Third Energy’s poor financial status continues after company declares huge loss in latest accounts

A fantastic report published by Drill or Drop on the 23/02/17  has revealed, Third Energy UK Gas Limited – the company behind fracking plans at Kirby Misperton in North Yorkshire – made a loss of £3.854m in 2015.

Full text shown below (photos added by FFNY);

It owed more than £50m to parent and sister companies and turnover was less than half that of the previous year.

The figures, released yesterday by Companies House, cover the 12 months to December 2015. They were filed on 13 February 2017, more than four months after the due date. In December 2016, Third Energy was warned it risked being struck off the companies’ register if it did not file its accounts by 6 February 2017.

Details

According to the accounts, Third Energy’s loss in 2015 was smaller than in 2014, when the company lost £4.416m.

But turnover in 2015, at £428,000, was less than half that of £2014 (£897,000). From the accounts, this appears to be because of lower sales of gas to a sister company and a fall in recharges to development partners.

Net current liabilities for 2015, totalling £50.019m, were up from £44.2m in 2014. This included payments to parent and sister companies. The directors of these companies confirmed they did not intend to seek repayment within 12 months.

The accounts said:

“The directors have placed their usual reliance on the confirmation of the holding company and fellow subsidiary companies that they will not seek repayment of these amounts totalling £50,871,000 in reaching their opinion that the company can continue as a going concern.

“As with any company placing reliance on another group company for financial support, the directors acknowledge that there can be no certainty that this support will continue although at the date of approval of these financial statements they have no reason to believe that it will not do so.”

Halliburton contract

The accounts confirmed that Third Energy had a contract with the leading US company, Halliburton Manufacturing and Services Ltd. This is described as “for the provision of services to support its onshore development activities”.

The accounts said: “As a result of this agreement, Halliburton may receive additional payments at a future date if these activities are successful.”

Tax asset

The accounts said Third Energy UK Gas Limited had a potential deferred tax asset of £39.5m at 31 December 2015. But they added: “It is not certain the company will have sufficient taxable profits for the losses to be utilised in the foreseeable future”.

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Key figures

Loss: £3,854,000 (2014: £4,416,000)

Turnover: £428,000 (2014: £897,000)

Net current liabilities: £50.019m (2014: £44.270m)

Amount owed to Third Energy Holdings Limited: £44.475m (2014: £40.667m)

Amount owed to fellow subsidiary companies: £6.396m (2014: 5.147m)

Sales of gas to fellow subsidiary: £399,000 (2014: £667,000)

Recharges to development partners: £29,000 (2014: £230,000)

Staff costs: £624,000 (2014: £593,000)

Staff numbers: Constant at 18 (4 management/administration and 14 technical/operational)

Current assets: £1.735m (2014: £1.784m)

Operating lease commitments on land and buildings: £330,000 (2014: £368,000)

Company structure

Third Energy UK Gas Ltd is one of five companies in the Third Energy Group.

The immediate parent company is Third Energy Onshore Limited. This company, who’s accounts were also released yesterday, has net current assets of £262,000 in 2015.

The ultimate parent company is Third Energy Holdings Ltd, based in the Cayman Islands.

The accounts stated: “In the opinion of the Directors, the ultimate parent company of Third Energy Holdings Limited is Barclays PLC.”

Third Energy Holdings Limited registration certificate from the Cayman Islands
Third Energy Holdings Limited registration certificate from the Cayman Islands

Links

Companies House information on Third Energy UK Gas Ltd

Third Energy UK Gas Ltd accounts to 31 Dec 2015 (pdf)

Companies House Information on Third Energy Onshore Ltd

Third Energy Onshore Ltd accounts to 31 Dec 2015 (pdf)

end of report by drill or drop

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Frack Free North Yorkshire also reported on Third Energy’s unusual company structure and financial position in 2016. see link here

full copy of the FFNY report is shown below;

Investigation reveals Yorkshire Fracking firm Third Energy’s links to infamous offshore tax haven

 

The Panama papers  revelations exposed in the National press in recent weeks have helped to shine a light into the murky world of offshore tax havens where an estimated £8 trillion of wealth is kept in offshore bank accounts, and denying countries like the UK from collecting their fair share in tax revenues which are needed to maintain our vital public services such as the NHS, schools and our emergency services.

An investigation, carried out by Frack Free North Yorkshire, can reveal that Third Energy (the company that have submitted a planning application to frack at Kirby Misperton in Ryedale) also makes use of these types of off-shore tax havens where their holding company ‘Third Energy Holdings Limited’ has been  based in the Cayman islands since 2011 in a building once described by USA President Barak Obama as “either the biggest building in the world or the biggest tax scam in the world”

Third Energy Holdings Limited registration certificate from the Cayman Islands
Third Energy Holdings Limited registration certificate from the Cayman Islands

 

How is Third Energy structured?

