Australian mining group takes control of fracking firm Cuadrilla

PNR 200202 Maxine Gill 2

Suspended Preston New Road fracking site, 2 February 2020. Photo: Maxine Gill

An Australian mining group has almost doubled its stake in the UK shale gas company, Cuadrilla Resources.

A J Lucas announced in Sydney today that it now owned 93% of Cuadrilla, up from 47.6%.

The increase follows its acquisition of the shareholding in Cuadrilla held by Riverstone, a New York based private equity firm.

Riverstone, which had held 45% of Cuadrilla, was reported in September 2019 to be looking to sell its stake. This was two months before the UK government announced a moratorium on fracking following earth tremors caused by fracking at Cuadrilla’s Preston New Road site in Lancashire.

A J Lucas said in a statement:

“Given the longer timeframe that it is expected to take to assess the UK shale resource and to develop Cuadrilla’s Bowland shale asset, Riverstone had indicated that the projected delays were longer than could be accommodated within the fund that originally invested in Cuadrilla.”

The deal appears to deliver one of A J Lucas’s ambitions, stated over a year ago, of “exploring ways to have a more direct presence in the UK”.

The A J Lucas chairman, Phil Arnall, said:

“This transaction allows AJL greater input on Cuadrilla’s setting of strategy and operating plans; it allows for more direct exposure and influence within the industry as well as interaction with Industry Regulators; and, it provides AJL the ability to better manage the allocation of funds amongst our various activities”.

Under the deal, Riverstone will receive what is described as a “nominal payment” for signing the agreement.

It will also receive US$2 million when Spirit Energy, Centrica’s oil and gas explorer, makes the next payment for work at Preston New Road, providing this is within the next three years. This is triggered by Cuadrilla flow testing for 6 months at Preston New Road.

If A J Lucas sells at least at least 25% of its UK shale gas interests within three years, Riverstone would get either $5 million or $10 million, depending on the value of the sale at the time.

A spokesperson for the campaign group, Frack Free Lancashire, said:

“It seems like only yesterday that Lord Browne was defiantly telling the UK that ‘We will finance whatever it takes. Equity finance, then debt and equity. If we really succeed, it will be billions, over 10 years it will be billions’.

“Today we learn that the investment company he controlled at the time,  Riverstone,  are cutting their losses, swapping 40% of Cuadrilla for a nominal payment and the promise of a few million dollars in the unlikely event that AJ Lucas achieve any success in their UK shale assets in the next 3 years.

“Given that Riverstone originally invested $US 58 million and the maximum they can walk away with under this agreement would seem to be in the order of $US 12 million this has been a terrible investment for them.  The fracking industry in the UK is proving to be just a huge a disaster for investors as it has been in the USA.

Cuadrilla said in a statement today:

“The streamlined ownership will simplify decision making and alignment as A J Lucas and Cuadrilla continue to work with regulators and other UK shale gas operators.”

The company said its work would focus on addressing what it called “technical concerns” about induced seismicity which led to the government moratorium.

Fracking operations on both wells at Preston New Road led to earth tremors felt across the region. The Oil & Gas Authority suspended hydraulic fracturing at the site on 26 August 2019 after a 2.9ML tremor, the UK’s largest fracking induced seismic event,

Cuadrilla predicted “a successful technical resolution” that would allow for “continued appraisal and development of high-quality UK shale gas exploration assets and the production of UK indigenous natural gas”.

But the company said:

“We envisage limited, if any operational activities at our Preston New Road site during 2020.”

  • The remaining 7% of shares in Cuadrilla continue to be held by current and former employees.
  • Kerogen Capital, which has an indirect stake in Cuadrilla through A J Lucas, was also looking to sell. Today’s announcement made no reference to Kerogen’s interest.

22 replies »

  1. Or, they are not mad and know a bit more than you do, RG!

    Interesting that a while ago there were all the antis really excited that Riverstone would find no takers for their interests. Schadenfreude was rampant.

    The history of these situations clearly showed that was likely to be fake excitement based upon nothing.

    Perhaps better to be a little more patient, and less excitable? But, insomnia works against that.

    • But what have Riverstone got apart from a “nominal payment”? What do you reckon that means? $1?

      The rest is contingent on Cuadrilla putting in a stellar performance during a moratorium. Based on history even if the moratorium were lifted that looks less than likely and even if it all went as well as could be expected and they ed up with $12 million, Riverstone have made a negative RoI of 15% a year for 10 years.

      Schadenfreude is still rampant here Martian.

      • Ahh, you base your investments/opinions based upon history, reaction?? Figures.

        No wonder you ended up with a 3 litre BMW diesel. Wonder what that will look like in respect of depreciation? Probably a museum somewhere that would find a place next to T.Rex.

        No Schadenfreude from me, just appreciation that some are not any better at making investments than those they criticise.

        And, of course, we have not lost sight that Cuadrilla is still there. Reconfigured, but still there. Par for the course, but always a hope of the antis that will not be the case. Perhaps your history needs some more attention?

        • “Ahh, you base your investments/opinions based upon history, reaction?? Figures.”

          Yup – tends to be a better guide that Collywibble.

          Schadenfreude will be subject to tariffs next year to enjoy it while you can!

