Cuadrilla has accused some of the opponents of its shale gas operations in Lancashire of “irresponsible and intimidating behaviour”.
Writing in the annual accounts, chief executive, Francis Egan, said the company enjoyed “great support” in the county but a small minority were “protesting unlawfully”.
The accounts for the parent company, Cuadrilla Resources Holdings Ltd, showed a loss of $11.6m for the 12 months to the end of December 2016. This was smaller than the $17.5m loss in 2015 but almost the same level as the loss in 2014.
Revenue was down in 2016 to $12,000, from $219,000 in 2015, with the continuing decline in the well services business. But operating expenses were also down, as were staff costs and the net cash outflow from operating activities.
Cuadrilla’s subsidiary companies operating in Lancashire and southern England also reported losses.
During the period of the accounts, the Communities Secretary, Sajid Javid, overruled Lancashire County Council’s refusal of planning permission for drilling, fracking and testing up to four shale gas wells at Preston New Road, near Blackpool.
Within days of the end of the company’s financial year, Cuadrilla began construction work at the site. Since then, there have been regular protests outside the entrance and multiple arrests. Protesters have also demonstrated outside Cuadrilla’s contractors and a few companies have withdrawn from work at Preston New Road.
In the accounts, Mr Egan, said:
“We continue to enjoy great support from people in Lancashire who see the potential for the economic benefits and jobs from the responsible development of a shale gas industry in their county.
“As expected we have also heard from those who remain sceptical at this early stage of exploration and sadly a small minority are choosing to make their protest unlawfully.
“We continue to engage closely with the Lancashire Police Force to ensure our operations are not impeded and, as importantly, that the daily routes of local people are not impacted.
“We are also supported by a broad variety of business in Lancashire and the North West, working closely with us on the operations, and these businesses remain engaged and undeterred despite the irresponsible, intimidating behaviour of a few activists.”
Mr Egan said the company planned to drill two horizontal exploration wells during 2017, the first of their type to be drilled into shale rock in the UK.
Fracking would be carried out towards the end of this year, he said, and well testing in the first half of 2018.
Since the report was written, the Court of Appeal has said it will hear two challenges against the granting of planning permission for the Preston New Road site.
Mr Egan said:
“Cuadrilla remains confident that the positive recommendation of the planning inspector, the decision to grant planning consent by the Secretary of State and the subsequent ruling by the High Court in respect of the PNR site will not be overturned.”
He also said communication and engagement with the local community remained a priority for the company. It planned to provide what he called “live streamed site visits” on the internet to share what was happening at the site.
The accounts said Cuadrilla continued to be debt-free and financed by its shareholders:
45% A J Lucas, the Australian mining group
45% Riverstone Holdings, a private equity investor
10% Cuadrilla employees and former employees
The group has seen a steep fall in revenue in the past two years. In 2014, revenue from the well services business, including rig hire, was $5,174,000. It fell to $219,000 in 2015 and was listed as zero in 2016.
The 2016 accounts identified a fall in staff numbers and the salary of the highest paid director.
Cuadrilla Resources Holdings Ltd
Loss for the year: $11,542,000 (2015: $17,671,000
Revenue: $12,000 (2015: $219,000)
Gross profit: $12,000 (2015: $185,000)
Operating expenses: $6,668,000 (2015: $9,678,000)
Administrative expenses: $5,037,000 (2015: $7,815,000)
Net assets: $35.6m (2015: $39.5m)
Operating loss: $11,693,000 (2015: $17,678,000)
Net cash outflow from operating activities: $7,410,000 (2015: $10,604,000)
Proceeds from issue of share capital: $7,568,000 (2015: $4,062,000)
Staff: 23 (2015: 29)
Salary of highest paid director: $629,000 (2015: $716,000)
Staff costs: $3,890,000 (2015: $5,907,000)
Directors emoluments: $1,010,000 (2015: $1,515,000)
No political donations were made in the current or previous year
During 2016 company issued total share capital of $7,568,000 to existing shareholders. Since then, in April and May 2017, the company issued share capital totalling $2,002,000 to existing shareholders.
Recharge of operating costs to A J Lucas: $2,528,000 (2015: $762,000)
Cuadrilla Resources Ltd
Loss for the year: $4,406,000 (2015: $1,393,000)
Revenue $2,582,000 (2015: $5,033,000) – management fees provided to subsidiary companies
Management staff 23 (2015: 27)
Total payroll costs $3,890,000 (2015: $5,138,000
Directors emoluments $1,010,000 (2015: $1,687)
Loans to subsidiaries $4,071,000 (2015: $840,000)
Loss: $151,000 (2015: $269,000)
Management fees: $34,000 (2015: $72,000)
Non-cancellable operating lease rentals: $27,000 (2015: $20,000)
Recharged operating costs to Lucas Bolney Ltd: $39,000 (2015: $64,000)
Loss: $1,637,000 (2015: $2,590,000
Management fees: $559,000 (2015: $2,053,000)
Non-cancellable operating lease rentals: $180,000 (2015: $230,000)
Cuadrilla Bowland Ltd
Loss: $3,960,000 (2015: $3,211,000
Management fees: $1,850,000 (2015: $2,749,000)
Operating leases $48,000 (2015: $17,000)
Cuadrilla Well Services Ltd
Loss: $2,998,000 (2015: $9,666,000)
Revenue: $0 (2015:218,000)
Operating expenses: $252,000 (2015: $6,101,000)