Parkmead Share Discussion Threads

[fhmktg] 26/11/2018 23:49

Fardel,I understood the Buzzard has a sulphur problem and that part of the scoping work will be to look at the needs for more treatment capacity to handle the GPA crude.

[fardels bear] 26/11/2018 22:02

Have we managed to deal with the H2S problem though?And I don't mean that dammed railway.

[robs12] 26/11/2018 21:49

Hmm. Hidden away in the last RNS, they have relinquished license P.1566 (and sounds like could be others too). This was Pharos, which was drilled and announced as a gas discovery in 2013:

hxxp://www.parkmeadgroup.com/news/latest_news/new_field_discovered_at_pharos/

I guess it wasn't as good as they'd hoped...

[kfr20] 26/11/2018 21:32

Share price has previously reacted well to Simon Thompson's articles. I'm all for the positive coverage. It would be nice to see some momentum here to challenge the year's high.

[francoismyname] 26/11/2018 21:24

Great article - onwards and upwards. Surely a positive for the share price.

[robs12] 26/11/2018 21:20

And another interesting (and possibly unfair) comparison....:

FPM are stating that the DNO bid significantly undervalues them at $6.8 per boe of 2P and $3.2 per boe 2P+2C being offered.
Recent average portfolio sale prices have been $12.1 per boe of 2P and $9.5 per boe 2P+2C.

Using those current 'substantially undervalued' bid metrics, PMG's 2P reserves are 46.3MMboe, which at $6.8/boe works out to be ~£2.50/share.
Or £3.74/share for the 2P+2C @ $3.2/boe.

Or £4.40 and £11 respectively if you use the recent average prices...!

Now there's a lot of other factors to take into account, particularly that they are not actually producing yet etc etc, but still a nice comparison to go to bed with. I'll sleep well ;-)

[mallorca 9] 26/11/2018 21:10

Simon Thompson


Comments

There were several positives to note in the annual results from Parkmead (PMG:52.8p), a small-cap oil and gas exploration and development company led by 19 per cent shareholder Tom Cross, the founder and former chief executive of Dana Petroleum until its sale to the Korea National Oil Corporation in 2010.
Firstly, the company generated £2.2m of positive operating cash flow from its low-cost onshore gas portfolio in the Netherlands, and the Diever West gas field in particular, which came on stream three years ago and has been exceeding expectations ever since. These have an average operating cost of only US$15.6 (£12.1) per barrel of oil equivalent. Closing net cash of £23.8m was £800,000 ahead of analyst predictions and with the benefit of the fall in sterling since the end of the financial year, the pro-forma cash pile is now worth around £24.2m. Parkmead also owns a shareholding currently worth £6m in oil and gas producer Faroe Petroleum (FPM:155p), a company that received a cash offer from Norwegian oil and gas operator DNO ASA, and one that clearly highlights the potential for corporate activity in the sector. Parkmead has a £2.9m interest bearing loan receivable on its balance sheet, too.
In effect, these three assets back up £33m of Parkmead’s £52m market capitalisation, meaning that the company’s exploration activities across 30 licences in the North Sea, any one of which has potential to create substantial investment upside for shareholders, are in the price for just £19m. The most valuable are three licences in the Moray Firth that contain the Perth and Dolphin fields.
Bearing this in mind, I can reveal that a detailed engineering study carried out by Nexen Petroleum, a subsidiary of the China National Offshore Oil Corporation (CNOOC), has confirmed the technical feasibility of a potential subsea tie-back of Parkmead’s Greater Perth Area (GPA) project to the Nexen-operated Scott platform and associated facilities in the UK Central North Sea. Parkmead has now entered into commercial discussions with the Scott field partners to explore terms for a tie-back of GPA to Scott. A tie-back has the potential to transform the GPA project both commercially and economically, by dramatically reducing the capital expenditure required to bring the GPA project onstream and by lowering the operating costs thereafter.
To put the potential valuation upside into perspective, analyst Colin Smith at house broker Panmure Gordon places a risked valuation of £50m, or 50.5p a share, on Parkmead’s undeveloped oil resources, or £372m on an unrisked basis. It goes without saying that if the commercialisation of the GPA project via Scott makes substantial progress then there is likely to be significant upside to Parkmead’s share price. For good measure, with the benefit of its low-cost onshore gas portfolio, Mr Smith at Panmure expects Parkmead to turn in a pre-tax profit of £1.2m in the current financial year to the end of June 2019, thus de-risking the investment case even further and providing additional operational cash flow to direct towards exploration activities.
So, having included Parkmead’s shares, at 37p, in my 2018 Bargain Shares Portfolio, and last rated them a buy at 50.5p ahead of news on the commercialisation of the GPA project (‘Bargain Shares repeating buying opportunities’, 29 Oct 2018), priced on a 36 per cent discount to Panmure Gordon’s total risked net asset value (NAV) estimate of 85p a share I continue to see significant share price upside. Buy.

