There is “material uncertainty” over the finances of companies in the Cuadrilla oil and gas group, annual accounts have revealed.

All the companies in the group rely on their parent company, the Australian mining group, A J Lucas Group Limited (AJL).

Seven of the subsidiaries involved in oil and gas exploration reported they had “no sustainable income stream”.

These include Cuadrilla Bowland Limited, operator of the mothballed Preston New Road fracking site, near Blackpool. The accounts are likely to concern people opposed to shale gas site, who have previously questioned whether there would be enough money to decommission the site and restore it to farmland.

The two holding companies and the operator of the Elswick gas site said they had “only a modest sustainable income stream”.

All eleven companies said they were dependent on the financial support of AJL to continue to operate.

The accounts for the year to June 2024, published last week, said AJL had written a letter of support which indicated it intended to “provide the necessary financial assistance [to each of the Cuadrilla companies] to trade and meet its liabilities as they fall due”.

But the independent auditor, MHA, said the letter was “not a legally binding document, and therefore there is a material uncertainty as to whether the required financial support will be provided”.

AJL’s debt obligations are due to mature later in 2025. The auditor said this was also “a key factor in AJL’s ability to continue as a going concern”.

All the Cuadrilla accounts acknowledged these “material uncertainties that may cast doubt upon the Company’s ability to continue as a going concern”.

But each set of accounts said AJL’s considerations did “not have any impact” on the ability to provide financial support, as set out in the support letter.

The two holding companies (Cuadrilla Resources Limited and Cuadrilla Resources Holdings Limited) and Cuadrilla Bowland, Elswick and Elswick No 2 said they:

“continue to maintain a low-cost presence in the UK, with the objective of increasingly ‘self-funding’ that position through conventional gas production”.

This appears to refer, at least currently, to the Elswick site in Lancashire. This began exporting gas to the grid for the first time in September 2024, after a break of more than 11 years.

Elswick, in licence EXL269, is operated by Cuadrilla Elswick Limited, with a small interest from Cuadrilla Elswick (No 2) Limited. It is the only UK onshore site in which Cuadrilla has an interest that is producing oil or gas.

Cuadrilla’s only other interests are:  

• PEDL244: 56.25% interest held by Cuadrilla Balcombe Limited in West Sussex – currently involved in a legal action over a well test
• PEDL165: 51.25% interest held by Cuadrilla Bowland Limited – mothballed shale gas site at Preston New Road in Lancashire, currently in breach of planning permission and an order from the industry regulator to plug and abandon the wells
• PEDL347 and PL081: 25% interest held by Cuadrilla North Cleveland Limited – licences extended to July 2027, agreement with Egdon Resources to explore for gas in the Weaverthorpe prospect

The accounts show that three Cuadrilla companies no longer hold any licences to explore or produce onshore oil or gas:

• Cuadrilla South Cleveland relinquished PEDL287 and PEDL342 after a technical review in July 2023 and was refused extensions to PEDLs 288 and 346
• Cuadrilla Gainsborough was refused an extension to PEDL276
• Cuadrilla Weald relinquished its interest in EXL189 after it expired in 2020

Liabilities and amounts owing

Cuadrilla companies have net liabilities (total liabilities minus total assets) totalling more than £200m.

The individual companies with the highest net liabilities for the year ending June 2024 were: Cuadrilla Resources Limited (£110,759,000), Cuadrilla Bowland (£44,570,000) and Cuadrilla Well Services Limited (£36,235,000).

The subsidiary companies (excluding Cuadrilla Resources Limited and Cuadrilla Resources Holdings Limited) collectively owe their immediate parent companies more than £100m.

Profit, loss and cash

Three Cuadrilla companies recorded a loss for the year:

• Cuadrilla Elswick £492,000
• Cuadrilla Bowland £71,000
• Cuadrilla Weald £69,000

Five companies recorded a profit:

• Cuadrilla Resources Limited £83,000
• Cuadrilla South Cleveland £41,000
• Cuadrilla North Cleveland £33,000
• Cuadrilla Gainsborough £19,000
• Cuadrilla Balcombe Limited £12,000

Accounts for Cuadrilla Resources Holdings Limited and Cuadrilla Wells Services reported they “made neither a profit nor a loss in the year”. Cuadrilla Elswick Limited declared no income or expenses.

Most of the companies saw smaller losses or a move from a loss to a profit in 2024, compared with 2023.

This may be explained by the decision by AJL in 2023 to impair (permanent reduction of) the value of the onshore shale gas exploration assets. As a result, in the 2024 accounts, Cuadrilla fully impaired all related party intercompany receivables (amounts owed to a company by another in the same group for services or loans).

The accounts reported that just three companies reported they had cash at the end of the year: Cuadrilla Resources Limited £334,000, Cuadrilla Elswick Limited £152,000 and Cuadrilla Bowland Limited £6,000.

The remaining six companies (Cuadrilla Resources Holdings, Balcombe, Weald, Elswick No.2, Gainsborough, North Cleveland, South Cleveland and Well Services) reported no cash at the start or end of the year.

Tax losses

Four Cuadrilla companies (Cuadrilla Resources, Cuadrilla Resources Holdings, Cuadrilla Elswick and Cuadrilla Well Services) reported accumulated tax losses totalling more than £34m, that could be used to offset future taxable income.

Another six companies (Cuadrilla Bowland, Balcombe,, Gainsborough, North Cleveland and South Cleveland and Weald) reported accumulated pre-trading expenses totalling more than £8m, that could also be used to offset future taxable income.

Staff

Staff are employed by Cuadrilla Resources Limited. The company reported it had two members of staff in the year to June 2024.

Wages and salaries for the year totalled £377,000 and incentives accrued were £168,999, up from zero in 2023. The total paid to the highest paid director was £429,000 (up from £282,000 in 2023).

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