          • You mean all that nice cheap US chicken, reaction? The same stuff most UK businessmen claim to Accounts was the reason they spent so much time in Hooters on their last trip? (Who knows. By the time we get to next year one of the media lot may actually find a picture of the correct type of chicken to put alongside their “informed” comments on the subject! Or, they may double down and post a picture of a donkey next to their bit around the Derby.)

            Just think how cheaply you will be able to obtain a Jeep next year!

            Trust you have not over indulged in the tulip speculation. That was a nice guide from history. Or, South Sea bubbles. Flat earth?

            Yep. Figures.

  2. Please stop referring to the the property damaging BGS Defined Hydrofrac Earthquakes as tremors.
    A tremor is a small, unfelt at the surface earthquake that causes absolutely no harm above or below ground. A seismic event is an as yet unquantified earthquake, whether large or small.
    Your report gives the impression to members of the general public who may be reading them of the August Bank Holiday Earthquakes being of no consequence. Which is the exactly the promise Egan and Cameron etc made when promoting this filthy industry and has now been proved incorrect.

  3. Well, I am a member of the general public and the tremors were of no consequence to me, Peter. Neither were the ones in County Durham recently.

    Still fighting for your “compensation”, Peter?

    Meanwhile, I have to get some filler to do some repairs before decoration-all caused by the school run traffic. Then, there is the cost of a balance/tracking check to correct for the road damage caused by the local dairy HGVs. A minority will, no doubt, contact the school and the dairy. The majority will decide they have a life to live. Sound familiar?

    • Road damage should be repaired asap before people are hurt by unstable vehicles with steering difficulties caused by unseen water filled potholes. These repairs are paid for by a combination of road tax and Council tax, which makes sense.

      Unlike your sarcastic comments Martin Collyer.

      By the way, I’m not seeking compensation for the damage done to my Hydrofrac Earthquake damaged family home, I’m pursuing Cuadrilla for the costs of restoring to the condition it was in before the earthquake struck. Compensation gives the impression I’m seeking redress for the inconvenience and distress it caused which I’m not, not yet anyway!

  4. Well, Peter, if your claim is valid I hope you are successful. If it is not, then I hope it is not and you are not going to increase the cost of insurance to others who only claim for reality.

    However, based upon your previous freely accessible social media comments over the past years, which have not always been completely accurate and balanced, I suspect you may have a long path to travel! Reminds me of a young lady friend who attended a job interview and told her potential employers what a sober and diligent student she had been at University, but was surprised they had looked at her posting history during those years, which indicated something quite different! To cheer you up-she got the job! To not cheer you up-it was because she was young and inexperienced, and could subsequently benefit from training!

    Your comments around road damage may not add any credibility to your case. Any insurance company will know that comment of yours is absolute fiction, that has no connection to current reality.

  5. Sorry Martin, I don’t understand your criticism of my comments about road damage? Hereabouts there’s lots of damage to road surface due to farm and construction traffic traveling upon country lanes. That’s a fact.
    It’s also true that unrepaired potholes have caused damage to road vehicles hereabouts.
    In general my comments are my honest opinions, based upon my experiences of living in an area subjected to the unwanted frackiing industry, under threat I believe of harm from the hazards they pose.
    Accordingly I express these opinions sometimes from an emotional point of view [edited by moderator]
    Many thanks for your best wishes in my quest for restitution for earthquake damage to my family home. It’s with the Insurance Ombudsman at the moment so we’ll have to see. They’re obviousky not exactly impartial so we’ll have to see. Don’t worry though. I’m prepared for a rebuttal so have the next step in hand.

    • Riverstone getting out before they are dragged down to the bottom of the barrel and made to look like they can’t make sound investments. Makes sense from a big corporation.

    • Peter-your comments about road repairs were about what should happen, but does not. Making out that is the norm is simply not reality. The norm is that potholes are a great place for spray markers finally marking the spot, and in the majority of cases the marker disappears and the pothole gets larger! If they are eventually filled in, they are usually back again in the same spot within a year, as the repairs are done hastily and badly, and the drainage that should have been sorted has not, so standing and running water has caused the same problem again.
      I have reported such issues. No action, then a whole stretch of road needed resurfacing as the surface was washed away. The Council did not have the money in the budget to clear the ditch to stop the surface being washed away (that had just been put there) but had money in another budget to resurface the road when the damage had been done! The other side of “local democracy” that you fail to see, as it is the reality.

  6. DoD

    Best place for share tips.

    AM Lucas up 24% today. Invest in bad news here.

    Orstead PE >40, hmmm, time to sell on good news here. Subsidy heaven now a thing of the past for new developments.

    Tesla, short spiked to interesting valuations … Hmmmm. Sold awaiting sub $300

    But plenty of money to be made in the grubble if you follow the subsidy money.

    Meanwhile Kier up 50% on HS2 hope ( but lots of debt ).

  7. Yes, hewes62, I noted that the overvalued Tesla had warned about the virus issue and had suffered a pretty large knock! (I was going to say a profit warning, but then realised Tesla doesn’t do profit-other than for a day or two!)

    Strange that JP had not flagged it up?

    But, with those Democrats doing their best to make themselves unelectable, and Donald looking towards 4 more years, there will be plenty of US money to re-inflate Tesla-if the balloon does not fully explode.

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