[robs12] 26/11/2018 20:20

"Surely if Parkmead are in transformational talks and the FT and it’s employees know about it, then surely we as shareholders should be given the same information via an RNS ."

We were given exactly the same info a couple of weeks ago in the 16/11 RNS - "Parkmead has entered into commercial discussions with the Scott field partnership in order to explore terms for a tie-back of GPA to Scott". They're now negotiating what % they have to hand over!

[robs12] 26/11/2018 20:16

Our Tom said recently "We are looking at territory around our existing fields, and things we can revisit with newer technology."

I wonder where Athena sits now?
It was loss making with POO at $60ish (can't remember the exact figure) producing to an FPSO. And decommissioned (partly at least I think) in 2016.

I wonder what impact on production costs if it could be tied back to Scott as part of GPA also...probably significant? And whether new technology would enable more to be recovered - I think was <10mmbbl remaining, so not a lot in the scheme of things.

[fardels bear] 26/11/2018 19:49

Then I expect they don't, or they're not.

[kfr20] 26/11/2018 19:49

The company has openly confirmed talks are taking place. The 'transformational' news we anticipate is hopefully on its way soon. Quite a leaky share, so price action will reveal time horizon I guess.

[francoismyname] 26/11/2018 19:44

Surely if Parkmead are in transformational talks and the FT and it’s employees know about it, then surely we as shareholders should be given the same information via an RNS .

[robs12] 26/11/2018 19:44

"Transformational" - it's just referring to the commercial discussion PMG already announced, nothing new really.

I like the "I can reveal that a detailed engineering study carried out by Nexen Petroleum..."! Really! Didn't PMG reveal that themselves earlier? Garbage journalism...mainly just quotes the announcement verbatim...

[francoismyname] 26/11/2018 19:34

Top find Contact2

Explains the 100k buy late on today.

Transformational talks means something very big indeed...

[robs12] 26/11/2018 19:31

francoismyname, TBH I'm not sure how to value the Dutch gas.
In February this year, Panmure Gordon gave it (all of it) a NAV of 2.1p/share, or roughly £2m. Since then the Diever West (PMG have 7.5%) has supposedly doubled in size and production increased. In terms of NAV maybe it is now double at £4m?
So good cashflow, and I guess that the vast majority of the £4m gross profit is attributable to the gas.
But not so good news is the average cost has increased >50% from $10 (reported in March) to $15.6/boe in the latest announcement (which I've only just gotten around to reading!).
Realistically I can't see anyone paying £25m (or anywhere near) for it if it was up for sale.

contact2... - nice find! Haven't seen any update from Panmure Gordon, but the figures quoted look almost unchanged since their February note.

[contact2fsnetcouk] 26/11/2018 18:58

Interesting comment -



"PMG enters into transformational talks on key project"

Here's hoping for an uptick

[francoismyname] 26/11/2018 18:09

I think people forget the Dutch assets are worth circa £25m. They give Parkmead a clear £4m profit in the last set of results and are growing. Now if another company wanted to buy them off us they wouuld be expected to pay 6/7 times annual profit hence the £25m value.

£50m is peanuts as a market cap. You also forgot the recent feasibility results which was a success ref the tie back. All in all you should be seeing a £70/80m market cap here quite soon me feels.

[robs12] 26/11/2018 18:01

Thought this was interesting - a graph of EV/2P picked up from another board, apparently put together by Jeffries and published on Alphaville this morning (courtesy of stepone68):



PMG not included on the graph, but if one roughly calculates PMG's EV at US$31m (£54m market cap less £24m cash and £6m for FPM shares = £24m, disregarding tax losses & Aupec, neither of which perhaps should be ignored..), and the 2P at 46.6MMboe, then isn't that ~0.67 - off the end of the graph...?

