Industry

Cuadrilla’s owner spent $1m+ in UK in 2021 despite operations “on hold”

The Australian owner of the shale gas company, Cuadrilla, spent $1.107m in the UK in 2021 (about £655,000 at current rates), even though its licences were “on hold” because of the fracking moratorium.

Cuadrilla’s Preston New Road shale gas site, 26 February 2022. Photo: Maxine Gill

In annual accounts published today, A J Lucas Group said all the spending in the UK was to pursue strategies to overturn the moratorium and on maintenance of its UK licences.

DrillOrDrop understands that onshore companies can apply for a rental waiver on shale gas licences, so much of the AJ Lucas spending in the UK was likely to be moratorium lobbying.

Indeed, the company said it had “escalated” its campaign in 2021 to lift the moratorium.

Francis Egan, chief executive of Cuadrilla Resources and Lucas UK, said:

“we have repeatedly made the case to Government that restarting and accelerating shale gas exploration and development in the UK should be a matter of national urgency.”

He said Cuadrilla had been “actively seeking” to persuade the UK government and industry regulator to “properly support onshore domestic gas production”.

He said that domestic gas supplies had “plummeted”, well before the Russian invasion of Ukraine. Investment had been “discouraged” and development “entangled in red tape”, he said.

(Industry data shows that total UK gas production peaked more than 20 years ago in 2000. In the past 35 years, onshore gas has never contributed more than 1.5% of total UK gas production.)

But Mr Egan said arguments in favour of domestic onshore production had “been listened to, to some degree”. He said:

“There are signs that the political listening may have begun, we trust that action will very shortly follow.”

Both Conservative Party leadership contenders have said they support fracking if local communities consent.

Today, the front-runner, Liz Truss, reportedly promised to approve up to 130 new oil and gas licences in the North Sea if she became prime minister next week. But in interviews she did not refer to onshore shale gas fracking.

A government commissioned review of fracking science, submitted in July 2022, has not yet been published.

Mr Egan said Cuadrilla had contended with “an enormous amount of red tape” in Lancashire, where it partially fracked the two wells at its site at Preston New Road in 2018 and 2019. This “greatly extended the time to complete operations and increased costs”, he said.

If the moratorium were lifted, the accounts suggest that AJ Lucas would need to raise money for exploration and development of its UK shale gas licences. The company said:

“the Group is unable to use excess funds from operations of its Australian drilling business to fund its UK operations. As such, any additional funds that may be required by the UK operations would require additional debt or equity funding.”

The accounts confirmed that AJ Lucas earned no tax refund from Cuadrilla’s activities last year. In 2020, the company received $2.977m under the UK research and development incentive. But the accounts said pre-trading expenditure from some of the UK companies could be offset against future taxable profits.

The total payment to Mr Egan in 2021 was $445,018 (about £260,000 at current exchange rates).

The Preston New Road site has been mothballed since the 2019 moratorium. Planning permission is due to expire in April 2023 and the industry regulator has required proposals for using the two horizontal wells by June 2023.

Mr Egan described the UK’s limits on earthquakes caused by fracking as “exceedingly low”. The limits had previously been agreed by the industry.

He said there had been “very limited” flow tests on each Preston New Road well, confirming the presence of “high-quality” gas.

But, as in previous statements, Mr Egan gave no indication of volume of gas recovered or potential reserves. He referred only to an estimate made in 2012 for the whole of the Bowland shale.

Industry figures show that another Cuadrilla Lancashire site, at Elswick, has produced no gas since 2013.

Key figures

(Australian dollars)

A J Lucas spending in UK: $1.107m (2020 $1.057m)

Group net loss for the year: $11.327m (2020 3.35m profit)

UK income tax benefit from R&D incentive: $0.00 (2020 $2.977m)

UK overhead costs: $1.259m (2020 $1.170m)

Net debt: $140.817m (2020 $130.906m)

Net debt to equity ratio at 30 June: 1.83 (2020 1.39)

47 replies »

  1. Liz Truss talking the talk to get what she want’s. Liz Truss will not be able to walk the walk. UK shale gas pummeled by well organised communities.

    • Take a look at the overall AJ Lucas share price. All down hill since 2012. The same time start up research and development company Cuadrilla ‘got going’. AJ Lucas share holders must be ecstatic about all the money they have lost. Maybe they never quite twigged that shale gas is the dearest and dirtiest form of gas extraction and therefore is a bad investment. When taking a look at the US market don’t forget to look at the numbers over the past 20 years and not just the last one.

