REG - Star Energy Group - Final Results
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RNS Number : 2976C Star Energy Group PLC 29 April 2026
29 April 2026
Star Energy Group plc (AIM: STAR)
("Star Energy" or "the Company" or "the
Group")
Full year results for the year ended 31 December 2025
Commenting today, Ross Glover, Chief Executive Officer, said:
"2025 was a year in which we remained firmly focused on balance sheet
strength, disciplined capital allocation and cash generation. In a volatile
market, our diversified portfolio, active hedging programme and tighter cost
control helped underpin our financial resilience and reinforce the
cash-generative nature of the business.
We have entered 2026 in a more uncertain geopolitical and commodity price
environment, but our priorities remain clear: improve operational reliability,
protect returns and invest selectively where the risk-adjusted economics are
compelling. We believe our combination of domestic production, strong
operational control and disciplined financial management differentiates Star
Energy from many small-cap peers and underpins our ability to build a leaner,
more resilient business focused on value creation for shareholders.
The sale of the Croatian geothermal business releases capital, removes future
funding demands and allows us to sharpen our focus on our home market in the
UK, where we have an outstanding operational track record and see the clearest
opportunity to create value. We will continue to work to maximise cash flow
from our oil and gas business, maintain a low-cost geothermal platform in the
UK while awaiting a more investable policy framework and actively pursue
value-accretive oil and gas acquisition opportunities that can bring value to
our substantial tax losses. Together, these actions leave Star Energy well
placed to seize opportunities and will drive sustainable shareholder value.
Financial
Performance
2025 2024
£m £m
Revenues 34.7 43.7
Adjusted EBITDA(1) 7.7 11.1
Net cash from operating activities 6.3 2.3
Operating cash flow before working capital movements 8.7 8.8
Loss after tax (7.8) (12.6)
Net debt(1) 4.3 7.5
Cash and cash equivalents (excluding restricted cash) 7.6 4.7
Net assets 34.8 42.6
1 Adjusted EBITDA and Net Debt (borrowings less cash and cash equivalents
excluding capitalised fees) are used by the Group, alongside IFRS measures for
both internal performance analysis and to help shareholders, lenders and other
users of the Annual Report to better understand the Group's performance in the
year in comparison to previous years and to industry peers.
Corporate & Financial Highlights
· Cash at 31 December 2025 was £7.6 million, excluding restricted
cash, and Star Energy had drawn £11.9 million under its loan facility. In
addition, the Company held restricted cash of £4.5 million which relates to
the cash backing of performance bonds for licence commitments of the Company's
Croatian subsidiary (IGeoPen d.o.o), relating to the Sječe and Pčelić
exploration licences. The cash will be released on the completion of the
recently announced sale of IGeoPen d.o.o
· Completed the sale of non-core land for £6.3 million with
proceeds received in April 2025
· Delivered more than £2.0 million of G&A savings compared to
2024
· Active hedging policy which generated a commodity hedging gain of
£1.5 million in 2025. Hedges are in place for 2026 which satisfy the
requirements under our finance facility and protect cashflow whilst allowing
exposure to price increases. We have hedged 14% of production with swaps at an
average price of $68/bbl and 40% with collars with an average ceiling price of
$71/bbl
· Energy Profits Levy of £2.85 million paid in 2025 based on the
taxable profits for the years ended 31 December 2023 and 31 December 2024
Operational Highlights
· Net production averaged 1,886 boepd in 2025 (2024: 1,989
boe/d), with downtime driven by a number of discrete events, including a
National Grid upgrade, which have now been resolved
· Continued to optimise oil production from our existing wells
through selective investment in short cycle developments which deliver quick
payback
· Singleton gas-to-wire project is well underway with delivery of
incremental production of c.74 boe/d, significantly reducing flaring,
monetising produced gas, increasing electricity generation and further
decarbonising our operations
· Savings achieved in operating costs to offset inflationary
increases
Croatian geothermal
· Agreement signed for the disposal of our three Croatian
geothermal licences, releasing €5.2 million of restricted cash and enhancing
financial flexibility. The consideration includes €1.5 million payable on
completion (€1.3 million net to Star Energy in accordance with the A14
Energy Limited shareholder agreements), with a financial earn out of €0.5
million per licence on commencement of operations. The transaction delivers a
clear strategic refocus of the Group's portfolio, allowing management to
concentrate on its core UK oil and gas and geothermal assets. Completion is
expected in H2 2026
Outlook
· We anticipate net production of c.2,000 boepd and operating costs
of c.$44/boe (assuming an average exchange rate of £1:$1.33) in 2026
· 2026 forecast capital expenditure is c.£6.6 million. This
includes £2.6 million to complete the Singleton gas-to-wire project which is
forecast to come online in H1 2026 with production of 74 boe/d. Star Energy
also plans to invest £1.0 million on quick returning incremental projects and
the balance on regulatory improvements, site resilience and projects to reduce
operating costs going forward
· G&A reductions carried into 2026 and targeting further
savings
· Low cost development platform maintained to advance our UK
geothermal pipeline
Marie Dransfield, Technical Director of Star Energy Group plc, and a qualified
person as defined in the Guidance Note for Mining, Oil and Gas Companies, June
2009 as updated 21 July 2019, of the London Stock Exchange, has reviewed and
approved the technical information contained in this announcement. Mrs
Dransfield has 20 years' oil and gas exploration and production experience.
