Boost to production
Parkmead raises stake in Moray oil fields
Aberdeen-based Parkmead, focused on the UK and Netherlands, said the fields in the UK Central North Sea lie in the Moray Firth at the core of its Greater Perth Area oil hub project. The group has increased its equity in these licences from 60.05% to 100%.
The company has also signed an agreement with Nexen Petroleum, a subsidiary of the China National Offshore Oil Corporation (CNOOC), to conduct a detailed engineering study in relation to the potential subsea tie-back of the Greater Perth Area project to the Nexen operated Scott platform and associated facilities in the UK Central North Sea. The Scott facilities lie just some 10km southeast of Parkmead’s GPA project.
It has commissioned a new reservoir study with AGR Tracs International in relation to well stimulation, which could lead to increasing oil flow rates and oil reserves recovery from the two fields by analysing the effect of fracture stimulation on the reservoir.
Perth and Dolphin contain very large oil fields such as Piper, Claymore and Tartan.
Through a series of licensing round successes and strategic acquisitions, Parkmead has established a key position in this area of the North Sea.
Parkmead made a number of important growth steps during 2017 in relation to the GPA project.
Tom Cross, executive chairman (pictured), said: “We are delighted with the significant progress we have achieved with the Greater Perth Area project. By increasing our stake in the Perth and Dolphin oil fields, Parkmead’s oil and gas reserves grow by some 63%.
“The study with Nexen will examine one path to potentially unlock the substantial value of the GPA project for the benefit of the UK and Parkmead shareholders, as well as providing further value for the existing infrastructure partners.”
Oil firm in receivership
An Aberdeen oil services firm has gone into receivership with the loss of 17 jobs.
Aberdeen Fluid System (AFS) Technologies, based at the ABZ Business Park in Dyce, was suffering from cash flow problems and rising costs.
It is a supplier of small bore tubing systems, and technology and services to the oil and gas industry.
FRP Advisory said it would market the company’s assets for sale.
Oil industry gears up for growth
The fall in oil price continued to impact the UK oilfield services sector in 2016 with turnover falling by 15.5%, but the future looks more positive as pressure from external factors ease, according to EY’s Review of the UK Oilfield services industry.
However, the report warns that the industry’s approach to recovery in 2018 could prove critical for long-term success.
For the second consecutive year the UK OFS sector reported a decline in turnover, from £35.7bn in 2015 to £30.2bn in 2016, with reductions across each of the supply chain categories (Facilities, Marine and Subsea, Reservoirs, Support and Services and Wells) the report reveals.
The majority of the UK OFS companies experienced a difficult 2016 with less than 2% achieving growth in excess of £10m. However, there were companies that experienced growth as a result of acquisitions, growth in overseas activity or diversifying into other sectors.
In addition, EBITDA margin for the OFS sector fell by 0.8% as cost saving initiatives, such as headcount reduction failed to offset the impact of the low oil price environment.
Derek Leith, EY Partner and Head of Oil and Gas Tax, said: “Industry leaders have taken action to make operations as lean and efficient as possible which has helped them ride out this downturn. However, cost cutting and headcount reduction cannot continue indefinitely.
“A shift towards greater innovation in systems, processes and technologies could help drive operational costs down further while also enabling the sector to respond to an increase in activity which appears to be on the horizon.
“The industry is entering a more positive environment where oil price is rising and production is increasing as a result of both improved efficiencies and new fields coming on line but this cannot give license for old habits to creep back in. Long term success for the UK oilfield services sector will rely not only on the continued application of greater efficiencies but an active commitment to a sustainable future for the industry.”
The lower oil price has impacted the oil and gas industry globally with a contraction of activity leading to fierce competition for capital. As the UKCS is a mature region, with high operating costs and fewer development projects than in recent years, the need for UK OFS companies to diversify their operations by sector or geographically through exports will become ever more pressing, according to the report.
Export figures show a slight increase in activity with exports as a percentage of turnover from UK OFS companies rising from 40% in 2015 to 41% in 2016. However, there was an absolute decline of £2bn, as a result of the overall contraction in the sector.
Mr Leith concludes: “UK OFS companies cannot rely on growth in the UK alone to increase revenues and must both internationalise and diversify their operations to ensure long term survival. While it is encouraging to see a rise in export activity it is concerning that access in overseas markets is still very modest.”
Jon Clark, EY’s Head of Oil and Gas Transaction Advisory Services, said: “Mergers and acquisitions have also helped companies to diversify by adding new capabilities but consolidation is set to have a wider impact for the industry as a whole.
“A rise in transactions is expected, driven by access to proven technology or new markets, removing excess supply or resetting capital structures.”