Cuadrilla profits fall in “relentless and exhilarating year”

pnr 181225 Ros Wills4

Coiled tubing tower at Preston New Road, 25 December 2018. Photo: Ros Wills

Cuadrilla saw profits drop by a third in 2018, according to annual accounts published this week.

The fall would have been bigger if the company had not sold part of its stake in the Balcombe exploration licence in West Sussex.

Assets increased in value because of drilling and fracking at the Preston New Road shale gas site, near Blackpool. The company’s highest paid director had a 15% rise but the company’s charitable and community donations were down nearly 20%.

Cuadrilla raised more than £12m in four shareholder funding rounds in 2018. There was also a £7m contribution to exploration from the Australian mining group AJ Lucas.

Chief executive, Francis Egan, described 2018 as an “exciting and unprecedented period for the business”.

During the year, the company drilled and fracked the UK’s first horizontal shale gas well at Preston New Road. It was also the first company to pass a new financial resilience assessment required for fracking companies in the UK.

Writing in the accounts, Mr Egan said 2018 was a “relentless and exhilarating year” for the Preston New Road site. He said he was also “encouraged” by results from a flow test at the Balcombe well, drilled by Cuadrilla in 2013.

Cuadrilla announced earlier this month that it intended frack the second well at Preston New Road, even though the potential of the first well was only partially tested. There were more than 50 induced earth tremors during fracking at the site in 2018. Pumping stopped prematurely four times because tremors exceeded the 0.5ML threshold on the traffic light system regulations.

Mr Egan said:

“We remain convinced that it will not be possible to establish a commercial shale gas industry in the UK within the existing 0.5 red light operating limits

“However, we understand that more data is considered to be required to support the case for a TLS review and as the only UK shale gas operator with permission to hydraulically fracture horizontal wells, it’s clearly up to us to provide it.”

Key figures

The accounts, for the year to the end of December 2018, are for Cuadrilla Resources Holdings Limited.

2018 accounts for Cuadrilla Resources Holdings Limited (pdf)

The holding company is owned by the Australian mining group, AJ Lucas (48%), the private equity investor Riverstone Holdings (45%) and Cuadrilla’s current and former employees (7%).

It has one subsidiary, Cuadrilla Resources Limited, which in turn has 12 subsidiaries, mostly operating in England in oil and gas exploration.

For the first time, the 2018 accounts give figures in GB pounds, rather than US dollars.

Profits fell from £4,254,000 in 2017 to £2,650,000 in 2018, despite including a £1,816,000 profit from the part-sale of Cuadrilla’s stake in the Balcombe licence. Cuadrilla recorded a profit for the first time in 2017 with a $16.9m contribution from Centrica. In 2016, the company reported a loss of $11.5m.

Operating expenses rose to £3,520,000 in 2018, up from £2,975,000 in the year before.

Administrative expenses were up slightly at £3,680,000, compared with £3,627,000 in 2017.

Total comprehensive loss for the year rose to £394,000, up from £146,000 in 2017.

Cash at 31 December 2018 fell to £2,265,000, compared with £6,373,000 the year before.

Net assets rose to £47,442,000, up from £32,380,000, reflecting the operations at Preston New Road and the flow test carried out by Angus Energy at Balcombe.

Project costs were down at £7.3m, compared with £10.7m for 2017.

Decommissioning provision at 1 January 2018 £5,080,000, up from £4,562,000 in 2017

Decommissioning provision at 31 December 2018 £3,731,000, down from £5,080 in 2017

AJ Lucas contributions to exploration and evaluation assets rose to £7,179,000, up from £4,944,000 in 2017.

Share capital rose to £167.7m, with four funding rounds, up from £155.2m in 2017.

Payment to highest paid director rose from £416,000 in 2017 to £480,000 in 2018.

Charitable and community donations were £81,000, down from £100,000 in 2017.

Average number of people employed by the Cuadrilla group rose slightly to 26, up from 24 in 2017.

Estimated accumulated tax losses to set against future taxable income rose to £46,281,000 from £43,118,000 in 2017.

Receivables outstanding from Cuadrilla Resources Limited rose to £98,027,000, up from £85,864,000 in 2017.)

Updated 13/8/2019 to include decommissioning provision figures for 31 December 2018 and 31 December 2017

37 replies »

  1. Looks like extremely dodgy accounting to me!

    What exactly does Receivables Outstanding from Cuadrilla Resources Limited mean?

    And Estimated Accumulated Tax Losses, what are they?

    I know that the story is about Cuadrilla profits falling but with the two above numbers crunched, I don’t see any kind of profit at all!

