Parkmead Group PLC on Thursday said it has signed an agreement to sell subsidiary Parkmead (E&P) Ltd as it switches its focus to growing its Netherlands assets.

The Netherlands and UK-focused gas explorer will sell its UK offshore oil licences to Serica Energy in a deal valued up to £134 million.

Parkmead shares closed up 34% at 19.40 pence on Thursday in London. Serica shares were up 5.0% at 138.00p.

Under the transaction, North Sea-focused oil and gas firm Serica will pay an initial £5 million, with a further £9 million in deferred payments to be paid in stages over the next three years.

Parkmead (E&P) includes a 50% working interest in Skerryvore and 50% of Fynn Beauly.

There will also be contingent payments totalling up to £120 million related to development milestones for the Skerryvore prospect and the Fynn Beauly oil discovery.

The two contingent payments, capped at £30 million and £90 million respectively are payable upon receipt by Serica of approval by the North Sea Transition Authority for any relevant field development plan on the licences.

Parkmead said it has been ‘carefully considering the outlook for its UK North Sea oil licences’ and noted the continuing challenges facing the offshore sector in the form of ‘the current political environment towards UK oil and gas, and the focus of the UK government on its net zero strategy’.

It added that the opportunity for the progression of the UK North Sea oil licences would be optimised with a larger, North Sea focused firm, which would allow Parkmead to focus on ‘growing its Netherlands gas assets and its projects in renewable energies.’.

Serica said the deal ‘provides optionality regarding future projects, simplifies decision making, and provides strategic flexibility’ in regard to its position in Skerryvore. Serica will be the operator of the asset with a 70% stake when the deal concludes. It had already owned a 20% interest.

Parkmead will ‘continue to hold all its other energy assets’. ‘These include its revenue-generating portfolio of onshore gas fields in the Netherlands and, in the UK, its operated Kempstone Hill Wind Farm and its potential solar and wind energy development projects at Pitreadie,’ the company noted.

The transaction is expected to close in the first half of next year, but Serica noted that the deal is subject to customary completion adjustments ‘and the carve-out of PUK’s Dutch assets to a Parkmead affiliate and NSTA change of control consent’.

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