Fracking Company Cuadrilla Continues to Lose Millions, Accounts Show

Cuadrilla's Preston New Road site

Despite the government’s best efforts to boost the industry, fracking remains an expensive business in the UK.

Fracking company Cuadrilla operated at a £3.4m loss over the course of 2016, its latest accounts show. That makes the company about £1m less well-off than a year before, and returns it to the same level of loss it experienced in 2014.

The accounts also show that Cuadrilla received £134,000 handout from UK taxpayers over 12 months in the form of tax breaks.

Cuadrilla spent about £125,000 on leasing land for its various onshore fossil fuel projects, the documents show. About £46,000 of this was spent by Cuadrilla Bowland, the company set up to manage Cuadrilla’s fracking operations at its Preston New Road site, its accounts show.

It leases the land from local farmer John Wensley. The Times had previously speculated Wensley received between £30,000 and £50,000 a year renting his land to the company.

The company currently employs 23 people, the documents reveal — some way short of the 64,500 jobs Cuadrilla suggests could be created industry-wide on its website. Cuadrilla’s directors received around £78,000 in remuneration last year.

Irresponsible, Intimidating Behaviour’

In the “strategic statement” section of the accounts, Cuadrilla’s CEO Francis Egan pulls no punches when talking about the protestors at the Preston New Road site.

He said Cuadrilla and its local partners “remain engaged and undeterred despite the irresponsible, intimidating behaviour of a few activists”, of which “sadly a small minority are choosing to make their protests unlawfully”.

According to Egan, the company is lucky to “enjoy great support from the people of Lancashire” and continues to “engage closely with the Lancashire Police Force to ensure our operations are not impeded”.

The accounts suggest Cuadrilla believes its Preston New Road site is on schedule, despite the protests. It said fracking is expected to start “towards the end of this year”, with the first gas flowing onto the grid “in the first half of 2018”.

Reacting to the news, campaigner Dianne Westgarth from the Preston New Road Action Group told DeSmog UK:

“Our homes are unmarketable and we are living in fear of what will happen to our livelihoods and communities: we've lost so much already, yet Cuadrilla have managed to gain handouts from our hard-earned taxes to fund a dirty industry we do not want or need. Any other company with such bad management and repeated losses would face liquidation.”

Complex Ownership

The documents show Cuadrilla remains mainly owned by two foreign companies.

US investors Riverstone/Carlyle Global Energy and Power Fund IV, a Cayman islands registered subsidiary of The Carlyle Group, own 45 percent of the company. The Carlyle Group famously profited handsomely from arms deals in the wake of the Iraq war.

Australian mining company AJ Lucas also owns 45 percent of Cuadrilla.

In its 2016 preliminary final report, AJ Lucas hailed two “very positive developments” in the UK’s fracking industry — the UK government’s decision to use tax generated from fracking for community benefit schemes, and to its decision to allow companies to offer cash bribes to residents willing to allow fracking to go ahead in their area.

As the flowchart below shows, AJ Lucas is massively in debt to Kerogen Capital, a US investment company. Kerogen’s environmental policy statement from 2014 supports the controversial idea that shale gas could be the answer to cutting emissions and tackling climate change.

Campaigner Claire Stephenson from Frack Free Lancashire told DeSmog UK it was “quite horrific” that large sections of Cuadrilla’s ownership was based offshore.

Their undemocratic and forced-upon presence in Lancashire has caused immense grief and stress with residents. To learn that once again, this irresponsible and failure-ridden company, has made a loss, reassures me that they deserve no place in our community. Cuadrilla are unsustainable and insupportable”, she said.

Cuadrilla did not respond to repeated requests for comment.

The Preston New Road site is one of two projects being managed by Cuadrilla in the Bowland shale area – the other is at Roseacre Wood.

The ownership of the two sites is somewhat complicated, with UK energy giant Centrica also having a 25 percent stake in the projects, via AJ Lucas.

Cuadrilla’s employees own the final 10 percent of the company which, given its multi-million pound losses each year, is perhaps not a great corporate benefit.

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