For further information please contact:
Star Energy Group plc Tel: +44 (0) 207 993 9899
Ross Glover, Chief Executive Officer
Frances Ward, Chief Financial Officer
Zeus (Nominated Adviser & Broker) Tel: +44 (0) 203 829 5000
Antonio Bossi (Investment Banking)
Simon Johnson (Corporate Broking)
Vigo Consulting Tel: +44 (0) 207 597 5970
Patrick d'Ancona
Chairman's statement
The year to which this report primarily relates is 2025, a period of sustained
global volatility with oil prices trending downwards. This has been
significantly disrupted, this time with substantially higher oil and gas
prices and with even more unpredictability immediately prior to the date of
publication of this report.
Throughout, we have remained focused on maintaining balance sheet strength and
disciplined cash management. This delivered positive results in 2025. Proceeds
from the disposal of a non-core asset enabled us to reduce net debt, and we
continue to allocate capital rigorously to areas with clear potential to
create shareholder value.
Our diversified portfolio of assets delivers predictable production, and our
oil hedging strategy has secured cashflows in a softer price environment,
generating £1.2 million of realised gains in 2025. We started 2026 in an
environment where market fundamentals were indicating significant oversupply
and weaker commodity prices. However, the crisis in the Middle East is now
causing a substantial supply side shock and escalating prices. What this means
for oil prices in the mid to long-term is still unclear. We are continuing to
monitor the situation closely and adapt our hedging programme as needed. We
have made a significant contribution to the Government's EPL windfall tax in
2025, and expect to make further contributions in the future. Furthermore, the
security of supply we can offer in the UK domestic market has a strategic
value which we hope the government agencies will appreciate more fully in the
period ahead.
We have also made meaningful progress in reducing our cost base despite the
regulatory challenges associated with UK onshore operations. Our consistent
production and robust cash generation differentiate us from many small cap UK
energy companies focused primarily on exploration. This provides a stable
platform for value-accretive growth and very strong operational expertise on
which to build both organic opportunities and new assets in the future.
In geothermal, we see long term strategic potential in the UK; however,
meaningful capital deployment will be contingent on a viable revenue framework
and further government endorsement of the UK geothermal industry. We hope that
geopolitical matters will not distract government agencies from actively
moving forward with geothermal projects needing their timely encouragement.
Until then, we remain focused on capital efficiency and generating value in
those areas where we can control our destiny.
We are mindful of growing concerns that high energy costs are placing pressure
on UK industry. While we cannot influence national policy, our plans reflect
the existing regulatory landscape, and we welcome the prospect of a more
supportive environment. Through locally-sourced, onshore oil production across
multiple sites, we continue to contribute to UK energy.
The disposal of our Croatian geothermal licences allows clear strategic
refocus of the Group's core UK oil and gas and geothermal assets. It
strengthens the Group's balance sheet and reallocates capital away from a
non-core international business.
Finally, our people remain central to the delivery of our strategy. Their
expertise and resilience underpin the operational performance that drives long
term shareholder value and I would like to take this opportunity to thank them
on behalf of the Board.
