Parkmead Group (AIM: PMG) has reported a year of stellar performance from its shares in Dutch gas assets as it plans further drilling later in the year.
In a 6 July trading update the Aberdeen-headquartered firm said it had seen “record gas revenues” ahead of expectations as assets continued to perform well.
It secured additional volumes last year in a royalty deal with operator Vermillion Energy, which increased the company’s “effective financial interest” in the onshore Drenthe IV, Drenthe V and Andel Va licences from 7.5% to 15%.
As a result, it now expects the portfolio to generate revenue in excess of €14.5 million (£12.4m) in the year up 30 June 2022, ahead of board expectations.
Gas prices have remained around €100/MWh following the invasion of Ukraine, a trend which the company expects to persist over the medium term due to continued tight gas supplies in Europe.
For that reason, Parkmead said it had chosen to remain 100% unhedged.
The average netback for the year to 30 June 2022 from the Netherlands was approximately $120 per barrel of oil equivalent (boe), with field operating costs of US$8.6/boe, it noted in its update.
Average gross production for the year across these assets was 21.8 million cubic feet per day, or around 3,750 boepd.
Looking to the rest of 2022, Parkmead said it had secured a drilling rig for the upcoming ‘LDS’ two-well campaign in the Netherlands.
The LDS wells will be drilled from the existing Diever well site and will target a combined mid-case gas-in-place of 37.2 billion cubic feet of resources in the Rotliegendes reservoirs within this licence.
It expects to receive the rig by early Q4 2022, ahead of its previously outlined schedule.
Parkmead described the tie-in period for new production from these onshore targets as “very short” and, if successful, that the new wells would result in “significant additional revenue and cash flow” for the company.
It has also said recently that it is nearing a drilling decision on the 157 million boe Skerryvore prospect in the UK North Sea.
Executive chairman Tom Cross said: “We have delivered record gas revenue from our Dutch gas assets for the year to 30 June 2022 and remain very confident in the outlook for these assets as we build momentum across Parkmead’s operations in this region.
“The innovative royalty deal we completed last summer is now bearing fruit and is adding considerable value to Parkmead. Our company remains 100% unhedged and is directly benefiting from these additional gas sales at higher prices.
“We are also delighted that our drilling campaign in the Netherlands is currently ahead of schedule. To complement our Dutch assets, we will continue to focus on building a portfolio of high-quality energy projects through acquisitions, organic growth and the active management of our assets across all energy sectors.”
It marks an uptick in sentiment since the company was forced to take a £10.9m impairment after handing back the licences for the Platypus project in the North Sea, following the departure of partner Dana.
Meanwhile, in February the company acquired Peterhead-based Kempstone Hill Wind Energy Limited, which owns a three-turbine 1.5 megawatt (MW) onshore wind farm near Stonehaven, Aberdeenshire.