The only company to frack horizontal shale gas wells onshore in the UK has cut the value of its exploration assets.

Annual accounts for seven Cuadrilla companies each announced impairments of up to £127m.

The impairments, reflecting falls in the value of Cuadrilla’s oil and gas licences, led to annual losses for all the affected companies.

Cuadrilla blamed Rishi Sunak’s reinstatement of the moratorium on high volume fracking in England in October 2022.

Cuadrilla Bowland Limited, the subsidiary which operates the now mothballed Preston New Road fracking site in Lancashire, saw an impairment of £46.1m. It reported a loss for the year to June 2023 of £46.3m, compared with a loss of £147,000 in 2022.

Its immediate parent company, Cuadrilla Resources Limited, announced a £64.2m impairment and an annual loss of £64.3m. In 2022, the company made a loss of £127,000.

The group’s holding company, Cuadrilla Resources Holdings Limited, had the largest impairment of £127.91m. It reported a loss of £127.92m, compared with a loss of £7,000 in 2022.

Cuadrilla Balcombe Limited, which drilled an oil well at Balcombe in West Sussex in 2013, saw an impairment of more than £4.6m. Its annual loss, as a result, was £4.68m, compared with no profit or loss in 2022.

The other companies with impairments were: Cuadrilla Elswick Limited, Cuadrilla Elswick (no 2) Limited, and Cuadrilla Weald Limited.

The annual reports for all seven companies said the ultimate owner, the Australian mining group, A J Lucas, had carried out a review of the carrying value of its investment in exploration assets.

It said this followed:

“the decision to lift and reimpose the moratorium within a five-week period, the ongoing political churn and policy changes experienced in the UK and the lack of discernible political will within the governing Conservative Party to progress onshore shale gas exploration for the foreseeable future.”

The reports said:

“Following the review, AJL [A J Lucas] concluded that it is appropriate to recognise a non-cash impairment expense against the carrying value of its onshore shale gas exploration assets to comply with relevant applicable accounting standards.”

Going concerns

A total of eleven Cuadrilla companies issued accounts for the year ending June 2023.

The directors concluded that all were going concerns, even though all but one made a loss and had net liabilities.

A J Lucas had said it would “provide the necessary financial support to enable the Company to trade and meet its liabilities” for 12 months from the date the accounts were approved.

The liabilities ranged from £135,000 for Cuadrilla Gainsborough, to £110.2m for Cuadrilla Resources Limited.

Cuadrilla Bowland reported net liabilities of £44.5m in 2023, compared with net assets of £1.8m in 2022.

Cuadrilla Balcombe had net assets of £453,000 in 2022 but net liabilities of £4.2m in 2023.

Cuadrilla Resources Limited saw its net liabilities more than double from £45.9m in 2022.  

Seven Cuadrilla companies reported accumulated tax losses totalling more than £53m. These are available to offset against future taxable income.

Another four companies reported accumulated pre-trading expenses totalling more than £1.5m, also available for offset against future taxable income.

Cuadrilla Resources Limited, the only company to have employees, reported staff costs of £401,000 for two people. It said the highest paid director received £282,000.

Licence and site news

The accounts also gave details of changes to licences and sites:

Preston New Road The accounts reported that the industry regulator, the North Sea Transition Authority (NSTA) had ordered Cuadrilla Bowland to plug and abandon its Preston New Road wells by 31 December 2024. Lancashire County Council has required the site to be restored to farmland by June 2025.

Elswick NSTA ordered Cuadrilla Elswick to plug and abandon the Elwick gas well in Lancashire by the end of 2024.

Balcombe A ruling is awaited on an application by Frack Free Residents’ Association to appeal against the High Court judgement upholding planning permission for a well test

PEDL276 NSTA granted a one-year licence extension to July 2024

PEDL287 Cuadrilla South Cleveland Limited relinquished PEDL287 at the end of the initial term.

PEDL288 NSTA approved a one-year extension for PEDL288 until July 2024.

PEDL290 Cuadrilla North Cleveland Limited relinquished PEDL290 at end of licence initial term.

PEDL333 NSTA approved a one-year licence term extension to July 2024 for PEDL333, held by Cuadrilla North Cleveland

PEDL342 Cuadrilla South Cleveland Limited relinquished PEDL342 at the end of the initial term.

PEDL346 NSTA approved a one-year extension for PEDL346, held by Cuadrilla South Cleveland Limited, until July 2024.

PEDL347 NSTA approved a one-year licence term extension to July 2024 for PEDL347, held by Cuadrilla North Cleveland. Cuadrilla has agreed with Egdon Resources and York Energy to give up operation of the licence and reduce its stake from 100% to 25%

PL081 In a deal with Egdon Resources and York Energy, Cuadrilla North Cleveland acquired a 25% stake in PL081. NSTA approved a term extension for the licence until July 2024.

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