Home Commodities Odey ups the ante on fracking after UK government lifts ban

Odey ups the ante on fracking after UK government lifts ban

by SuperiorInvest

Odey Asset Management and a number of top funds committed to reducing greenhouse gas emissions have invested in British fracking company IGas Energy as they capitalize on the UK government’s decision to lift a ban on the controversial process.

based in London Odeswhose founder Crispin Odey has previously appeared skeptical of the mining method, which has been accused of increasing emissions, is rapidly increasing its stake in the AIM-listed offshore oil and gas company with significant shale interests.

The hedge fund has increased its position in IGas since at least early August, from less than 3% of the disclosure threshold to just over 7% by mid-September, according to the filing. The share is held in the Odey Special Situations fund, which is managed by fund manager Adrian Courtenay.

Other investors holding stakes in the company include Royal London Asset Management, which said in April: “Reopening focus on North Sea oil supply and gas fracking does not alleviate short-term supply shortages and does not fit into the government’s net zero. Targets.” The British government wants to reduce net carbon emissions to zero by 2050.

The University of East Anglia, which claims to be a “pioneer” in climate change research and is getting £8m to launch a climate change action plan, has a small stake in IGas. Australian fund manager Pendal Group, which won an award for sustainable and responsible investments last year, also has its stake.

IGas shares have soared as much as 700 percent this year and remain around 300 percent as expectations grew of a UK government policy shift towards fracking, which involves pumping water, sand and chemicals under high pressure to release gas. rock formations.

In early September, Prime Minister Liz Truss said the government would do just that repeal the ban on fracking as a way to increase the UK’s domestic energy supply and ultimately help reduce skyrocketing energy bills.

However, the process is highly controversial, not only because it produces fossil fuel, but also because of the risk of methane leakage and seismic activity. But business secretary Jacob Rees-Mogg said last month he opposed shale gas extraction “pure Luddites”.

The build-up in Odey Asset Management’s shares comes after Odey’s founder said in 2019 that “the world will begin to see the effects of years of resource depletion on the cheap – the latest example being fracking” in an investor letter seen by the Financial Times.

Odey Asset Management declined to comment.

Odey himself has previously donated £22,000 to the Conservative Party in Rees-Mogg’s North East Somerset constituency, while Chancellor Kwasi Kwarteng once worked as an adviser to Odey.

The University of East Anglia said it held shares in IGas through the Low Carbon Innovation Fund, a venture capital fund that is part-funded by the EU. In 2013, the fund bought a stake in a geothermal company, which was then acquired by IGas in 2020. The acquisition was made by transferring shares of the IGas fund.

“We never intended to own IGas shares, it wasn’t something we made a conscious decision to do,” said Saffron Myhill, the university’s innovation funding manager. “We have no interest in continuing to own IGas shares,” she added.

Myhill said the university was subject to a moratorium on stock sales, but declined to say whether it had expired.

Royal London, which has pledged to halve the carbon emissions of its investment holdings by 2030, said the “holding [in IGas] results from the equalization of the holding of debt in the company a number of years ago”.

“The focus and cash flow of the business from our perspective was on UK offshore oil production rather than the fracking prospect,” he said. “Recently, the company has developed potential in carbon storage and ground heating.”

Pendal, which owns fund company JO Hambro Capital Management in the UK, did not respond to a request for comment.

laurence.fletcher@ft.com

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