    And the disparity between the INCREASE in renumeration to the highest paid Director from £416K to £480K when compared to the REDUCTION in compensation to Charities and the Local Community from £100K to £81K is PERVERSE!

    All with absolutely NO useful gas returned to the surface and contributing to local gas supplies?

    Do me a favour!

    • Peter – you seem such a talented human being – you seem to think you know more about geoscience than I’ve learnt in 30 years. You know seem to have acquired accountancy skills. You and Robin should form a political party for polymaths

        • Refracktion??, bitter and twisted comments john. Thats all your come-back, its pathetic. Coming from the way you spell refraction! Well then, when Cuadrilla come back to carry out their long awaited operations this will certainly a “refraction”! (Correct Spelling)!

          • Eli Froth – I guess wordplay is clearly a bit beyond you isn’t it :-).
            Can you translate this:
            “when Cuadrilla come back to carry out their long awaited operations this will certainly a “refraction”!”
            into something meaningful when you have a moment spare [edited by moderator].

        • I see the punctuation problem is a bit of an epidemic!

          So much interest in attack, but so little on defence. Perhaps defence, or defense for our US friends, reserved for ‘photos of ladies undies?

          Relegation beckons-full stop.

          I suspect these attack dogs have been nobbled!

            • Probably not Fifi, but you mistake me for those who wish to use English grammar as a mechanism to shut down those who worry them the most with their comments and knowledge. I just like to magnify that none of us are perfect in respect of use of English, otherwise some of our overseas friends would also be disadvantaged. In so doing, it gathers the posts, like moths to a flame, to emphasise what is being attempted, and who and what worries them the most. Thanks for your contribution.

              Paxman worries that political correctness protects idiots from ridicule. I see what he means, but I am a bit more gentle in my approach.

              • Perhaps you should follow the rules of JR-M and [no comma] ‘In a call for accuracy contained in his list, staff were told: “CHECK your work.” [double space] 🙂

                • And certainly not Imojis. But, nice to see his debut rated as the best first outing for a new Cabinet member in decades. He also had the whingers nicely deflated for Boris to mince. What an interesting few months we have ahead.

                  So, your point really is that you want to join the cabal that thinks attacking the competition covers up the fact that there is nothing else you have to contribute. Well, apart from the smiley face showing “I wos ‘ere”. Good old Chad, that was proper grammar.

                  Reminds me of my days at work when a customer would report that he had recently seen someone who just wanted to criticise his existing supplier, utilising totally irrelevant guff. “What did he offer you?”, I would ask. “Oh, he never thought of stating that”, was the reply, “so, I will be sticking with you.”

                  But you should know by now, Passepartout, I am not a follower. I suspect you have me confused with the cabal.

  2. If you want more Community Donations Peter the answer is simple. I believe there is a £100k payment for each drill. So, more drills equal more Community Funds.

    Arithmetic is not that difficult, not even a plastic calculator needed. Fingers and toes would suffice for that one.

    To help you out, complete the work on number 2 and then a few more could be drilled. Kerching.

    I see those deductibles against future taxable income are building up nicely. Antis really doing well to deny the most vulnerable the help and support they need. Maybe they are supporters of Donald and believe the good old USA needs the income more than little old UK.

    Wonder how much tax is pulled off a £480k salary and how many benefits (required or falsified) that pays? Oh, the irony within the tax system.

      • hewes62

        So, £280k divided by £5k=56.

        But, better if it was allocated to those who die as a result of fuel poverty, before they do. Last figures I saw were around 8k for UK, although there was a rider that could be very much on the low side. But if you divide £280k by 8k, that equals £3.5k. Hmm, could be used to give a large increase in winter fuel payments to those who don’t manage to eat and heat, and have a bit left over.

        Strange and wonderful thing, capitalism! Even stranger when antis moan about the possibility of people moving overseas and therefore reducing their UK tax yet that is exactly what they are pushing for oil and gas!

        Hello again reaction. Your party excludes punctuation, does it? I think Judith can spell Judith, but your spelling, Judith, may be a different thing-or, you may have a very worn keyboard, as I do, and just get fed up correcting.

        Someone seems a little upset that Cuadrilla results still look pretty decent and robust.

        • “Someone seems a little upset that Cuadrilla results still look pretty decent and robust.”

          Without recognising the contribution from the carries / farm in payments and the asset sell off as income they would be £9 million down so posting a £6.5 million loss. Decent and robust? Really?

          • Ahh, the “withouts”.

            Well, without diesel a 3 litre diesel BMW would be scrap, but reality is different to fiction, so not to worry.

