The shale gas company, Cuadrilla Resources, has described itself as “largely non-operational” following the moratorium on fracking in England.
The company, now owned by the Australian mining group, AJ Lucas, recorded a loss of £38.5m in the year to December 2019.
The annual accounts said material uncertainties “may cast significant doubt upon the Company’s ability to continue as a going concern”.
Cuadrilla is the only company known to have carried out high volume hydraulic fracturing in the UK.
Fracking operations at its Preston New Road site near Blackpool were suspended on 26 August 2019 after an induced earthquake measured 2.9ML – the largest so far recorded in the UK. The moratorium was imposed on 2 November 2019 and is still in force.
Cuadrilla said it had been working, along with other UK shale gas companies, to address the concerns which led to the moratorium. But it said:
“The very low regulatory thresholds on induces [sic] seismicity applied to hydraulic fracturing in the UK make this a particular challenge. As such, it is not possible to say when exactly a solution that meets current UK regulatory expectations may be arrived at.”
The company said the potential recovery of shale gas from the Preston New Road wells “remains to be determined” because it had not been able to measure a sustainable flow rate.
Loans increase annual loss
The £38.5m loss in 2019, compared with a loss of £99,000 in 2018.
Cuadrilla said most of the loss came from “an exceptional” impairment charge on loans to subsidiaries – largely money advanced to Cuadrilla Well Services Limited.
The company said AJ Lucas had committed to provide financial support for the next 12 months to allow it to trade and meet its liabilities.
Chief executive, Francis Egan said Cuadrilla had “very significantly reduced its operating costs” and was “currently largely non-operational”.
But he added:
“[the company] has retained its extensive technical data-base, corporate knowledge and access to technical and operational capability. It remains therefore well positioned to respond to what is considered a likely future re-evaluation of the value of UK indigenous natural gas.”
He said there may be a “re-think on the value and benefits of domestic UK exploration and production” with rising gas production and “increasing recognition of the environmental benefit of domestic gas production compared to long distance imports”.
Cuadrilla Resources Limited is a subsidiary of Cuadrilla Resources Holdings Limited. The accounting period for Cuadrilla Resources Holdings Limited has been extended from 31 December 2019 to 30 June 2020. The controlling party for both companies is AJ Lucas Group Limited.
Key figures for Cuadrilla Resources Limited
Revenue (management fees for operational and admin services to subsidiaries): £3,115,000; 2018: £1,571,000 –
Operating expenses: Not listed for 2019; 2018: £124,000
Admin expenses: £4,316,000; 2018: £1,655,000
Impairment of intercompany receivables: £37,601,000; 2018: £29,000
Operating loss: £38,802,000; 2018: £237,000
Loss for the year: £38,565,000; 2018: £99,000
Non-current assets: £148,000; 2018: £81,000
Current assets: £65,9111,000; 2018: £92,445,000
Total assets: £66,059,000; 2019: £92,445,000
Total liabilities: £111,103,000; 2018: £99,007,000
Net liabilities: £45,044,000; 2018: £6,481,000
Staff numbers: 24; 2018: 26
Payroll: £3,180,000; 2018: £3,281,000
Aggregate pay for highest paid director: £601,000; 2018: £480,000
Total cash outflow on qualifying leases: £70,000