Business

Aberdeen oil and gas group buys windfarm near Stonehaven

NORTH Sea oil and gas entrepreneur Tom Cross has clinched a multi-million pound windfarm acquisition for the Parkmead business which he is leading on a push into the renewable energy business.

Aberdeen-based Parkmead said it has bought the Kempstone Hill windfarm near Stonehaven in a deal worth around £4m.

The deal gives the company control of a windfarm that provides power for up to 1,000 homes and generated around £0.2m underlying profit in the latest financial year.

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Mr Cross, who grew Dana Petroleum into a business valued at £1.9 billion, described the acquisition as an important move that continued a clear and focused strategy to build a balanced energy group.

Parkmead noted that under this strategy its board has been actively looking to further enhance the group’s position in cleaner and renewable energies.

“The acquisition of this wind farm sits well within the Board’s strategy and increases the Group’s presence in this rapidly growing sector,” it said.

The acquisition gives the company control of its first generating asset. It could use the profits made on the windfarm’s output to fund continued expansion.

HeraldScotland: Tom Cross: Picture Parkmead GroupTom Cross: Picture Parkmead Group

Mr Cross also reckons that having ownership of Kempstone Hill should help Parkmead to maximise the potential of renewable energy projects that are at an earlier stage of the development process.

Parkmead has been working on plans to develop wind farms on Aberdeenshire farmland it acquired in 2019 in an £8.5 million deal after recognising the commercial potential of renewable energy projects.

When that deal was announced Parkmead highlighted “the transition that is taking place in the energy market, supported by legislation, from fuels with a higher carbon content to lower carbon alternatives,” citing gas and renewables.

Parkmead also said then that it remained of the strong belief that oil would have a very important role to play in the energy mix in future years.

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Other expansion moves the company has made in recent months suggest its views on the value of oil and gas have not changed.

In July last year Parkmead increased investment in the gas business with a £480,000 deal that allowed the group to double its interest in three onshore fields in the Netherlands. The deal allowed the group to capitalise on the surge in gas prices in recent months, which has sparked talk of an energy crisis in the UK.

In its results for the year to June 30 Parkmead said a 33 per cent increase in second half revenues compared to the first six months reflected the strong recovery in gas prices from pandemic-related lows.The results were published in November. Parkmead also noted that it had applied successfully for a licence covering Moray Firth acreage containing two significant undeveloped oil discoveries.

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The group has been working on plans to develop oil fields in the Greater Perth Area (GPA) of the Moray Firth.

Mr Cross said yesterday: “We will continue to build a portfolio of high-quality energy projects through acquisitions, organic growth and the active management of our assets across all energy sectors.”

Mr Cross used acquisitions to help build Dana into one of the leading independents operating in the North Sea. He took charge at Parkmead after Dana was acquired by Korea’s KNOC for £1.9bn in 2010. Parkmead has acquired a range of oil and gas assets under Mr Cross’s leadership.

The Kempstone Hill windfarm was developed with three turbines around 10 years ago, on land owned by the Jack family for decades.

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In the year ended September 30, the windfarm generated earnings before interest, depreciation and amortisation of £0.23m on revenues of £0.38m. Parkmead paid £3.29m cash for the windfarm and assumed a related project loan of around £990,000.

Shares in Parkmead closed up 0.6p at 39.55p leaving it with a stock market capitalisation of around £43m.

Jonathan Wright at Parkmead’s house broker finnCap, said the Kempstone Hill acquisition “instantly boosts revenue and EBITDA, provides long-term steady cash flow, and brings valuable experience and relationships that will further enhance its existing renewable energy portfolio”.

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