The company which drilled and fracked two gas wells in Lancashire has reported a huge £38.6m loss in its annual financial results.
The losses made by Cuadrilla Resources, which has subsidiaries including Bamber Bridge-based Cuadrilla Bowland Ltd, were attributed in the report to loans to other companies in the AJ Lucas group. They dwarf the losses reported in 2018 of £99,000 as the firm invested heavily in drilling and testing before operations were suspended indefinitely at the end of 2019.
The firm, which was aiming to develop fracking gas fields across the county, said that it and other fracking companies had been working with the Government to address concerns caused by repeated earth tremors generated by fracking operations, but had not yet come up with a solution which would enable the lifting of the moratorium imposed on fracking in the UK.
Fracking was effectively halted in November 2019 by the Government, after a series of tremors in August when Cuadrilla was fracking at the Preston New Road site near Little Plumpton. The largest tremor, at 2.9ML was felt by many households across the Fylde coast and led to people claiming damages to their property. Work at the site was suspended and only gas flow-rate tests were made there afterwards.
Earlier this month, a study by Manchester University found that 4.9 tonnes of methane was leaked from the drill site in January 2019 – equivalent to the environmental damage that 142 trans-Atlantic flights cost – adding to environmentalists warnings that fracking would damage the environment.
Cuadrilla Resources, which is owned by Australian mining corporation AJ Lucas, said in the report for the year ending December 31, that significant progress had been made during that year at Preston New Road and that high quality natural gas had been discovered. It said both of the horizontally drilled wells had been “partially fractured” but work had been halted early due to the reports of induced seismic activity caused by the fracking.
But it said that “the very low regulatory thresholds” on induced tremors applied to fracking in the UK meant that it would be a “significant challenge “ to further fracking. It added: “As such, it is not possible to say when exactly a solution that meets UK regulatory expectations may be arrived at.”
The firm pointed out that the UK imports around half of its gas usage and that was likely to rise as North Sea gas reservoirs were used up. The report stated that Cuadrilla Resources had significantly reduced its operating costs and “while largely non-operational, has retained its extensive technical data base” so that it could be ready to resume activity if regulations allowed. It added that despite the £38m losses and £45m in net liabilities, mainly to other companies in the group, AJ Lucas confirmed support for the next 12 months. But it said: “The directors of the company acknowledge that there are material uncertainties that may cast significant doubt upon the company’s ability to continue as a going concern.”
Cuadrilla Bowland Ltd, which has a 51 per cent share in the gas licence for the Bowland Shale area which covers west and central Lancashire, reported a loss of £2.5m, as compared to a profit of £3.2m in 2018. Cuadrilla stated that the loss was related to the accounting treatment of an inter-company loan between two Cuadrilla corporate entities.