[francoismyname] 26/11/2018 17:48

Nice 100k share buy at 57p declared after hours.

Bodes well for tomorrow.

[mallorca 9] 26/11/2018 17:14

FAROE PETROLEUM PLC ("FAROE")
By
DNO ASA ("DNO")
Summary
-- The Board of Directors of DNO ASA is pleased to announce the terms of an offer to be made by DNO for the whole of the issued and to be issued share capital of Faroe Petroleum plc (other than the 105,247,866 Faroe Shares already held by DNO, representing 28.22 percent of Faroe's issued share capital).
-- The Offer will be 152 pence in cash for each Faroe Share, valuing Faroe's existing issued and to be issued share capital at approximately GBP607.9 million.
-- Of the Offer value of approximately GBP443.8 million on a fully diluted basis, GBP402.6 million is attributable to the current issued share capital of Faroe (other than those Faroe Shares already held by DNO and the Faroe Employment Benefit Trust) and the balance GBP41.2 million is attributable to DNO's understanding of the number of outstanding share options and awards granted by Faroe to its directors, management and employees, representing approximately 7 percent dilution of Faroe's current issued share capital.
-- The Offer Price represents a premium of 44.8 percent to Faroe's share price of 105 pence at the close of business on 3 April 2018, the last business day before DNO announced its first acquisition of shares in Faroe, and a premium of 20.8 percent to Faroe's share price of 125.8 pence at the close of business on 23 November 2018, the last business day before this announcement.
-- Commenting on the Offer, Bijan Mossavar-Rahmani, Executive Chairman of DNO, said:
"We are pleased now to engage directly with the Faroe shareholders with a proposed all-cash voluntary offer of 152 pence per share which represents a premium of 44.8 percent to the closing price of 105 pence on the day before DNO announced its first acquisition of Faroe shares last April, and a premium of 20.8 percent to the closing price of 125.8 pence last Friday. In the period between our first acquisition, triggering significant bid speculation, and this offer, the price of Brent crude has dropped 13 percent and oil and equity markets have entered a period of great uncertainty.
For those shareholders who wish to exit, DNO is therefore offering a considerable premium.
For those who wish to remain, there is no assurance of Faroe achieving its full value potential in a volatile commodity and financial markets environment as a relatively small scale, financially constrained UK-AIM listed company whose share price performance has remained stubbornly disappointing, with the very notable exception of short-term spikes following the sale of a particular large block of shares by one investor to another (most recently to DNO) and the attendant speculation about an impending takeover premium with each such transaction.
We firmly believe that Faroe's assets, the substantial part of which are Norwegian, are better placed in the bosom of DNO, Norway's oldest independent oil and gas company, currently operating gross production of 125,000 barrels per day which compares with the 7,500 barrels of oil equivalent a day of gross production operated by Faroe. DNO's proven and probable reserves were nearly four times those of Faroe's as reported at 31 December 2017.
Whether the offer achieves DNO's minimum acquisition target or the acquisition of all of Faroe's shares, we attach great importance to retaining the skills, knowledge and expertise of Faroe's operational management and employees. We intend to retain Faroe's Aberdeen head office and each of the other offices."
This summary should be read in conjunction with, and is subject to, the full text of the attached announcement (including its Appendices). The Offer will be subject to the Conditions and certain further terms set out in Appendix 1 and to the full terms and conditions to be set out in the Offer Document. Appendix 2 contains the sources and bases of certain information contained in this summary and the following announcement. Appendix 3 contains the definitions of certain terms used in this summary and the following announcement.
DNO ASA
FAROE PETROLEUM PLC
BY
DNO ASA
1. Introduction
The Board of Directors of DNO ASA is pleased to announce the terms of an offer to be made by DNO for the whole of the issued and to be issued share capital of Faroe Petroleum plc (other than the 105,247,866 Faroe Shares already held by DNO, representing 28.22 percent of Faroe's current issued share capital).
2. The Offer
The Offer, which will be subject to the Conditions and further terms set out in Appendix 1 to this announcement and to be set out in the Offer Document, will be made on the following basis:

