, including those associated with achieving net-zero, have increased to almost $1 billion, added Parkmead.
SKERRYVORE
The company aims to refocus on acquisitions and “attractive” projects such as Skerryvore in the UK central North Sea, which it said were “simpler and lower cost than Perth”.
Parkmead, as operator with a 50% interest, plans to drill the high-impact Skerryvore well during Q4 2024. Partners in the project, targeting an estimated 157 million barrels of oil equivalent, are Serica and CalEnergy.
The company said it remained in a “very healthy cash position” with revenues from its producing Dutch gas fields and onshore UK wind turbines.
It has also recently made presentations to the North Sea Transition Authority (NSTA) on planned work programmes for its applications in the 33rd Offshore Oil & Gas Licensing Round.
The company is additionally considering number of acquisition opportunities in UK Continental Shelf production.
Executive chairman Tom Cross added that Parkmead had developed a clear strategy for its future in the UK North Sea.
“As a balanced energy company, Parkmead will continue to progress its diverse portfolio of gas, oil and renewable energy assets in order to maximise shareholder value.
“This solid base onshore in the Netherlands and the UK puts Parkmead in a strong position to pursue the exciting and significant upside offshore that Skerryvore presents in the near-term, and the Fynn Beauly and Fynn Andrew assets in the medium-term, together with any new licences that may be awarded to Parkmead and its partners following its applications in the current 33rd UK offshore licensing round.”