Third Energy is managed principally by three directors; John Dewer the operations director, David Robottom the financial director and Rasik Valand the CEO. The trio are currently directors of 27 companies in the UK and In the past were also directors at 12 companies that are now dissolved or they have resigned. The overall company is rumoured to be 97% owned by Barclays Plc.

The company that has applied to frack at Kirby Misperton is called Third Energy UK gas Ltd they are based at Knapton in North Yorkshire and are wholly owned by a company called Third Energy Onshore Ltd also based at Knapton, however this company is wholly owned by Third Energy Holdings Ltd who are based in the Cayman Islands.

Similarly  the trio of Dewer, Robottom and Valand are also directors of Third Energy Offshore, Third Energy Services, Third Energy Limited, Third Energy Petroleum ltd, Third Energy Oil and Gas ltd, Exploration and production ltd, Third Energy gas Ltd and Third Energy Ebt trustee Limtied. These companies are based in the UK however they are all wholly owned by the Cayman Island based Third Energy Holdings (See chart below)

Third Energy company structure
Third Energy company structure chart
Third Energy company structure chart

 

Who are Third Energy Holdings Limited?

Very little information is available as to who owns Third Energy Holdings Limited. What we do know is that the registered address is Ugland House on South Church Street, George Town and that the ultimate parent company is likely to be Barclays Plc.

Ugland House is a building located in George Town, Cayman Islands. Located on South Church Street, the building is the registered office address for 18,857 entities, including many major investment funds, international joint ventures and capital market issuers. During his first presidential campaign, U.S. President Barack Obama referred to Ugland House, raising questions over the number of companies with a registered office in the building

“That’s either the biggest building in the world or the biggest tax scam in the world,” President Obama (2009)

Ugland House, George Town, Cayman Islands - Home to 19,000 companies including Third Energy Holdings
Ugland House, George Town, Cayman Islands – Home to 19,000 companies including Third Energy Holdings

 

This short film explains why Ugland House has caused so much controversy;

Third Energy UK Gas Limited’s tax record and financial position in the UK

Before Third Energy UK Gas ltd are allowed to commence with fracking in North Yorkshire one of the hurdles  they need to overcome is the financial checks required by the Department of Energy & Climate Change (DECC).

Frack Free North Yorkshire have written to DECC to ask for clarification on the types of financial assessments conducted and the level of financial bonds held by DECC should the fracking firm go into administration. we received the following response from DECC;

“DECC  conducted a financial assessment of this company in November 2014 which was in accordance with DECC published financial guidance. The financial assessment was based on published accounts supplemented by management accounts and financial forecasts.”

“We can confirm that the Department holds a parent company guarantee which was issued to Third Energy UK Gas Ltd. by Third Energy Holdings Ltd. The parent company guarantee was not issued directly through the ultimate parent company, Barclays.”

Furthermore DECC confirmed in January 2016

“There are no financial bonds in place”

Frack Free North Yorkshire have also written to DECC to confirm that the Tax payer will not be liable for any decommissioning costs, clean up costs or legacy costs should Third Energy’s holding company go into liquidation. As of the 15/04/16 DECC have failed to provide an answer.

Frack Free North Yorkshire have also reviewed the company credit report generated for Third Energy UK Gas Ltd. The data contained within the report seems to suggest that Third Energy UG Gas Ltd have paid no corporation tax in the UK for past 5 years despite a turnover in the same period of £7.5million. Third Energy UK Gas Ltd made a loss of £4.4million in 2014/15. (link to full report here – THIRD ENERGY UK GAS LIMITED (01421481) – Credit Report – 18 February 2016

 

corp tax
Third Energy UK gas Ltd Corporation tax summary

 

endole cover
Endole Cover sheet to the Third Energy UK Gas Ltd credit report.

 

profit and loss
Third Energy UK gas ltd summary or Turnover and Proift/Loss in the past 5 years

 

Frack Free North Yorkshire are not suggesting that Third Energy have broken any laws, however considering Third energy have never drilled for oil and gas in the Cayman Islands and all of the Third Energy directors are based in the UK the current business structure does warrant further explanations. We therefore kindly request that Third Energy answer the following questions;

1 – Why are Third Energy based in the Cayman Islands?

2 – How does this link back to Third Energy’s ultimate owners Barclays bank who also have business registered at the same address in the Cayman islands?

3 – Are Third Energy avoiding paying corporation tax in the UK by basing their holding company offshore?

4 – Can Third Energy confirm who becomes liable for the clean up costs in Yorkshire should ‘Third Energy Holdings Ltd’ go into liquidation?

Frack Free North Yorkshire look forward to receiving a response from Third Energy.