Texan oil firm investment loses council £7m

Warrington Council lost about £7m on its investment in a Texas oil firm

An ill-fated investment in a Texan oil company has lost a council more than £7m.

Warrington Borough Council pumped up to £10m into the firm in 2020.

But the company, Technology Enhanced Operations (TEO) Ltd, faced "headwinds" and reported losses of $11m (£8.1m) and $8m (£5.9m) in the following years.

Denis Matthews, the council's cabinet member for finance, said the authority would not make any attempt to "try to spin" the loss, adding it had been a "very small part of the overall investment portfolio".

TEO specialised in using new technologies to maximise gas and coal extraction, and has wells across the southern US state.

But in 2022, it saw production drop by 18% and, last year, announced it was planning to "dispose of its oil and gas properties".

'Disappointed'

At a full council meeting on Wednesday, Liberal Democrat councillor Luke Stuttard asked: "Following the confirmed £7.3m loss from the council's investment in Technology Enhanced Operations - formerly known as Technology Enhanced Oil - and despite receiving £1.8m in dividends and £232,000 from the sale, can the cabinet member clarify what due diligence was undertaken before the investment?"

He added: "And what lessons have been learned, and what safeguards are now in place to prevent similar financial risks in the future?"

Finance chief Matthews said all required due diligence had been done before the investment was made.

He added the council had now sold its stake in the company.

"However, if in future the assets are sold on at a profit by the owners, the council would receive further income," he said.

"While I'm sure members are disappointed that this particular investment did not perform as well as had been expected, this formed a very small part of the overall investment portfolio."

In 2024, global credit ratings agency Moody's pulled its rating of Warrington Council over its £1.bn debt.

In 2023, local government minister Lee Rowley warned the council over its financial management, highlighting its "uniquely complex" investment portfolio.

• Additional reporting by the Local Democracy Reporting Service