Cuadrilla: "Until then, it's merely a geological phenomenon"
The Australian features an article on AJ Lucas, the financially troubled engineering, building and services company,.
AJ Lucas is a leading shareholder in Cuadrilla Resources, holding a 41 percent in the UK based shale gas explorer that recently reported an estimated 200 trillion cubic feet of gas in place on its permit in the Bowland shale. Lucas also owns a direct 25 per cent interest in the Bowland project.
The shares of Lucas have been suspended from trading on the Australian Stock Exchange since May, as the company has worked on plans that would address repayment of $26m in senior debt held by ANZ and the buy-back of $44.5m of redeemable convertible preference shares (RCPS) controlled by Goldman Sachs.
Last month Lucas announced that it was raising $13.4m through a placement to Hong Kong based private equity firm Kerogen Capital, and a further $30m to $35m via an underwritten non-renounceable rights issue.
Kerogen, set up by former JP Morgan bankers Ivor Orchard and Jason Cheng, also agreed to provide a $66.5m mezzanine loan facility in exchange for options in AJ Lucas that may further increase its stake in the Australian company.
The fund raising was critical to Lucas’s stakeholdings in Cuadrilla, allowing to meet equity subscription commitments to maintain its pro-rata holdings.
Allan Campbell, chairman and chief executive of AJ Lucas, founded Cuadrilla in 2007 with Denver-based geology professor Chris Cornelius.
Mr. Campbell told The Australian the company's shale exploration expertise had come from Lucas's contract drilling background, but there had been "no contest" between Europe and Australia as a drilling target.
"Gas in Australia's worth around $3 a gigajoule and there's enough under Australia to keep us going for hundreds of years," he said. "In Europe it's around $10 and there's huge demand and existing infrastructure."
He said that while the risk in the oil business was in exploration, the risk in unconventional gas was mainly political.
"There's a great deal more work to be done, and many millions of dollars to be spent, before we can call it commercial," he said. "Until then, it's merely a geological phenomenon."
The Guardian newspaper linked the re-capitalization plans to a possible Chinese bid for Cuadrilla., citing strong ties between China National Offshore Oil Corporation (CNOOC) and Kerogen that may place the shale gas explorer next in a line of natural gas companies sought by China.
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