Industry

Is Barclays waiting for fracking to sell Third Energy?

 

180215 barclays bank protest Fossil Free University of Bristol

Protest outside Barclays Bank, 15 February 2018. Photo: Fossil Free University of Bristol

Barclays suggested this morning that it had not sold Third Energy because fracking at the company’s gas site at Kirby Misperton site in North Yorkshire had been delayed by the government.

The bank said at last year’s AGM the rundown of its non-core assets, including Third Energy, was being accelerated and that closure was less than two months away.

But since then, Barclays has increased its loan to the company by £2.9m.

At this year’s AGM this morning in central London, Barclays Chairman, John McFarlane, told investors:

“We want to get rid of this and to divest this asset”.

Asked why Barclays had increased the loan to £15.4m, Mr McFarlane said:

“Yes. We admit that we made this investment. It’s been sitting in non-core and you’re absolutely correct we want to get rid of this and to divest this asset.

“However, there has been most significant government delays with respect to this project and therefore what we had hoped at this particular moment in time has not yet occurred.”

Asked “Do you mean the fracking?”, Mr McFarlane replied “Yes”.

Financial resilience test

Greg ClarkThe government announced in January 2018 that it was delaying a decision on final consent for fracking at the KM8 well in Kirby Misperton until Third Energy submitted its overdue accounts.  The Business Secretary, Greg Clark (left), also ordered an assessment of the company’s financial resilience.

The accounts were released on 2 February 2018, showing a £3.4m loss. Parliamentary questions on when the financial resilience assessment would be completed have been met with the answer:

“There no set timeframe for the Department [of Business, Energy and Industrial Strategy] to provide its response to the Oil and Gas Authority in this instance.”

Also in February, Third Energy began releasing equipment from the KM8 site and in March, the company  said the fracking would be delayed until the autumn because it wanted to avoid the harvest and holiday seasons when the roads were busiest.

“We have plans in place”

This morning, Mr McFarlane was asked if he had hoped the fracking would happen.  He replied:

“No. We are hoping to divest this company at the appropriate time and, unfortunately, we have not been able to do that at this point in time. We are looking forward to doing it as soon as possible. We do have plans in place and we do have relationships with advisors to move this asset on and we will do it as quickly as we can.”

Barclays protest Ian Crane 170420

Photo: Ian Crane

The questions, asked by Leigh Coghill, an anti-fracking campaigner, on behalf of a Barclays shareholder, continued:

“Is there any chance you would divest before the fracking takes place?”

Mr McFarlane replied:

“I can’t comment on the individual circumstances here because it’s got privacy aspects to it. All I can tell you is that we do not want to own this asset.”

At the AGM, Barclays came under pressure to cut investment in other fossil fuel projects, including pipelines. While it was questioned on climate change issues, a group of student protesters moved to the front of the conference hall and onto the stage. They were removed by security staff.

Barclays has been the subject of an ongoing anti-fracking campaign. In October 2017, Friends of the Earth estimated that 7,000 people supported its ongoing action against the bank.

20 replies »

  1. John Mcfarlane is very good at not really answering questions put to him at the AGM. I am bitterly disappointed that Barclays continue to lend money to Third Energy after claiming they can’t wait to divest!

  2. “There no set timeframe for the Department [of Business, Energy and Industrial Strategy] to provide its response to the Oil and Gas Authority in this instance.”
    Has anyone Asked why Not.

  3. Looking at the text of the report, the answer would seem to be ….. yes for now.
    Presumably in an expectation that a frack would increase the value of their holding.

  4. I suggest Barclays do not want to be associated with fracking any longer or prefer to sit on this holding pending fracking being accepted and proven somewhere else by others first.
    If they were keen to realise their investment they would have provided the funding for third energy to be of financial resilience to frack. Perhaps it was all too risky and they will wait for Cuadrilla or Ineos to pave the golden way….
    Maybe British Gas / Centrica will be similarly reticent when Cuadrilla Bowland is requested to show how it is to have a sufficient bond to cover any environmental damage they may cause. Perhaps the £30million liabilities of Cuadrilla Bowland will be treated with similar caution by Greg Clark?

