Ex BP head Lord Browne now works in the Cabinet Office. A company controlled by the peer has recently bailed out troubled fracker Cuadrilla
Is Cuadrilla Resources – the UK’s first fracking company – running short of ready cash? A report by part-owner AJ Lucas shows Cuadrilla has spent $88m on developing its sites in Lancashire and Sussex (p 187). This is $5m more than the company raised in 2010, when Riverstone (chaired by Cabinet Office executive Lord Browne), Australian miner AJ Lucas and management stumped up to buy $83m of shares.
The company has now spent all that cash. This implies that Lord Browne has recently bought more stock in the fracker to keep it afloat. Indeed, Riverstone has a commitment to do just that, up to a maximum of $21m.
Fellow part-owner AJ Lucas has a similar commitment, this time to the tune of $11m (see link above). However, the Australian company is undergoing financial difficulties of its own, concentrating its efforts on paying a bill from the Australian tax authority. As such its currently unable to honour its promises.
The fracker is also holding talks with other investors to raise more money. The company has appointed advisors and consultants “to assist in the formulation of a conceptual development plan, to advise on the options available to Cuadrilla and to hold discussions with potentially interested parties” – see p50 here.
While this is standard practice in the industry, it stands in stark contrast to assurances made to Balcombe residents that Cuadrilla would develop the Sussex site, not some new – and unknown – entity.
By July 2011 Cuadrilla had spent $60m. Between July and December the fracker added a further $17m to its cost base; this year $10m further has been added. With an average well expected to cost around $10m and no wells anywhere near production, Cuadrilla is finding fracking in the UK much more expensive than it anticipated.
