Industry

Campaigners celebrate Barclays’ decision to stop funding fracking – bank says “no urgency” to sell Third Energy

Barclays Stroud 170506 Rising Up

Barclays in Stroud, 6 May 2017. Photo: Rising Up

Opponents of plans to frack in North Yorkshire have welcomed confirmation by Barclays that it plans to sell its stake in Third Energy “at some point”.

Barclays owns 97% of Third Energy, which has permission to frack for shale gas at its KM8 well at Kirby Misperton in North Yorkshire.

Barclays Chairman, John McFarlane, told shareholders last week that the rundown of what the bank calls non-core assets, including Third Energy, was being accelerated. He said:

“The good news is that non-core closure is now less than two months away”.

Friends of the Earth emailed supporters today describing the decision as “a massive blow for the fracking industry” and urged them to keep up pressure on the bank. The local campaign group, Frack Free Ryedale, said it was “amazing news” and Frack Free South Yorkshire congratulated the bank on what it described as a “momentous decision”.

But a spokesperson for Third Energy said:

“This doesn’t change the situation on the ground. Barclays will sell at some point, as any private equity investor would, but there’s no urgency or deadline.”

And a spokesperson for Barclays said:

“The Chairman reiterated at Wednesday’s AGM that the TE [Third Energy] holding sits in Barclays Non-Core (BNC). BNC was set up three years ago to house assets not core to our strategy, and will be folded back into the Group at the end of June, with c.£25bn of risk-weighted assets (including the TE holding) still on its books.  We will sell our TE holding at some point, though there is no new driver of that or urgency to the situation.”

Over the past two years campaigners have protested at Barclays across the UK. In the past few weeks, branches across southern England have been targeted (DrillOrDrop report).

Monica Gripaios, who lives in Ryedale and campaigns for Frack Free Ryedale, attended Barclays AGM and asked a question to Mr McFarlane, which prompted him to announce plans to dispose of non-core assets.

The decision was confirmed in a statement to investors.

Mrs Gripaios, who also handed in a petition with nearly 70,000 names against the bank’s involvement in Third Energy, said:

“After coming to the AGM for three year running, I was so delighted to hear the chairman say the bank are planning to divest from this area. I hope they will follow through on the promise and this is not an empty commitment. I certainly feel reassured and hope that I don’t have to go back next year”.

Steve Mason of Frack Free Ryedale said:

“This is amazing news! Clearly fracking is a bad investment environmentally, socially and financially, with the majority of political parties in England are now opposed to fracking, I think potential investors should take heed. Where is the long term future of this industry?

“Why would you put money into an industry that is increasingly rejected by communities and could get banned at anytime? I wouldn’t want my investments relying on election results! Especially after what has happened in recent years”.

Frack Free South Yorkshire congratulated the bank. A spokesperson said:

“We have worked with People & Planet, along with other anti-fracking groups and organisations across the country who share our concerns, to persuade Barclays to divest from the fracking industry.

“This is yet another demonstration that repeated visible protest, backed up with logical, sensible well-researched arguments can create positive change.”

Just over a year ago, Third Energy received planning permission to frack at KM8 well. North Yorkshire’s planning committee voted by seven to four in favour of the application, which included plans to produce gas for up to nine years. There were 4,000 objections to the plans and a petition against it of more than 2,500 signatures.

Local campaigners failed in their attempt to challenge the approval at a judicial review. They argued in the High Court that the council should not have advised elected members that they could not legally require Third Energy to pay a financial bond to put right any damage caused by fracking at Kirby Misperton.

The company declared a loss of £3.8m for the year ending December 2015. It also reported that it owed more than £50m to parent and sister companies and that turnover was less than half that of the previous year (DrillOrDrop report).

Frank Colenso, a resident in Ryedale, said today:

“The North Yorkshire County Planners need to have a rethink regarding a bond if the sale of Third Energy finally goes ahead.