Operating review
During 2025 we continued to execute our strategy of maximising cash generation
from our UK onshore producing assets while building a low cost geothermal
development platform. The year was characterised by disciplined capital
allocation, a structural reduction in our cost base and targeted investment to
improve operating reliability and resilience. We have been clear for some time
that Star Energy must be run as a lean, cash‑generative business: safety and
regulatory compliance first, then operational reliability, then
value‑accretive growth where the risk‑adjusted returns justify it.
Against that backdrop, we delivered more than £2.0 million of
year‑on‑year general and administrative expense (G&A) savings. These
savings are structural, reflecting a simpler organisation and tighter control
of discretionary spend. We also strengthened liquidity and maintained balance
sheet flexibility, including the completion of a non‑core land sale which
generated £6.3 million of proceeds in the first half of the year. We ended
2025 with £7.6 million of cash (excluding restricted cash) reflecting the
strong focus on costs, capital discipline and liquidity management.
Operational delivery and production performance
Net production averaged 1,886 boe/d in 2025. This was lower than 2024 but was
driven by a small number of discrete events rather than any deterioration in
the underlying quality of the asset base. At Gainsborough and Welton,
unplanned National Grid power outages during their summer infrastructure
upgrades, together with a process pipeline failure, impacted output. The grid
works are complete, no shutdowns are scheduled for 2026 and the pipeline issue
has been resolved. At Stockbridge, water disposal constraints reduced
production; we are addressing this through the conversion of a production well
to a water injector.
We have used these events as a catalyst to further tighten operating
discipline-improving maintenance planning, focusing on bottlenecks that drive
downtime, and prioritising interventions with short payback. Looking forward,
with the 2025 constraints addressed and a flexible programme of work, we have
provided production guidance of approximately 2,000 boe/d for 2026.
Capital discipline and value‑focused investment
In a mature portfolio, value is created through reliability, low‑risk
optimisation and selective investment. During 2025, we invested £5.3 million
in our oil and gas assets, including £2.7 million on the Singleton
gas‑to‑wire project, with the remainder focused on production optimisation
and plant upgrades.
For 2026, we are forecasting capex at c.£6.6 million, including £2.6
million to complete the Singleton gas‑to‑wire project. We are targeting a
H1 2026 start‑up and expect to deliver incremental production of c.74
boe/d, significantly reducing flaring, monetising produced gas, increasing
electricity generation and further decarbonising our operations. We also
forecast £1.4 million expenditure on abandonment activity, reflecting our
commitment to responsibly manage end‑of‑life obligations. Across the
portfolio, our approach remains consistent: invest where returns are
compelling and measurable, maintain flexibility, and protect our balance
sheet.
Geothermal: large opportunity, disciplined pacing in the UK
We continue to believe the UK presents a very material geothermal heat
opportunity. Geothermal is domestic, long‑life, low‑carbon energy that can
operate year‑round and can support the decarbonisation of industrial heat,
public‑sector heat networks and emerging infrastructure demand. However, we
have also been clear that investment must be paced to the reality of the
current UK policy environment. We will maintain a low cost development
platform, into which capital can be deployed when the policy framework is in
place.
Our message to Government has been consistent. To unlock private capital at
scale, the UK Government must do the following:
1. Consult on and implement a National Geothermal Strategy, including targets
for geothermal energy development and use, aligned with NESO and heat network
zoning policy.
2. Create and implement compelling non-financial and financial investment
incentives for geothermal, including by making geothermal a focus for
investment by GB Energy and the National Wealth Fund.
3. Dedicate additional cross-departmental policy-making resource and attention
to geothermal - including by establishing formal structures within Government,
involving industry experts, to develop policy recommendations.
In 2025, we reduced geothermal expenditure by c.£1.2 million compared to
2024, reflecting this disciplined approach while continuing to progress our
highest‑value UK opportunities, including projects in the Manchester and
Southampton areas.
