Tom Cross’s Parkmead production deal renews Dana Petroleum comparisons

OIL entrepreneur Tom Cross yesterday announced that his latest venture Parkmead had acquired its first production assets in a move that prompted further expectations of a repeat of his success with Dana Petroleum.

Aberdeen-based Cross described the deal, to be funded by an £8.53 million placing, as a “significant milestone” and meant the group is entering production just a year after he assembled a team of experts to identify potential oil and gas targets.

Cross is investing more than £3.45m as part of the placing which is at a significant discount to the current share price. He said the investment highlighted his commitment to Parkmead and “reflects my belief in the future opportunities that exist”.

The acquisition also represents the third such deal in just four months for the company which is one of the most hotly-followed by private investors hopeful that Cross will repeat the success he had with Dana which delivered stellar returns for investors before its takeover by the Korea National Oil Company. Shares in Parkmead have already risen six-fold since Cross was named as chairman late in 2010.

The Parkmead announcements came amid of flurry of activity involving North Sea explorers yesterday.

Shares in Xcite energy – another company keenly watched by private investors – rose by more than 10 per cent after it announced that the Department of Energy and Climate Change had now granted all the necessary approvals for the first phase of its programme to develop the Bentley field. Trapoil also saw its shares rise after announcing that operations have commenced on its Orchid exploration prospect in the North Sea.

Under the Parkmead deal, the company has signed an agreement with Dutch-based Dyas BV to acquire a portfolio of Netherlands onshore assets for €7.5 million (£6.2m). The assets include interests in four producing gas fields and two oil fields and part of the sum agreed will be deferred until the first oil is sold from one of the field.

Cross said the acquisition was of strategic importance as the company looked to build a “new independent oil and gas company on an accelerated basis”. It also follows two recent acquisitions of assets in the UK Southern North Sea.

“Parkmead is making excellent progress. This is our third acquisition in the last four months. In addition, we expect to start drilling our first well in the North Sea this month and we are also far advanced with a number of applications for the ongoing UKCS 27th Licensing Round.”

The acquisition and the development of the assets will be funded through the placing of shares at 14p. Cross is subscribing for more than 40 per cent of the shares which will take his holding in the company up to just under 29 per cent.

In November he had also loaned the company £8m to fund key deals.

Chief financial officer Donald MacKay and non-executive director Philip Dayer are subscribing for 152,445 and 357,142 shares respectively.

Although shares in Parkmead have risen strongly in recent weeks and closed at 21p on Wednesday – the day before the announcement was made – the company said the placing price represents a discount of 9.6 per cent to the company’s average closing mid market price since the start of 2012.

Shares in Parkmead closed down 1.25p at 19.75p.

Xcite shares closed up 12p at 129p, valuing the company at just under £300m. Shares in Trapoil closed up 0.5p at 25.5p.