Parkmead shares soared on Thursday after the company announced the sale of its subsidiary Parkmead (E&P) Ltd to Serica Energy (UK) Ltd, in a deal worth up to £134 million.
The transaction includes £14 million in firm cash consideration, with an initial payment of £5 million at completion and three deferred payments totaling £9 million to be paid between 2025 and 2027.
Parkmead shares were 75% higher at the time of writing.
The deal also includes substantial contingent payments of up to £120 million, linked to the development of two key assets. These contingent payments are tied to the approval of field development plans for the Skerryvore prospect and Fynn Beauly oil discovery, with potential payments of up to £30 million and £90 million respectively.
“I am delighted to announce this important transaction for Parkmead. Through the sale of these UK offshore oil licences we have no further capital investment requirements, whilst retaining a very attractive share of the upside should any developments at Skerryvore or Fynn Beauly proceed,” said Parkmead’s Executive Chairman, Tom Cross.
“The addition of the near-term, firm £14 million cash consideration, together with Parkmead’s existing cash, means the Group is well-funded to pursue the next phase of its growth plans in natural gas, renewable energies and international E&P.”
While Parkmead is selling its UK offshore oil licenses through this transaction, it will retain its Netherlands onshore gas licenses and continue to hold all its other energy assets, including its revenue-generating Dutch gas fields and the Kempstone Hill Wind Farm in the UK.
The rationale behind the sale reflects the challenging landscape for UK North Sea oil operations. Parkmead cited the current political environment towards UK oil and gas, along with the UK Government’s focus on its Net Zero Strategy, as key factors in its decision. The company believes these offshore licenses would be better served within a larger, North Sea-focused organization, allowing Parkmead to concentrate on developing its Netherlands gas assets and renewable energy projects.
The transaction is expected to complete in the first half of 2025, subject to regulatory approvals. Looking ahead, Parkmead plans to focus on growing its core UK renewable and Netherlands gas assets, including the development of a major wind farm of up to 100 MW at Pitreadie, while actively pursuing value-adding acquisition opportunities in renewable energy and international exploration and production.