for each Faroe share 152 pence in
cash

The Offer values Faroe's existing issued and to be issued share capital at approximately GBP607.9 million.
Of the Offer value of approximately GBP443.8 million on a fully diluted basis, GBP402.6 million is attributable to the current issued share capital of Faroe (other than those Faroe Shares already held by DNO and the Faroe Employment Benefit Trust) and the balance GBP41.2 million is attributable to DNO's understanding of the number of outstanding share options and awards granted by Faroe to its directors, management and employees, representing approximately 7 percent dilution of Faroe's current issued share capital.
The Offer Price represents a premium of 44.8 percent to Faroe's share price of 105 pence at the close of business on 3 April 2018, the last business day before DNO announced its first acquisition of shares in Faroe, and a premium of 20.8 percent to Faroe's share price of 125.8 pence at the close of business on 23 November 2018, the last business day before this announcement.
If, after the date of this announcement, any dividend and/or other distribution and/or other return of capital is declared, made or paid or becomes payable in respect of the Faroe Shares, DNO reserves the right to reduce the consideration payable under the terms of the Offer at such date by an amount equal to such dividend and/or distribution and/or return of capital.
3. Background to and reasons for the Offer
DNO is Norway's oldest oil and gas exploration and production company with a strong Norwegian heritage and shareholder base. For the past ten years, DNO has successfully focussed on growing its international presence, anchored by the DNO-operated flagship Tawke and Peshkabir oilfields in the Kurdistan region of Iraq. DNO now ranks among the leading European listed independent oil and gas companies in reserves and production, with year end 2017 proven and probable (2P) reserves of 384.1 million barrels of oil equivalent (MMboe) on a company working interest (CWI) basis, plus 98.9 MMboe of CWI contingent (2C) resources. DNO's total operated production currently stands at around 125,000 barrels per day (gross).
DNO is in the early phases of re-establishing its North Sea presence. After the acquisition of Origo Exploration Holding AS in 2017, DNO has rapidly built up its portfolio through new licence rounds and farm-ins (currently holding participating interests in 21 licences offshore Norway) and has commenced an ambitious exploration drilling campaign on its portfolio, targeting five wells per year. DNO's organic growth ambitions in Norway are complemented by its shareholding in Faroe.
DNO acquired 28.7 percent of the shares in Faroe in April 2018. At the time, DNO expressed support for Faroe's management's North Sea strategy, as it has supported other upstream companies in which it has held or continues to hold strategic investments, including RAK Petroleum plc, Rocksource ASA, Det norske oljeselskap ASA and Panoro ASA, among others. These investments, when sizeable, have included board representation, as is common, even often expected, in the industry.
DNO, by far the largest shareholder in Faroe, was deeply disappointed when its reasonable request last summer for board representation and constructive engagement with Faroe was summarily rebuffed. Moreover, there was a dilution of DNO's shareholding to 28.2 percent through the vesting of share awards in favour of Faroe directors and others. Based on DNO's assessment of publicly disclosed information, share awards and options representing an additional 7 percent or so dilution appear yet to be vested or exercised, which will further significantly dilute existing shareholders' interests in favour of Faroe directors and others.
DNO has both publicly and privately raised its concerns about the corporate governance culture and shareholder value strategies at Faroe, but to no apparent avail in terms of substantive and timely actions. Against this backdrop, DNO has now decided proactively to address these concerns and protect its sizeable investment in Faroe by offering to acquire all the outstanding shares in Faroe that DNO does not already own.

[mallorca 9] 26/11/2018 17:08

I've just re read this mornings Faroe RNS - will post this shortly.
The DNO offer is for all Faroe shares , other than the 28 % that DNO already own's.
Thus, their offer includes an offer to buy the circa 4 million shares held by PMG.
This is going to raise over £6m for PMG.

[kfr20] 26/11/2018 17:06

A good read across either way it seems.

[mallorca 9] 26/11/2018 17:02

DNO already owns 28% of Faroe.
Could they try to get PMG - for their Faroe shares - or might PMG go in for Faroe in an attempt to block DNO ?

[mallorca 9] 26/11/2018 16:57

PMG own's circa 3,900,000 Faroe shares. Their value has today increased to over
£6m.