  5. Toxic assets. Stranded assets. Worthless assets. £50 million of debt to write off. Oh, keep adding more millions as the months tick by. No fracking. No profits. Not viable. A public relations disaster. A consumer boycott. Fracking has no future, no present, and a disastrous past.
    Oh dear, what can the matter be
    Dear dear what can the matter be
    Oh dear what can the matter be
    Fracking’s so long to start up.

    He promised to make me some profits to share out
    He promised to heat our homes but the lights are still on without it
    He promised energy security but theres nowt to show for all the hype
    And Sajid has moved to the Home Office…..

  6. Lots of speculation there, Richard!

    Perhaps they are quite happy to watch the oil and gas prices rise before they sell? If you have a farm you want to sell, and it has a barn full of grain, just maybe the price is easier to maximise when the grain price is high?

    Had your revised energy bills yet?

    • My energy bills stay the same – £0; no vat, no % increase; no investor led profit demanding more and more; just keeps turning and turning……..

      • Zero energy bills? Hmmm ok I get that you’re wealthy enough to be a country bumpkin nimby that has splashed out on a ground source heat pump or maybe even a cheeky £1 million back garden turbine but I am curious what do you use to cook with?

          • Come on then Sher spread the love then we can all live in a utopian dream. No money required to sustain free energy.
            As for Barclays we all know their MO

            Barclays are staving off selling as they know that when shale gas kicks off it will be huge. That is why they are still throwing millions at it. Must be confident… What do you think?

            • DYOR Kisheny; you can do it if you try; gotta tailor it to your own circumstances and limitations, but it can be done……

              Barclays are staving off selling it cos no one wants it; it’s a dead duck; if they were throwing millions at it Third Energy would be solvent and with con support, good to go; not happening; you lose again.

  7. Not too many caves left, and the mammoth fat is getting a bit scarce! (Mind you, back in the prehistoric days they were pretty good miners. Tunnelling away to get what they needed. They had it easier of course, as no wheels to keep clean.)

    It is possible for a few to live “off grid” or close to, but the vast majority of the UK population and industry is a different matter altogether. Some will attempt to make a gesture, so they can chat about it over their dinner parties (often outsourced, featuring out of season veggies airfreighted from Africa), and then find out their nice wood burning stoves in the centre of London are a major source of pollution!

  8. Quote ‘Barclays suggested this morning that it had not sold Third Energy because fracking at the company’s gas site at Kirby Misperton site in North Yorkshire had been delayed by the government.’
    What an interesting blame game! So the fact that Third Energy were 4 months late submitting their accounts for the second year running had nothing to do with the govt being backed into a corner and being forced to scrutinise their financial viability? Smart move! The only reasons I could think of for this were that either TE are financially inept; had something to hide; or have no respect for any financial regulations. None of which give me confidence about their ability (financial or otherwise) to deal effectively with any problems that could arise from fracking. It’s also astounding that Barclays, as major shareholders, didn’t have any influence on this financial ineptitude at TE.
    That said, it does beg the question: Is there some underlying motive why the govt has “no set timeframe for the Department [of Business, Energy and Industrial Strategy] to provide its response to the Oil and Gas Authority in this instance.” ? Hardly going all out for shale is it? Is someone getting cold feet?
    It’s hardly surprising that Barclays prefer to talk empty words about divesting rather than cracking on with it. They only have to wait until TE frack at KM8. Dependent on results from the frack, the shares will either increase in value massively (ker-ching) or they’re worth peanuts – not much less than currently. Surely worth some empty rhetoric and a brief wait.

    • If you check out the governance’s autumn plans plus current infrastructure in Kent you will get the big picture, and it’s not shale or even renewables……

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