Star Energy Group plc has acquired a 51% stake in A14 Energy Limited, which owns the Ernestinovo geothermal waters exploration license in Croatia. The acquisition is part of Star Energy's strategy to transition into a geothermal developer, owner, and operator, diversifying regulatory risk and entering the electricity generation sector. The geothermal sector is seen as a fundamental component of the energy transition, providing long-term baseload electricity and heat generation. Star Energy, with its experience in sub-surface analysis and drilling, is well-positioned to deliver geothermal energy in Croatia, which has a liberalized and attractive energy market.

The acquisition was made by Star Energy's subsidiary, GT Energy Croatia Limited, for a cash consideration of €1.3 million. Additionally, Star Energy will pay €0.1 million for cash-backed guarantees to the Croatian Hydrocarbon Agency and €0.2 million in back costs for the ongoing appraisal of the Ernestinovo license. GT Energy Croatia Limited has also entered into a shareholders' agreement with Peninsula International Pte Ltd to jointly develop, construct, and operate geothermal projects in Croatia.

GT Energy Croatia Limited and Peninsula, through their subsidiary IGeoPen, have submitted three bids for geothermal licenses to the Croatian Hydrocarbon Agency. The results of the bids are expected by December 2023. Upon successful award of these licenses, an additional amount of up to €1.5 million will be payable. The financing for re-entry of an existing well and drilling of new appraisal wells will be provided through shareholder loans and externally sourced finance. GT Energy Croatia Limited has agreed to carry Peninsula for up to €13.2 million over the five-year exploration license period, repayable from free cash flow generated from the licenses.

The Croatian geothermal resource is well understood, with extensive data available from over 4,000 exploration and appraisal wells. The geothermal gradient in Croatia is proven to be 60% higher than the European average, making it well-suited for electricity generation. The country also has nearby electricity transmission infrastructure, providing immediate access to pan-European power markets. The Croatian government is highly supportive of the geothermal sector and offers an attractive market premium for renewable energy generation. Croatia currently has one operating geothermal plant with an installed capacity of 17.5MWe, but the Croatian Hydrocarbon Agency estimates that the geothermal potential in the country exceeds 1GW.