Elaine Maslin, 8th June 2012
Aberdeen-based oil explorer Deo Petroleum yesterday upped estimates of oil in its North Sea Perth field, but said development was being hampered by lack of offshore equipment.
Deo said estimates for oil in its central North Sea Perth field net to Deo had been increased from 14.2million barrels of proved and probably reserves to 21.5million barrels.
However, it said planned first oil from the field, for which an application has been submitted to the Department of Energy and Climate Change (DECC), could be delayed because of lack of capacity in the supply chain.
Chief executive David Marshall said: “Due to international demands on the supply chain, access to development equipment is very tight.
“The oil and gas industry is a global industry and the supply chain very much addresses it that way. With the oil price where it is, a lot of projects are happening in the North Sea and elsewhere.
“Subsea installation and rigs are all mobile and they tend to move out of the area.”
Deo agreed recently a deal worth £12.7million to be taken over by fellow-Aberdeen firm Parkmead Group, due to complete in August subject to shareholder agreement.
Chief finance officer Gregor Goodwin said this would give the firm the critical mass to be able to more easily access the supply chain.
Development of the field, 52.03% owned by Deo, is expected to cost in total about £270million and be through a floating production vessel.
Announcing the firm’s 2011 results, Mr Marshall, said: “2011 was a successful year for Deo. We have met our objectives of delivering a field development plan and environmental statement to DECC and have upgraded and increased our Perth resources to 2P reserves of 21.5million barrels.
“The recently-announced proposed acquisition by Parkmead will not only help Deo progress the Perth development, but also to pursue other opportunities in key areas of the UK central North Sea.
“Both companies have a deep understanding of the North Sea, complementing one another in their core skills. We believe this combination will allow Deo to deliver further value to shareholders.”
Its results showed operating losses of £0.6million and current cash of £1.2million, with access to a £2million loan from Parkmead.
In a separate announcement yesterday, Parkmead Group said it had secured the backing of 56.3% of the shareholding in Deo for the takeover.