“With a net worth in excess of minus £50m, who now is going to pay the bill if anything goes wrong? We will continue to oppose all fracking of any kind in Ryedale, North Yorkshire and the UK to protect health, the landscape, tourism and the community”.

28 replies »

  1. I must be missing something here? What has actually changed? Barclays were always going to cash in their interest in TE at some stage. Probably after they successfully frack KM-8. Barclays were never going to be liable for any potential TE environmental issues.

    Barclays sells, somebody else buys…..

    A bit like the news today in the Guardian that BMO is dumping £20mm of BHP shares – such a big deal that BHP share price is up 2.5% today. Good news as I have BHP shares – thank you Archbishop of Canterbury!

    https://www.theguardian.com/environment/2017/may/15/top-uk-fund-manager-divests-from-fossil-fuels

  2. Err, no John. Barclays have realised they are a bank!

    I am still a little surprised that Lloyds have not realised the same, or were allowed not to. I think you will find Fred’s plaything has been forced to do so.

    I wonder if Barclays do some banking business with Ineos, or would like to??

  3. Very wise. Hopefully sell at a profit and get out. Let’s just see who’s prepared to back any dangerous escapade of attempting to frack the UK. It won’t be a big solvent company that’s for sure! The liabilities in the event of a disaster are far too high. Witness Exonn & Shell in Groningen, Holland. No a small limited speculation like Cuadrilla, they might/should buy; at least the geology isn’t as complex? Let’s see how confident Lucas & their backers are …

  4. This really is verging on a fake news story which goes hand in hand with FoE. It’s made to look like the band of brothers had something to do with this decision which it hasn’t.
    The big American firms will inevitably buy up all of the UKs shale assets like what’s happened with iGas. There is plenty of cash available from other sources.
    Once the election gives Conservatives big majority we will see this industry speed up.

  5. Richard-“it won’t be a big solvent company that’s for sure”! “Sell at a profit, and get out.” (How do you sell at a profit when you are carrying £50m debts? Diane Abbotts could, maybe.) OMG you must be running Windows XP to make that sort of statement. You really do not know much about this subject, do you? I have no problem with that at all, what I find strange is that you then make such strange comments disconnected from reality.

    • No, Ubuntu actually and no, I don’t know what the debts of Third Energy are. But surely it’s a speculation? The debts are there due to the upfront cost of exploration etc. So, yes. Whoever buys this stock is speculating on the perceived risk and gain? I’m in the Fylde where Cuadrilla have spent some 500 million exploring and now borrowed 50million off Centrica to develop the exploration site.

  6. I wonder how it is that we should interpret “Campaigners celebrate Barclays’ decision to stop funding fracking” in light of the fact that Barclays has said absolutely nothing to indicate that they would stop funding fracking? In fact an excerpt from a more balanced reporting website says, “A spokesperson for Barclays, however, told DeSmog UK that the chairman’s comments did not mean the bank has changed its stance on fracking.”

    Does Drill or Drop think it is doing the anti-frack cause a service by promoting misinformation such as this in its headlines? This cycle of pumping inaccurate stories to promote the anti-frack campaign has only served to turn the general public away from the cause thus far. Any cause needs to maintain some credibility to have its voice heard. Stories such as the one on this page explain why the anti-frack group becomes a smaller, fringe element of hard core extremists by the day.

    • Thanks for your comment Rex.

      In response, the article’s headline does include “Bank says no urgency to sell Third Energy” and it also quotes the Barclays spokesperson saying the bank would sell Third Energy at some point, but “there was no urgency or driver…” – which could be interpreted as “no policy change to drive the sale”.

      As far as I can see, the article doesn’t state or even imply that Barclays have changed their “stance” on fracking (presumably whether they support or oppose it), but only that they are now looking to sell their stake in Third Energy at some point in the future.

      The article quotes campaigners, but also the Barclays chairman, a Barclays spokesperson and a spokesperson for Third Energy.