  2. Oh the numbers over the last 20 years. You mean the numbers that have shown that as USA was eased towards self sufficiency by the efforts of the frackers, world oil prices dropped significantly, with OPEC losing their largest customer and slashing prices to try and force USA back to being a large importer. Didn’t work, USA carried on, world benefitted from lower prices until recently.

    Don’t forget SNP talking about how Scotland would rejoice with oil prices over $100/barrel.

    “Polling at the start of the summer suggested that the offer of direct help with energy bills would see support for local fracking rise from 29% to 53%.” Looks as if Liz may know what she is on about.

    • SO MARTIN ,

      Are you actually saying that as many as 53 %: of people living in close proximity to a Fracking site would actually like to increase their chances of,
      (1) Cancer ?
      (2) Asthma ?
      (3) Birth Defects ?
      (4) Their homes significantly being devalued ?
      (5) Their homes becoming un-mortgageable ?

      REALLY MARTIN

      I know that they say that when it comes to stupidity, theirs one born every minute , but 53 % of a community , I think not old chap ..

      Remember , Ms Truss said that she would give the local people the final say as to whether Fracking would be allowed to blight their communities . If that be the case , then that’s good enough for me .

      • Nope, Jack. (I will reply even though your self appointed “leader” thinks your comments are irrelevant.)

        I suspect the figure of 53% is higher now. Not me saying it, Jack. The people have spoken-or voted! Your thoughts are not the issue. Thankfully.

        The bigger question is what close proximity is. Being worked on currently, and I suspect of much interest to estate agents as whether £811 off annual energy bills-before latest increase-can be elevated some more for their sales brochures.

        As for your repeated nonsense comment about gas prices in USA, well still a fraction of gas prices in Europe. And that difference about to increase even further, with Nord Stream 1 the useless bit of kit it was always intended to be. No learning from the Trojan Horse. In spite of jP’s comment, the dearest form of gas is LNG, and very dear when there is a shortage.

        Jack, my vlad, you will really need to sort out whether self sufficiency maintains rock bottom prices when there is a huge demand for product. Perhaps have a word with the Norwegians? It really is down to the local politicians to decide how they want to manage that windfall.

        And, I remember that Liz said nothing of the sort. You really can’t resist the attempt to distort the truth, can you? I do remember Mr. Musk’s recent support for oil and gas though! OMG, perhaps Ms. Lucas next?

          • Thanks Paul. Nothing there about blighting.

            Plan for communities to benefit? Yes, being set out. Might even be better than the plans from the wind turbine lot.
            Even prior to that being finalized it would appear from the polling that the consensus may not be what some would desire, and may not be what some have previously claimed.

            That’s life.

            • MARTIN ,

              It would appear you have difficulty understanding the English language.

              DID I make reference that Ms Truss said the word ” blighting ” ?

              Well did I ?

              Because your above response to Paul Seaman implies that ” blighting ” is some how entwined in the comments of Ms Truss

              JACK is the person using the word “blighting ” and if you dispute a single word I say , please say now ……. As I will be delighted to fill this page with evidence.

              • Nope, Jack. I understand English pretty well. It is not understood by others. What Liz stated was evident. It did not require your added bit that was your opinion, and not supported by the opinion poll that was conducted

                Not “theirs” but “there’s”, Jack.

                Oh dear, oh dear. You have already filled the page, but not with evidence of your grasp of English.

      • I am sure those who advise Liz Truss will be very keen to check out Cuadrillas previous experience in the shale gas industry. With Cuadrilla admitting they are a research and development company suspicion will be raised on their abilities as commercial operators.

        Cuadrilla did originally state “‘Members of Cuadrilla’s management team have each played leading roles in the drilling and/or hydraulic fracturing of more than 3,000 natural gas and oil wells across the world” however that claim was later removed from their website.

        If this claim was true then surely Cuadrilla have a huge portfolio of successful commercial shale gas ventures across Europe where we know they have been attempting shale gas operations.

        If these don’t exist the UK Government need to take a long hard look at what they are thinking of possibly allowing.

      • No issue with time, Jack, just hypocrisy.

        Consumers wish to consume. They can and do so. Some wish to stop them consuming, whilst doing so by consuming themselves. If you have no wish to control your own consumption, Jack, then you may find others may not feel obliged to compensate for your excess.

        Remember the microplastics that were found in the Antarctic, that were subsequently found to have come off the hull of the “research” ship? By the way, I have iron in my blood! Will I go rusty?

        • Not quite sure why research is in speech marks, Martin.

