The founder of an island-based energy firm behind plans to extract gas from the Manx seabed has given evidence at his employment tribunal claim against the company.

Former Crogga chief executive officer Diccen Sargent was chief executive officer and director of Crogga Ltd since its formation in 2016 until he resigned in February 2022 amid concerns that the company was becoming insolvent.

He is making a claim for unlawful deduction of pay against holding company Crogga Energy Ltd and its subsidiary Crogga Operations Ltd.

Crogga Operations was placed into voluntary liquidation following a creditors’ meeting in February this year.

The tribunal got under way at Murray House on Tuesday and is expected to last two days.

It heard that Mr Sargent had been involved with Crogga from the outset, as director and shareholder. Crogga Ltd had been awarded a production licence in relation to a gas field located in Manx waters off the coast of Maughold.

In March 2020, Crogga Ltd was restructured, with a holding company Crogga Energy created and Crogga Operations and Crogga Ltd as its subsidiaries.

Mr Sargent’s contract of employment was transferred in December that year from Crogga Energy to Crogga Operations.

It was put to him by the respondents’ advocate Keira Gore that his employment with Crogga Energy had ended at that point.

But he insisted the transfer was done for ‘purely administrative purposes’ to facilitate a deal with an investment company and to maximise the return for shareholders

He told the hearing: ‘I’m not a lawyer. My job is making holes and drilling wells. While the paperwork was transferred to Crogga Operations, nothing changed in what I did. I was CEO of the entire organisation. Crogga Energy was my job.’

He added: ‘Ironically, I was never paid by Crogga Operations.’

The tribunal heard the Crogga had ended up in ‘significant financial distress’, with its finance director warning it would run out of money by the end of 2020.

The tribunal heard that one funding round for a seismic survey had raised £2.3m but that still left £10m to find.

Given the financial situation, the executive directors agreed to defer some and then all of their fees and salaries, with an uplift of 15% upon payment, pending the completion of the group’s next funding round.

Some £11,000 of the complainant’s salary had been deferred in respect of Crogga Energy to the end of 2020 and then deferrals of his full salary of £8,000 a month became the liability of Crogga Operations.

Mr Sargent accepted he would have become a wealthy man if Crogga had succeeded in drilling for gas, but that his personal motivation for keeping the company alive was not his shareholding but ‘because so many people I knew had put money into it’ and he had wanted it to work for the benefit of the Isle of Man.

Mr Sergent told the tribunal that the plans of Crogga’s current board were ‘completely crackers’.

At the beginning of this month, Crogga was granted a further short extension to its licence. It wants to drill an exploratory well based on a 2D survey rather than a 3D one as currently stipulated.

Crogga estimates sales of 660 billion cubic feet of natural gas from the Crogga field off the coast of Maughold over the 19-year life of the field. It says this could generate £2.8bn in revenues and royalties for the Treasury and create net income of £2.5bn for Crogga shareholders.

In a corporate profile sent to MHKs this week, Crogga Energy said it had a total of 73 Manx resident shareholders and a recent rights issue raised £1m. It said none of the current directors are being paid in any form.