Completion of sale of Croatian geothermal company

Star Energy (AIM:STAR) is pleased to announce further to its announcement on 24 April 2026, that it has completed the sale of its Croatian subsidiary IGeoPen d.o.o. ("IGeoPen") to Enna Geo d.o.o. IGeoPen's direct parent is A14 Energy Limited ("A14 Energy") of which Star Energy owns 71%, with 29% being owned by its JV partner, Peninsula International PTE Ltd ("Peninsula").

Consideration for the sale consists of two elements:

• An initial cash consideration of €1.5 million - Star Energy's share is €1.3 million reflecting the A14 Energy shareholder agreements; and
• A financial earn-out of €0.5 million per licence which is payable on the commercial operation date of a geothermal power plant developed on each of the three licences - Star Energy's potential share is €1.5 million.

The transaction delivers a clear strategic refocus of the Group's portfolio, allowing management to concentrate on its oil and gas and UK geothermal activities. It releases €5.2 million of restricted cash and removes future capital commitments arising from the Croatian licences.

The receipt of €1.3 million and release of €5.2 million of restricted cash enables us to repay €2.7 million (£2.3 million) of the Kommunalkredit facility. Together with the scheduled amortised repayment in December 2026, this will reduce the balance outstanding on the facility to €6.9 million (£6.0 million) which is repayable in semi-annual instalments over 2027 and 2028.

The sale augments the Group's balance sheet and, together with strong operating cash flows and the recent £9.1 million equity raise provides significant capability for inorganic growth in its oil and gas business. The Group has £258 million of tax losses, and there is potential to create material value through accelerated realisation of these.

Following completion, management will be focused on those areas where the Board believes the best opportunities exist to create value for shareholders, namely:

• continuing to improve the performance, efficiency and resilience of the Group's existing UK oil and gas operations;
• pursuing selective inorganic oil and gas opportunities, in particular those that can accelerate the utilisation of the Group's substantial UK tax losses; and
• maintaining a capital-efficient UK geothermal development platform while continuing to advocate for the policy changes needed to support material investment in the sector.

Commenting today, Ross Glover, Chief Executive Officer, said:

"This transaction completes an important step in the reshaping of Star Energy. The receipt of €1.3 million and release of €5.2 million of restricted cash enables us to repay €2.7 million of the Kommunalkredit facility, reducing gross debt, while at the same time removing future capital commitments and ongoing costs associated with the Croatian business.

Just as importantly, it brings greater strategic focus to the Group. Our capital, management attention and operational capability can now be concentrated on those areas where we believe we have the clearest opportunity to generate attractive returns: improving the performance and cash generation of our existing oil and gas portfolio, pursuing disciplined and value-accretive growth opportunities, and maintaining a capital-efficient UK geothermal platform.

At our interim results, we said that our priority was to convert our stronger financial position into profitable growth and long-term shareholder value. Completion of this transaction strengthens that platform further. We will continue to be disciplined in how we deploy capital, with the objective of translating a simpler, less leveraged and more focused business into sustainable returns for shareholders."