Star Energy Group is an AIM-listed UK company that produces oil and gas from onshore fields in England and is building a geothermal heat business. It bet on geothermal, lost ground as oil output and revenue fell, then in 2026 sold its Croatian geothermal arm and raised £9.1m to rebuild around UK oil and gas. It now holds more cash than debt, but has not yet found an acquisition it will buy.
Small onshore oil fields pay for everything else
Star Energy runs mature onshore oil and gas sites in the UK, including Gainsborough, Welton, Stockbridge, Singleton and Bletchingley. Output was about 1,900 barrels of oil equivalent a day (boepd) in 2025. Oil and gas is the group's only source of revenue; the company says so directly. Profit depends on the oil price, on how much the wells produce and on operating costs, which it guided at about $44 per barrel for 2026.
The second business is UK geothermal: drilling for hot water to supply heat networks. Partners include Bring Energy and the University of Southampton, Veolia, and NHS hospitals at Wythenshawe (Manchester) and Salisbury. Geothermal has produced no revenue so far and loses money. The company says it will only invest heavily once the government provides a workable revenue framework.
The group also holds about £258m of UK ring-fence tax losses (losses that can offset oil and gas profits). Management wants to use them by buying producing assets. 16 Sep 2026 29 Apr 2026 16 Sep 2025 24 Apr 2026
The geothermal bet, funded by a new loan
In October 2023 a Croatian subsidiary won two geothermal exploration licences, Sječe and Pčelić, alongside its existing Ernestinovo licence. In April 2024 Star Energy signed a €25m loan with Kommunalkredit Austria. It replaced the old bank facility and was meant mainly to fund the geothermal push. In January 2025 the group raised its stake in the Croatian company from 51% to 71%.
The company also reported strong 2023 production of 2,100 boepd. Chris Hopkinson was chief executive at that point. 4 Oct 2023 9 Apr 2024 24 Apr 2024 3 Jan 2025
Falling output, a new CEO and a squeeze
In June 2024 Ross Glover replaced Hopkinson as chief executive. He said the focus would shift to making the oil and gas business more efficient and profitable. Management cut administrative costs and sold non-core land at Holybourne for £6.3m in April 2025. It saved more than the £1.5m a year it had targeted in July 2024, with 2025 savings above £2.0m.
The core business weakened anyway. Production fell from 2,100 boepd in 2023 to 1,886 in 2025. Revenue fell from £49.5m to £34.7m over the same two years, and adjusted EBITDA (operating profit before depreciation) fell from £16.1m to £7.7m. The company blamed lower oil prices, a weaker dollar, power outages and a pipeline failure at Gainsborough and Welton, and water-disposal limits at Stockbridge. It also complained of the 78% tax rate under the Energy Profits Levy and slow environmental permits.
The Singleton gas-to-wire project, which turns flared gas into electricity, kept slipping. It was first due in late 2025. In September 2025 the grid operator's timetable pushed it into 2026, and the target later moved to Q2 2026, then H1 2026, then early October 2026. The shares sat near 7p for most of 2025. 5 Jun 2024 25 Jul 2024 29 Apr 2025 16 Sep 2025 29 Apr 2026 25 Feb 2026 16 Sep 2026 22 Apr 2025
2026: exit Croatia, raise cash, hunt for assets
In April 2026 Star Energy agreed to sell its Croatian geothermal subsidiary to Enna Geo. The sale closed on 14 October for €1.3m upfront, with up to €0.5m more per licence if a power plant starts operating. It released €5.2m of restricted cash that had backed licence performance bonds. €2.7m went to repay debt, leaving €6.9m owed to Kommunalkredit.
In May it raised £9.1m at 15p a share. The stated aim is portfolios of up to about 2,500 boepd, bought or operated, plus development of its own fields. Peter Gyllenhammar AB built a 22% stake between September 2025 and September 2026, and three other holders disclosed 3-7% stakes in May 2026. The company has not said why. The shares reached 24.5p in July 2026 and the latest close, on 19 October 2026, was 20.5p. 24 Apr 2026 14 Oct 2026 1 May 2026 7 May 2026 16 Sep 2026
What explains the record
Two things stand out. First, the oil and gas business, which pays for everything, shrank while money and management attention went into geothermal that earned nothing. Second, repeated delays and misses on production guidance and the Singleton start-up were mostly attributed to external events. They still meant promises were not met: output was guided at about 2,000 boepd for 2025 and came in at 1,886.
Hedging also cost money in 2026. Star Energy had hedged about 54% of 2026 output before the Iran conflict lifted oil prices, so it missed some of the gain. The company said its loan facility required the hedges. It booked a £5.0m hedging loss in the first half. 16 Sep 2025 29 Apr 2026 16 Sep 2026
Cost cuts, a smaller footprint and a promise of discipline
Glover's team cut costs, sold land and Croatia, and cut loan debt. It repeatedly states its priorities as cash from existing fields, selective organic projects, value-accretive acquisitions and capital-light UK geothermal. In the September 2026 results it said no acquisition so far offered the return it requires.
Directors subscribed £31k in the placing. A sale of 350,016 shares at 16p (about £56k) was disclosed in May 2026 under Glover and Ward's names. The company has not explained it. 16 Sep 2026 1 May 2026 28 May 2026 14 Oct 2026
“However, the availability of capital alone will not drive us into a transaction.” 16 Sep 2026
More cash than debt, still short of output
In the first half of 2026 revenue rose to £23.2m from £18.3m, and oil and gas EBITDA rose to £6.2m from £5.5m. Net production was 1,866 boepd, slightly below a year earlier. Cash was £15.7m and net cash £4.6m, against net debt of £4.3m at the end of 2025. That excludes the Croatian proceeds, which arrived in October. Geothermal lost £0.6m before tax-free adjustments.
Production in July and August ran above the first-half average after faults were fixed. The company has not reported whether Singleton has started. 16 Sep 2026 14 Oct 2026
Lower guidance and open questions
The company first guided to about 2,000 boepd for 2026 in February. In September it lowered that to 1,900-1,950 boepd, citing the first-half issues and the Singleton delay. Capex is expected at £6.6m, and Singleton is due in early October 2026, adding about 74 boepd. Glentworth, a possible new oil well, is its main near-field project. Its base case is about 162 bopd, and investment timing is undecided.
Open questions: whether it can find an acquisition at an acceptable price, and whether Singleton and Glentworth deliver. UK geothermal depends on Green Heat Network Fund bids for Manchester and Southampton and on government policy. The company has not said when decisions are due. 16 Sep 2026 25 Feb 2026 30 Apr 2026
Written by AI from Star Energy Group Plc's own announcements since Oct 2023 · every paragraph links to its sources