          The actual figures were rather garbled by some of the press.

          45.5% of the 770 microplastic bits recovered in the remote Weddell Sea came from marine paint (but not necessarily the research vessel).

          101 particles , which resembled paint on the research vessel, were subjected to further analysis – 89% of these (so around 89 out of 770 in total) were found to come from the research vessel.

          The scientists were clearly aware of the risks of contamination, and used detailed analysis to try and deal with it.

          The research is useful in pinpointing the pollution caused by maritime traffic of all kinds.

          To read the original research, see https://pubs.acs.org/doi/10.1021/acs.est.1c05207

          • Well, indeed Paul. Figures confusing some journalists? Now, there’s a thing. $7 per MMBtu against $47 per MMBtu seems able to confuse as well. (US Henry Hub gas price v Dutch TTF gas price.)

            So, would that be the same for maritime traffic that is transporting oil and gas to UK that UK could produce locally, and cut out the maritime traffic??? Liz, are you aware of that? You could be one league ahead of Greta, Liz!

            (The reason “research” was in speech marks, is my view upon the benefit of people travelling to a remote part of the world and then researching that their visit has polluted it! Suppose it is a little more sensible than environmentalists travelling by ship into the Antarctic region to show how much of the ice had vanished, became stuck in the ice that had not vanished, and then required rescuing at vast expense-but not much.)

      • I didn’t Jack.

        I have been out having pancakes with my grandson. Strangely (lol) as there is this terrible cost of living crisis and everyone is doomed, there was a 10 minute wait for a table!

        Looks as if the cafes in the cities will also be busy soon as UK heads into winter, and those “working” from home return to their offices-to keep warm! (Unless they live near a UK fracking site and get a nice chunk knocked off their energy bill and can afford then to “work” from home. An absolute bonus for certain estate agents.)

        • MARTIN ,

          If you live within the Toxic Fallout Zone of a Fracking site. You may be offered a maximum of 25% discount on your Gas bill .

          When taking in to account the drop in house values for the people living in these Fracking areas .

          How many years will they need to live before the savings made on a gas discount , balance the drop in value of their homes ????? 50 years ,100 years , 150 years ?????

          And will they still feel it’s worth it , if they are suffering with any of the known harmful effects of Fracking , like Cancer and Asthma ??????

          And will mothers with new born babies also think the 25% Gas discount is worth it if their babies are born with problems ???

          I THINK NOT

          • If you want to find babies with problems, Jack, then the DRC should be your focus. And cancer? Cobalt is a known carcinogen. Nuclear to back up unreliable renewables? Hmm, no issues there?!!!
            There is a lot more on offer apart from the 25%. It is not the maximum being discussed. But, just another sign of how numbers are the Achilles heel to the antis. It was always thus. Now, others will actually do the numbers for themselves.

            Estate agents? You mean those scrambling around to meet demand from buyers, with a 10% increase in UK property values just announced for the last 12 months? Goodness, if any estate agent can not sell a property with an in built energy discount attached, they really need to retrain.

            29% to 53% ,Jack. Seems something is happening to cause that sort of movement. Good luck with trying to arrest it. You will need it if you are so obvious in your approach to move away from the reality into your made up stuff.

            • SO MARTIN ,

              So let’s gets this right , you have great concern for children in far of places around the world , but ZERO CONCERN for children in the UK ..

              With such mixed messages , caring for some children, but not for others .. It’s smelling like we have a desperate investor here , frantically trying to talk up an industry to recover their losses.

              YES , there is a lot more on offer than the 25% with Fracking ……. On offer is the chance to greatly increase your risk of Cancer, Asthma , Birth Defects and to see your home plumit in value.

              Just for the laughter content …….. Are you trying to say that , in your opinion….. That just because nationally there has been a house price rise of 10% in the last 12 months ……You would also see price rises in Fracking areas , should Toxic Fracking be allowed in the UK ???????

              MARTIN , old chap , as far as house price values go , the EVIDENCE and estate agents say differently….. DO YOU want to see the evidence ?????

              As far as your comment on ” made up stuff ” it’s a bit rich coming from you , Mr OPINION Only…… You have never backed up a single comment you’ve made with any evidence , EVER .

              • The only thing smelling, Jack, is your inability to post without making things up! You have played the investor card previously. I am still not an investor in AJLucas, can’t be in INEOS, have been in IGAS but no longer (if I was I would be quite happy rather than desperate.)

                You do the same thing constantly. Can’t you find a narrative that avoids that? Doesn’t say much about your skills when you obviously can’t.