      • Thank you, Paul. Barclays has never indicated that it would stop funding fracking, yet your headline directly implies that this is the case. This is, by definition, dishonest journalism.

        When or if Barclays sells its stake in Third Energy is a side issue. If that action were tied to a decision to divest broadly from companies that engage in fracking, then it would be pertinent to this particular controversy, but this isn’t so. Offering a sensationalist headline about “Barclays decision to stop funding fracking” and then relying on readers’ investigative prowess to read between the lines regarding “no urgency or driver” is a weak justification that doesn’t make sense. Why would you run a headline that contradicts itself in this manner?

        These are your stories to write, and if you are willing to mislead your audience and gamble away any credibility you might have, that is entirely up to Drill or Drop. I believe it makes you look weak and desperate.

  7. Oh dear. Richard, did you not read the text of this report? Do you not know that Third Energy has yet to frack? They have been quietly running a conventional gas site in KM for about two decades. Debts are absolutely NOTHING to do with fracking. They had no need to acquire this site, they already had it. Their only costs have been pretty modest to acquire a licence to frack.
    Why would anyone need to speculate on buying Third Energy? They would do their research and decide whether they could make it profitable-just like Ineos did when it snapped up assets off BP recently, which were loss making. The only speculation would be whether they managed to find commercial quantities of gas, which is exactly what any mining company faces every time, but they would be able to look at the geology data and then make a judgement. There are a number of companies who have been looking at that area for a while, so they will have prior knowledge.
    If the geology looks good, there will be many investors who would like to acquire a site with existing planning permission to frack, and cut out that tedious part of the process. After all, this is only one of two! Don’t get too excited about the debt-much of that would be written off by Barclays and added to your bank charges.

    If you check back on this site, you will see that acreage was recently acquired by one company off another, not far away from this site.

    • Hi Rex

      Barclays website states: “We want to exit non-strategic assets and businesses, so capital can be deployed for higher returns and to support innovation within our core business. Since inception, we have more than halved the size of the BNC RWAs” [Barclays non-core risk weighted assets]
      https://www.home.barclays/about-barclays/strategy/Barclays_Non_Core.html

      Fracking is not part of the bank’s long-term strategy as it is not part of the bank’s core business. Thus, Barclays are looking to “exit” fracking businesses, so I would maintain that the headline is correct and is not misleading the audience.

      Business people are not always the best communicators, so perhaps we must agree to differ on the interpretation of their statement.

      • You know that is misleading Paul – just own it. Barclays didn’t make a decision to stop funding fracking – end of story. They made a decision to exit non-core businesses, regardless of the focus of those non-core assets. If I sell my holding in an index fund, it is not because I have decided to stop funding one of the hundreds of names in that index portfolio. To couch it as a judgment with respect to a single position is nothing but hyperbole and misinformation. I have made a strategic decision to exit a portfolio of assets and that decision might be influenced by a variety of factors.

  8. Must confess I’m lost and will have to bow to superior knowledge. I read your response of:

    “If the geology looks good, there will be many investors who would like to acquire a site with existing planning permission to frack, and cut out that tedious part of the process. After all, this is only one of two!”

    and am perplexed as to whether that doesn’t infer a speculative investment opportunity.

  9. ‘They would do their research and decide whether they could make it profitable’

    If there is millions of therms of profitable gas under their feet Barclays would want to hold onto this appreciating asset.

    Barclays have done their research,decided that fracking is not profitable, and are selling it.

    They own the company, they have seen the returns, and they want out.

    • I thought the antis had made them “drop” Third Energy – at least that is what this article implies and Enemies of Industry would like you to believe…..

  10. Anti fracking brigades are a bit desperate for any piece of news and spin it for their liking.

    If Barclay sells it then there must be someone buying it. And these buyers probably don’t buy to hold just for fun. There will still be drilling and fracking and production. So nothing change. And the new operator could be worse. Such wishfull thinking by the antis.

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