Focused. Simplified. Costs Reduced. Cash Rich. Is Star Energy Ready for its next phase?
“…We’ve got real production, real assets. We produce Oil and Gas in the UK every day of the week and have been doing this for years and years…”
When Star Energy Group informed the market it had raised £8.5mln, it was noted that all the company directors had participated in April’s placing at the issue price. That gave confidence that board members of the oil and gas extraction business were in alignment with investors who were given the opportunity to purchase shares in May’s separate retail offer, which has confirmed an additional £540,000 to confirm a gross raise of approximately £9.1mln in aggregate by way of the Placing, the Subscription and the Retail Offer.
The revitalised shareholder register exemplifies the direction of the company that is offloading non-core capital intensive projects such as the Croatian geothermal asset which would have been crippled by punitive premium price tariffs.
These events including the sale of a U.K. production facility have strengthened the balance sheet of Star which already produces oil and gas and has been doing so for 50 years across Lincolnshire, Nottinghamshire and in the southeast of England. Ninety-five percent of what Star currently produces is oil at the current daily rate of just shy of 2000 barrels a day from mature assets.
Chief executive Ross Glover is mindful of asset life and cost. Last year he shaved £2mln of overheads. He knows the numbers and the operational capability of the business having been with the company for nine years which saw him serve as Chief Operating Officer. “This year we’re targeting about 2000 barrels a day and they’re mature assets. So, it’s our job to be very disciplined with how we run those. It’s all about well up time, improving the reliability, really minimizing downtime of those assets,” says Glover.
“The point for investors is just a very small improvement in uptime. We’re very operationally levered. A little increase in uptime, a small decrease in cost translates quite dramatically to cash flow.”
In addition to the income generated from the mature assets, Glover and the team are creating a geothermal development platform which will assist in the decarbonisation of the U.K. heat market.
The U.K. though, argues Glover, still requires oil and gas so in addition to managing the current Star Energy estate, the board is looking for acquisition opportunities that are of the cash-accretive, value-accretive, two and a half thousand barrels a day of additional production variety.
In this video interview with Sarah Lowther, Ross discusses the company roadmap, why the current hedging policy influences Star’s fiscal discipline and how the £240mln tax losses will be used to assist longer term optionality.
Follow the company on X @Starenergygroup
The author was remunerated but does not hold shares in the company