                What I am saying, Jack, is that the poll is showing locals opinion. You obviously don’t like that so try to fabricate something to shoot the messenger with. 29% then 53% and this winter? I can see why your lot are so concerned, but no one suggested you should not be, just realistic.

                Would house prices rise in fracking areas? Depends on the overall package, but I suspect they would. The full package Jack, not your incorrect and pruned one.

                Must away. Off with grandson again. Will be teaching him his green cross code today. So important when there are these silent killers on the road-EVs!

                • MARTIN ,

                  HOW about a little evidence MARTIN ??????

                  If your not willing to supply any evidence to back up your comments , the the readers must take note of the fact that what you say , is YOUR OPINION ONLY .

                  As far as Fracking goes , I say Fracking is a highly toxic, environmentally damaging, climate changing process, that is dangerous to human and animal health, that devalues homes in Fracking areas…….. It also leaves a costly, toxic legacy for future generations……. Now if theres ANYTHING you dispute in my above comments, please say.. I will be delighted to provide you with the evidence.

                • MARTIN ,

                  YOU SAY , quote , ” Must away. Off with grandson again. Will be teaching him his green cross code today. So important when there are these silent killers on the road-EVs! ”

                  What about also showing your Grandson a vehicle exhaust and explain to him how it is poisoning him and destroying the climate of the planet.

                • Why would I do that, Jack? [Edited by moderator] he can note his Dad driving off to work around 6.30am and returning at around 7pm each day to build new houses for all those searching for new houses whilst the prices carry on rising. Supply/demand/price equation Jack. I would have to explain that when he is older he will observe some who can not grasp that, but something he should learn at an early age to avoid much fake news. And all those houses with gas central heating-still. Maybe a solar panel or two for show, but the rest-gas.

                  I can also keep him away from cobalt, Jack, and explain how that could give him nasty diseases, and is doing so to other children.

                  I provided a little evidence Jack-29% to 53%. You were the one who wanted to ignore that and provide what instead? Your opinion! “I think not” was your opinion. Well, think away Jack, but that was the result. Evidence v opinion. Looks as if you have tried to reverse reality-again.

                • MARYIN

                  Of course he’s building new houses. The thing is MARTIN, just like everything else you say , it’ always backed up with sweet nothing…

                  Watch this space , next week if it fits your narrative , you or a member of your family will be astronauts.

                  MARTIN , How ever YOU try and spin it , house prices DROP in Fracking areas . Those are the facts

                  Also estate agents are saying that house prices will DROP in Fracking areas , Those are the facts

                • Proof Martin, PROOF MARTIN .

                  ANYONE living in close proximity to a proposed Fracking site who thinks Fracking is a great idea , is either void of a brain , or not aware of toxic and financial Implications….. BUT they will be made aware in due course.

                  Is this speculation MARTIN ??????

                  https://www.bizjournals.com/triangle/news/2015/12/15/duke-study-fracking-lowers-home-values-by-30.html#:~:text=Fracking%20can%20significantly%20decrease%20home,a%20mile%20of%20shale%20drilling.

  3. Nope, they are not facts, Jack. They are SPECULATION about the future. “Could” was a clue. The SPECULATION even took place before significant financial benefits were discussed.

    Meanwhile, those who may live within an area where fracking could take place have been asked for their input recently, and the majority supported fracking if it would provide significant discount to their energy bills. (And, that was before energy bills rose again.) What is hard to understand about that, Jack? Exactly the same applies with regard to wind turbines. Sweeten the deal sufficiently and locals might just embrace a concept. Landowners did, and then when expanded, many locals did. Not asking you to support that Jack, but then your comments are not relevant, or so I have been informed.

    So, there is Jack with historic SPECULATION that he quotes as fact. Whereas Martin takes a FACT from recent RESEARCH and puts it forward as what? Oh yes, a FACT.

    Desperate stuff from you again Jack, but you have played the same card so many times it is an obvious Joker.

    Backed up with nothing? 29% now 53%.

    Backed up with nothing? JacktheLad, you could make a start with a name! A real one, not one adopted from someone who was an icon for dishonesty.
    You will be pleased though that my grandson has been fully informed of why many farmers are not pleased to see those herbivores (pigeons) on their land, scoffing the wheat that would otherwise be available for his breakfast cereal. Chatted to him about it today as we watched the tractors (using red diesel) cultivating the fields to sow for next years harvest. Several more FACTS for you, Jack. Over the weekend I may even let him know why his Mum is having to spend so much on E10 petrol and yet get lower miles per liter, so can’t take him to the seaside as much as he would like, and why his eggs and soldiers are so expensive. But, managed to buy him a nice warm winter coat today, so he is prepared for the lack of heating. I will leave it until he is past the temper tantrum stage to let him know who to hold responsible.

