Shares in AIM-listed PARKMEAD GROUP have moved higher following the announcement of final results last week. Although the results themselves were uninspiring, reflecting a difficult year, the company is upbeat with regards to prospects moving forwards and having analysed the details it is difficult to disagree with the optimistic outlook put forward.
The company is headquartered in Aberdeen and is a UK and Netherlands focused independent energy group. It currently produces gas from a portfolio of four fields across the Netherlands and holds oil and gas interests covering 26 exploration and production blocks. The four complementary business areas are Netherlands Gas, UK Oil and Gas, Performance Benchmarking & Economics and Future Opportunities. There are significant development opportunities including the Greater Perth Area development located in the UK Central North Sea. Interests are also held in a portfolio of exploration prospects alongside leading international partners.
Revenue for the year ended 30 June 2020 was £4.1m (2019: £8.3m), reflecting the record-low gas prices seen during the year. Net profit before tax and non-cash impairment charges was £0.8m. Cash balances were £25.7m as at 30 June 2020 and net assets increased to £71.3m as at 30 June 2020 (2019: £68.3m). Gas prices fell from highs of around €25.7/MWh in October 2018 to lows of around €5.0/MWh in June 2020 due to the oversupply of Liquefied Natural Gas into the European market as well as the impact of Covid-19. Gas prices have rallied strongly in recent months to approximately €14.0/MWh in November.
The company has relatively low operating costs and it is said to be looking at a number of high growth opportunities which would create value for shareholders. Although there are no details of these, the area in which Parkmead Group operates looks very interesting and there is certainly scope for the business to develop and grow significantly in the coming years. Given the strength of the balance sheet there is some protection against downside. We rate the shares as a SPECULATIVE BUY.