Significant Rise in Crude Oil Price Predicted as Aberdeen Firm Eyes 6 Acquisitions
“We’ve been here before several times,” said Mr Cross, who built North Sea-focused Dana Petroleum into a £1.9bn business before taking charge at Parkmead in 2011.
OIL and gas entrepreneur Tom Cross has predicted the oil price will rise to above $60 per barrel next year but said the Parkmead Group can make good progress at the current depressed level of around $40/bbl.
Noting the industry is cyclical, Mr Cross forecast market forces would result in a significant increase in crude prices in coming months. Production from big fields around the world is declining at around 15 per cent a year but spending on developing finds and on exploration has virtually dried up.
“We’ve been here before several times,” said Mr Cross, who built North Sea-focused Dana Petroleum into a £1.9bn business before taking charge at Parkmead in 2011.
“I can see it back above $50 this year and above $60 next year.”
The comments will be studied with interest by firms in the North Sea, where the slump in the crude price since 2014 has taken a heavy toll.
Before George Osborne cut tax rates last week, industry body Oil & Gas UK said 30 per cent of fields in the area were losing money at $50/bbl oil. It reckoned 50 per cent were losing money at $30/bbl, the price reached in January.
Mr Cross said Parkmead would benefit if prices rose as he expected but was not dependent on them increasing.
It is producing gas from four fields in the Netherlands at $14 per barrel oil equivalent.
With cash in the bank and no debt, the firm is in a good position to take advantage of opportunities that have been created by the price fall.
He said lots of assets have been put up for sale at relatively low prices by firms that want to raise cash to service debts. Some firms are in distress.
In March last year Mr Cross said the downturn had created opportunities to make cheeky offers for assets. Prices have fallen since then.
Parkmead is analysing 11 potential acquisitions, including six in the UK. The subjects Include individual assets and entire portfolios.
It has funding in place to spend around $100m (£70m) this year.
However, banks have said they would lend up to $350m.