  4. Nope, Jack. Because the link states COULD not WILL.

    Same trick attempted and same result, Jack.

    53% “one brick short of a full load”. Except Jack, if they look at your previous contributions to make themselves aware they might just observe the whole lorry load of your bricks scattered around, co-workers critical of your efforts and others who vanish when called upon for support.

    Insurance premiums? Think you will find Jack that no insurance company is too happy to insure properties that remain unheated over the winter! Equally, insurance is one of the first things to be sacrificed if cost of living/disposable income becomes a big issue. Another of your “don’t go there” car crashes. Goodness, the 53% is probably now a great deal higher if they have been made aware of your activities. Keep it going Jack and it will soon be unanimous!

      • No, no, Jack.

        Not according to those people I have already quoted living in US fracking areas and enjoying a bonanza.

        FACT.

        However, Jack, are you really suggesting that cheaper housing in UK where that housing would have an energy bill discount as well, would be unattractive to buyers? You really need to get some help in understanding the current UK housing market if you are, Jack! Sell like hot cakes, comes to mind, Jack. But, you always have had a blind spot to the old supply/demand/price equation. Good job UK estate agents do not.

        I noticed this week a plot of land available with permission to remove an existing shack and build a new (small) property. Price? £400k!(That was without the cost of the new build and the land clearance and landscaping.) Hmm. Wonder if there would be a larger queue of buyers if that £400k was reduced and reduced future energy bills included? Oh, the earth may shake a bit! Well, the plot is next to a busy road so it already does. Cancer risk? Well, the plot is pretty close to a row of pylons, so pay your money and make your choice-or, other way round. Having taken all that into consideration, do as your new neighbour did and plonk a load of solar panels on your roof-but, don’t ask him first as you may find his were just generating 33p worth of electricity per day and he was expecting enough to heat his swimming pool.

        Another of your buckets that seems to be full of holes, Jack. Perhaps find a better bucket? Plastic is pretty good.

        • MARTIN ,

          Oh dear , more OPINIONS from you backed up with the usual ZERO evidence.

          People in the USA , living in close proximity to Fracking sites are NOT enjoying the increased risks of Cancer , Asthma and parents to be are not enjoying the worry of their children being born with birth defects.

          Homeowners are not enjoying seeing their homes plumet in value and become difficult to insure and sell

          MARTIN do you dispute what I say ??????

          Please , please give JACK the opportunity to fill this page with factual evidence by saying you do dispute what I say ……. It will give JACK another golden opportunity to enlighten the readers as to the dangers of Fracking and also once again expose how your return posts are only ever OPINIONS.

          • HAHA MARTIN ,

            So you now know more than estate agents ???????

            GEEEEEE is there no limit to your knowledge ?????

            Supply evidence to your comments please , not just your OPINION

  5. Ermm, Jack, there is no fracking in UK, so no one has any idea what might happen to house prices if there was-including estate agents. No one knows what the upsides would be yet for those living in close proximity, and the downsides are not exactly defined, with most being taken from somewhere else in the world. With you desperately trying to avoid the very considerable upsides from there. Even with a broad brush of the upsides, 53% of those who might be living in close proximity seem to be quite happy about the prospect. And that is before the upsides may be multiplied. You want to paint them as idiots who don’t look at both aspects of the situation. Well, good luck with that.

    So, you have not been supplying evidence. There is none because nothing is happening-yet. So no evidence, just your lame attempt to put forward “evidence” that does not exist in respect of UK. Trust you never have a need to be in a UK Court Jack.

    • MARTIN ,

      The ” upsides ” of Fracking of Fracking in the UK , don’t make me laugh.

      Do you really think and increased risk of Cancer, Asthma and other life changing health problems will be a Unique Selling Point for homeowners in Fracking areas ????????

      Or maybe the beautiful features of a Fracking rig at the end of you garden will entice prospective house hunters

      Or maybe the increase in noise , light pollution or heavy vehicle movement will tempt potential buyers to rush to estate agents and snap up homes in Fracking areas.

      Please , say no more MARTIN , my sides are splitting with laughter .

      One thing we can be certain of , is the in the USA where Fracking is currently blighting communities , the value of homes has DROPPED and that’s a FACT .

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