The government should refuse consent for Third Energy’s fracking plans in North Yorkshire, campaigners said this morning in response to publication of the company’s annual accounts.
The figures for Third Energy UK Gas Limited for the year ending December 2017 show liabilities had risen to £63.9m and annual losses to £3.5m. Turnover was down from £757,000 in 2016 to £191,000 last year.
The company said it was “actively seeking” new sources of funding. It said it needed £14m to develop the Ryedale gas field and more cash injections to keep afloat. But the accounts said there was “significant doubt” about Third Energy’s ability to continue as a going concern and the company is up for sale.
Russell Scott, of the campaign group, Frack Free Ryedale, said:
“Third Energy’s latest accounts show a company in financial meltdown.
“”The firm is openly admitting they don’t know who or how they will fund future development.
“For the last three years we have been warning the government that Third Energy do not have the capability to operate competently.”
A year ago, Third Energy told Kirby Misperton residents it was ready to frack the KM8 well in Kirby Misperton. But in January 2018 the Business Secretary, Greg Clark ordered an assessment of the company’s financial resilience. Since then, the site has been cleared and there has been no news on consent from the government.
Russell Scott added:
“Third Energy’s latest set of accounts prove what we already knew – they cannot be considered financially stable and minister Greg Clark should ensure final fracking consent is denied.”
The financial statement said the Ryedale gas wells were producing low volumes, revenues were falling and Third Energy UK Gas Limited was dependent on sourcing finance to fund further exploration and development. It said:
“the company will require significant capital expenditure to develop the conventional and unconventional resources of £14m, £5m of which is forecast in the next 12 months. In addition, the Company needs further cash injections even to operate without the additional capital expenditure.”
Third Energy UK Gas Limited relies for day-to-day funding on Third Energy Holdings Limited, which is based in the Cayman Islands. The ultimate parent company of the holding company is Barclays PLC, which has said it intends to dispose of the Third Energy group.
According to today’s financial statement, the group is “actively seeking alternative sources of funding”, which may involve disposing of Third Energy UK Gas limited and the rest of the onshore gas business. It said:
“Third Energy Holdings Limited is not expected to provide the required funding to support the necessary activities to enable the group to progress to cash generation and continue as a going concern.”
The directors said they were confident they would find a buyer but they said this could not be guaranteed or that a sale would be agreed before financial support was withdrawn. There was also no certainty about the intentions of a future owner, they said.
“These conditions represent a material uncertainty that may cast significant doubt on the ability of the Company to continue as a going concern and, therefore, to continue realising its assets and discharging its liabilities in the normal course of business.”
The accounts show that the Third Energy group had a contract with Halliburton Manufacturing and Services Limited for onshore gas services. Halliburton may receive unquantifiable additional payments in future if activities are successful, the accounts said.
Third Energy UK Gas Limited had 15 employees in 2017, one down on the previous year. Annual staff costs of £560,000 were paid by Third Energy Holdings Limited and Third Energy Onshore Limited.
Last month, two directors, Keith Cochrane and Lord Jitesh Gadhia, resigned after just a year inn the job (DrillOrDrop report.
Steve Mason, of Frack Free United, said:
“It just goes to show how unreliable fracking is – we have one company on the floor financially and another on shaky ground because of earthquakes. Third Energy is a company in financial meltdown – over 60 million in debt and is likely to be sold.
“How can this government even claim that shale gas will give the UK energy security when fracking is proving to be a losing bet and has such an uncertain future?”
Simon Bowens, Yorkshire campaigner for Friends of the Earth, said:
“It’s no surprise that Third Energy want to sell their onshore fracking business. Fracking is a failing fossil fuel industry.
“In light of the IPCC’s recent report where the wold’s leading climate scientists laid out the radical action needed to avoid climate chaos, wise investors would be much better off investing in solutions like energy efficiency and renewables.”
Cost of sales: 2017 (£1,642,000); 2016 (£1,768,000)
Administrative expenses: 2017 (£1,930,000); 2016 (£1,768,000)
Operating loss: 2016 (£3,381,000); 2016 (£3,216,000)
Loss for financial year: 2017 £3,582,000; 2016 £3,405,000
Net current liabilities: 2017 (£63,965,000); 2016 (£54,652,000)
Of this, owed to group undertakings: £62,555,000; 2016 £55,709,000
Of this, owed to Third Energy Holdings: £59,181,000; 2016 £48,165,000
Deficit on shareholders’ funds: 2017 (£37,054,000); 2016 (£33,472,000)
Staff costs: 2017 £560,000; 2016 £540,000