Star Energy today announced its unaudited interim results for the six months to 30 June 2023.

Commenting today Chris Hopkinson, Chief Executive Officer, said:
"We have delivered a strong operating performance in the first half with average net production of 2,071 boepd compared to 1,865 in 2022.  We are working hard to reduce our operating costs where possible, in the face of general cost inflation and ever-increasing regulatory overburden.

Maximising returns from our conventional oil and gas business remains a key focus for us, given its free cash generation, particularly with improving commodity prices.  That, coupled with decades of experience of sub-surface analysis, onshore drilling, well management and environmental control from our portfolio will play a key role in our geothermal development.

The global potential for geothermal, as a zero carbon source of energy, is clear.

In the UK we are building a material pipeline of business opportunities in both the private and public sector.  The recently released Government commissioned white paper, produced by the British Geological Survey (BGS) and ARUP, highlights the significant opportunity that exists to decarbonise the NHS estate and we have already won tenders for two NHS Trusts in Manchester and Salisbury.

The recent acquisition in Croatia represents a significant opportunity to accelerate our development and enables us to diversify into geothermal electricity generation. The Croatian Government is highly supportive and the electricity market is liberalised and well established offering an attractive market premium (CfD) for a 12 year period.

This is an important next step in our strategy to transition, over time, into a significant player in the geothermal market and to deliver future value for our shareholders."

Corporate & Financial Summary

• Company rebranding complete.
• Strategic acquisition of Croatian geothermal development business
• Geological characteristics are well suited for electricity generation with a geothermal gradient proven to be 60% higher than the European average and electricity can be sold bi-laterally throughout the EU.
• Consistently strong production in H1 2023 offset by lower commodity prices compared to H1 2022. Brent prices averaged $79.8/bbl in H1 2023 compared to $107.6/bbl in H1 2022.
• Cash balances as at 30 June 2023 were £1.5 million (31 December 2022: £3.1 million) with net debt of £4.0 million (31 December 2022: £6.1 million). We had headroom of US$4.7 million (£3.7 million) under our RBL as at 31 August 2023.
• Operating cash flow before working capital movements and realised hedges in H1 2023 of £8.5 million (H1 2022: £16.4 million).
• £4.4 million of net cash capex incurred during six months to 30 June 2023.  Net cash capex for FY 2023 expected to be £10.0 million, primarily relating to our conventional assets including expenditure on near-term incremental projects, our Corringham development, as well as costs related to complying with and reducing the regulatory burden at some of our sites.
• The Group benefited from its hedging policy with 60,000 bbls hedged in the period at an average of $95.0/bbl resulting in a realised gain of £0.7 million.
• Profit after tax of £0.5m (H1 2022 £19.4 million) was after deducting a tax charge of £3.7 million (H1 2022 tax credit of £13.2 million). The tax charge relates primarily to non-cash deferred tax. The estimated Energy Profits Levy for the period ended 30 June 2023 is c.£0.9 million which is payable in October 2024.
• Ring fence tax losses of £259 million.

2023 Interim Operational Summary

• Net production averaged 2,071 boepd in H1 2023 (H1 2022: 1,865 boepd).  
• Full year net production remains on track. Underlying cash operating costs per boe anticipated to be c.$39.5/boe (based on an average exchange rate of £1:$1.26).
• Planning permission granted for Glentworth oil project.
• Corringham site construction nearing completion, securing planning.
• Awarded two NHS hospital trust geothermal projects in Manchester and Salisbury
• 2D seismic survey for Salisbury project planned.
• Two Government sponsored geothermal reports published, endorsing its potential as a future renewable energy source and highlighting the potential for geothermal in the decarbonisation of the NHS estate.
• There is no update on the status of the grant funding for the Stoke-on-Trent geothermal project at this time. 

Production Operations

Net production for the period averaged 2,071 boepd (H1 2022: 1,865 boepd), with maximum uptime from wells and the company anticipate net production will remain, as forecast, at around 2,000 boepd for the full year.

Board Changes

In January 2023, Doug Fleming joined the Board as an Independent Non-executive Director and became a member of the audit committee.  Doug was most recently Chief Financial Officer at private equity backed Siccar Point Energy, an E&P company with assets in the UK sector of the North Sea.

In June, Chris Hopkinson was appointed as Chief Executive Officer  of the Company.  Chris joined Star Energy in January 2022 and, since September 2022, had assumed the role of Interim Executive Chairman.
 
Also in June, Philip Jackson was appointed as Non-executive Chairman. Philip has been a Non-executive Director of the Company since 2017.

KeyFacts Energy: Star Energy Group UK country profile