Goodman Trust investment Shalco was to invest $85m in shale-drilling project

The

Goodman Family Trust

has an investment in a UK-registered company that was to put $85 million (

61.6 million at the time) in a shale-drilling venture in Oklahoma.

Shalco Energy Ltd, with an address in London, England, was set up to take part in a joint venture with West Star Exploration and Production Company, of Cleveland County, Oklahoma.

Shalco, by way of a Delaware subsidiary, was to invest $85 million in a project, the Oak Tree Project, that involved drilling more than 40 wells in certain lands in Oklahoma.

However, it went to court in the US in 2012 alleging that the cost of the planned wells was hugely understated by West Star and that it would not have become involved in the project if it had known “that the initial budget was so grossly overstated”.

20 wells

It told the court that given how matters were unfolding, it was more likely the $85 million investment would only fund 20 wells.

It sought $40 million in damages and unspecified punitive damages also.

West Star denied the allegations and entered a counterclaim. It said it had never guaranteed the costs of the project, which are affected by market conditions.

It said it was approached by Shalco which wanted to buy into the project, but that at a later date Shalco experienced difficulty in getting funding from its investors. It said it was seeking more than $5 million in damages, as well as costs.

No trial

The matter never went to trial and each side agreed to pay its own costs, publicly available documents in the US show.

Accounts for Shalco Energy Ltd for the year to the end of January, 2014, show that it booked a loss of £2.1 million in that year, having booked a loss of £20.1 million the previous year.

Notes to the accounts said it had sold certain oil and gas interests, for cash and shares, in 2013, thereby bringing to an end its involvement in the joint venture with West Star.

Early last year it entered into an agreement with Silver Creek Oil & Gas LLC in relation to planned drilling for hydrocarbons in Oklahoma.

In the US court case it was stated that Shalco had its place of business in Dublin, Ireland and the accounts indicate that the company is tax resident here.

Smurfit investments

The shareholders include director Seán Mooney, a former partner with

KPMG

, Dublin (auditors of the Shalco accounts), Kavast Ltd, a company with an address in Shropshire, England, and Bacchantes, a company in the Isle of Man that has made investments on behalf of businessman

Michael Smurfit

.

The accounts for Kavast state that it is primarily involved in chartered aviation and that in June 2013 it concluded the sale of its aircraft.

A loan of £1.4 million due to Co Louth company Ven Air was forgiven by the latter company, according to the accounts, and Ven Air was paid a further £1.5 million that it was owed.

While Ven Air was the company’s immediate parent, its ultimate parent was the Goodman Family Trust, according to the accounts. The accounts do not say in what jurisdiction the trust is located.

Efforts to contact West Star Exploration and Production were unsuccessful. Shalco Energy did not comment.