Star Energy Group plc (AIM: Star) has released a trading update ahead of its Annual General Meeting, reporting strong momentum in production, in line with guidance at approximately 2,000 barrels of oil equivalent per day (boepd). The company plans to optimize oil production from existing well stock through investment in quick payback opportunities and seek reductions in site operating costs. Initial discussions with potential farm down partners have been encouraging, with a formal process set to commence in early Q3 2024.
The company intends to exit its shale gas licence positions to save costs and focus more on its producing assets. CEO Ross Glover emphasized the company's efforts to right-size the business and ensure an optimal corporate structure without compromising growth potential. The recent refinancing exercise has strengthened the balance sheet, providing the opportunity to reinvest operating cashflows into the oil and gas business for profitability and sustainability across various commodity price environments.
Glover highlighted the potential of geothermal energy, stating, "I believe that geothermal can be a key part of the solution to decarbonise heat." The company aims to deploy capital appropriately as its geothermal projects mature. Additionally, the company is reviewing technical data from secured licences in Croatia to rank the optimal sequencing of their commercial development.
While the long-term goal is transitioning into geothermal, the company's immediate focus is on maximizing cash flow from producing assets during high commodity prices and ensuring preparedness for the future. The company also emphasized the potential for a "just transition" for oil and gas workers to green technology, as geothermal development aligns with existing skill sets in the industry.
The company is navigating a period of political hiatus from a policy perspective, but clean energy and clean jobs remain a key priority for both main parties. Labour has indicated that GB Energy will be an investment vehicle for nascent renewable technologies, with geothermal fitting within that definition.
For further information, interested parties can contact Star Energy Group plc or its appointed financial advisors.