            • And another “without” – without relevance – we are very familiar with that one from you Martian.

              Without sales revenue greater than costs most companies don’t make profits (its a bit like the Micawber thing)

              If without counting carries (more of which which may not be forthcoming in the difficult future facing their investors) and asset sales in their P&L they would be posting large negative numbers then you’d have to have spectacles so rose tinted they were practically red to describe the results as “pretty decent and robust”.

              • What a load of uninformed guff!

                Since when do companies who are conducting exploration and testing make an operating profit??

                Whilst you seem to think others do not realise that delayed reaction, some others will continue to be amused by your attempts to suggest you don’t have any clue around the financing of such companies. It is quite clear you are better informed than that. Shame you still want to treat others as less knowledgeable.

                Interesting you still use the royal “we”. Just been watching a piece about purchasing fake followers. Seems that one has also been exposed.

                So, yes, pretty decent and robust. Whilst interested parties are willing to maintain that decent and robust position, you can attempt to spin what you like, but that is the situation. Yes, as I posted to Dorkinian, there may come a day when the Cuadrilla parties take a different view, and then it is likely someone else will take over-as constantly demonstrated across UK on shore oil/gas.

                Maybe stick to the Emojis. The attempt at “content” to misinform others is too obvious.

                • Martian – you seem not to have read the bit I wrote about future funding so I’ll put it here for you again

                  “If without counting carries (****more of which which may not be forthcoming in the difficult future facing their investors*****) and asset sales in their P&L they would be posting large negative numbers then you’d have to have spectacles so rose tinted they were practically red to describe the results as “pretty decent and robust”.”

                  For you to try to persuade people that the future prospects of this company look ““pretty decent and robust” in the light of that P&L and what we know about some of the companies funding them / with investment in their PEDLs look a bit desperate. It’s a matter of opinion of course, but I note you seem unable to provide anything substantive to back your opinion up.

                  Maybe stick to Collywibble. Analysis doesn’t seem to be your strong suit.

                • What a load of guff, still based upon “withouts”.

                  No, I didn’t miss out the bit about future funding, as that will be determined ermm in the future.

                  I already discussed that with Dorkinian, so what is your point?

                  But, delayed reaction, do continue to live up to the title.

                  Yes, Cuadrilla may get fed up with funding, in the future, and may then bring in new funding partners. Or, they might get so fed up, they give up and someone takes their place. We go through this little dance every time an exploration company declares results as certain individuals think there is mileage in pretending they know how to analyse the implications of the results. They are proven incorrect as time passes but they still come up with the same guff the next time.

                  Reading may help you out, reaction. I commented upon the CURRENT situation which is pretty decent and robust.

                  If you want to convert to Mystic Meg, good luck with that, but such financial doom speculation has been shown repeatedly to be wishful thinking for the antis. By the law of averages, one day, one situation might fall in place, but I suspect even then, it would make no difference within the bigger picture.

                  Stick to the Emojis. Much safer.

                • I see you are no nearer to being able to offer anything substantive in support of your “pretty decent and robust” b/s

                  Surprise Surprise!

                • I see you still can’t read the account details, but still wish to become Mystic Meg.

                  Those details that show clearly a pretty decent and robust position.

                  But, if you want to rely upon the tea leaves, what future income will they get from Sussex??

                • I see you are no nearer to being able to offer anything substantive in support of your “pretty decent and robust” b/s

                  Surprise Surprise!

  3. Decommissioning Provision actually fell in 2018, from £5,080k to £3,731k, rather than increasing as reported in the post.

  4. Did they not do some decommissioning in 2018? Maybe having spent money they can remove provision for it.

  5. I can’t see this level of subsidy going on much longer, not with the pattern of failure at Balcombe, Preese Hall and PNR.

    If they trigger more earthquakes or fail to produce commercial quantities of hydrocarbons again, that will surely be goodbye and good riddence to Cuadrilla.

  6. You may be right, Dorkinian. That is the way exploration and development of oil/gas functions. If a company is not successful, then they bow out-but, usually to be replaced by another who believes they can be successful. You reference Balcombe. So, you know that already.

    INEOS are pretty expert at making assets work that others can not, so plenty of options. And, of course, then the antis would not need to be worried around mug punters.

  7. What concern is it of yours where I have money, delayed reaction? Perhaps if I was local to PNR and was receiving some financial support from AJL I might have a punt! LOL

    I certainly don’t have it in overseas production of diesel, although Fund Managers may have taken a different view within tracker funds. They do tend to like high dividends for some strange reason. .

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