Croatia
· On 24 April 2026, we announced that we had signed an agreement
for the sale of our three Croatian geothermal licences. The consideration for
the sale includes €1.5 million payable on completion (€1.3 million net to
Star Energy in accordance with the A14 Energy Limited shareholder agreements)
and a financial earn out of €0.5 million per licence on commencement of
operations. The sale releases €5.2 million of restricted cash and removes
future capital commitments, strengthening our balance sheet and enhancing
financial flexibility, while enabling value-accretive capital allocation. The
transaction delivers a clear strategic refocus of the Group's portfolio,
allowing management to concentrate on its core UK oil and gas and geothermal
assets. Completion is expected in H2 2026.
Creating value beyond the base business
In addition to operational delivery, we remain focused on opportunities to
enhance shareholder value through corporate actions. Star Energy has
substantial UK tax losses, and we continue to evaluate value‑accretive
acquisition opportunities where those losses can be utilised to improve
after‑tax returns. We will be selective and will not compromise our balance
sheet strength or management focus.
Outlook
Our priorities for 2026 are clear: deliver the full benefit of the cost
reductions; improve operational reliability and pursue value‑accretive
opportunities where they meet our return and risk criteria. Star Energy is
becoming a leaner, more resilient business-well positioned to generate free
cash flow from its producing assets and well positioned to bring value to our
tax losses.
We continue to operate in a safe and environmentally sensitive manner, which
is a fundamental principle guiding all our activities and decisions. Our focus
on maximising profitability from our oil and gas activities is crucial for
long-term sustainability and enables us to successfully navigate a volatile
oil price environment. We are advancing our UK geothermal energy development
platform to take advantage of the government's renewable energy aspirations,
proceeding cautiously until a clearer investment framework is established.
Financial Review
Our focus in 2025 has been on managing our commodity price exposure, reducing
our costs and continuing to improve the resilience of our business.
Production for the year averaged 1,886 boepd (2024: 1,989 boepd). Brent oil
prices remained volatile as a result of the geopolitical climate and uncertain
global economic outlook. Brent prices declined from an average of
$81/bbl in 2024 to an average of $69/bbl in 2025, with prices falling to the
low $60s in Q4 2025. Sterling strengthened during the year with average
GBP/USD rates of £1:$1.32 in 2025 compared to £1:$1.28 in 2024, negatively
impacting our revenues which are mainly denominated in USD. Our realised
price, post hedge was $68.5/bbl (2024: $77.5/bbl).
Revenues for the year were £34.7 million compared to £43.7 million in 2024,
a reduction of £9.0 million reflecting lower commodity prices, foreign
exchange movements and lower volumes. We mitigated the impacts of this through
our hedging policy, generating a net oil price hedging gain of £1.5 million
and a hedging gain on foreign exchange of £0.3 million. We also made savings
of £4.5 million on operating costs, administrative expenses and geothermal
research and development expenditure compared to 2024.
Realised Price/Cost Per Barrel
2025 2024
$ $
Realised price 68.5 77.5
Administrative expenses 9.4 13.3
Other operating costs (underlying) 32.4 32.0
Well services 8.4 6.8
Transportation and storage 3.4 3.2
Other cost of sales decreased from £22.3 million in 2024 to £21.6 million in
2025 as reductions from cost savings more than offset inflationary
increases. Underlying operating costs (which exclude third party oil but
include costs relating to leases capitalised under IFRS 16) were £33.7
($44.2) per boe for the year (2024: £32.8 ($42.0) per boe).
Adjusted EBITDA was £7.7 million (2024: £11.1 million) and the underlying
operating profit was £1.7 million (2024: £5.9 million), with the variance
resulting primarily from a reduction in revenues, offset by hedging gains and
cost savings.
Adjusted EBITDA
Reconciliation of profit/(loss) before tax to Adjusted EBITDA
2025 2024
£m £m
Profit/(loss) before tax 1.1 (4.5)
Net finance costs 4.9 4.8
Depletion, depreciation & amortisation* 7.4 6.5
Impairment of development costs 0.5 4.3
Impairment of goodwill 0.5 -
Exploration and evaluation assets impaired 0.0 1.9
Changes in fair value of contingent consideration (0.5) (2.3)
EBITDA 13.9 10.7
Lease rentals capitalised under IFRS 16 (1.8) (1.9)
Profit on sale of property, plant and equipment (4.5) 0.0
Other expenses - 2.0
Share-based payment charge 0.2 0.2
Unrealised gain on hedges (0.3) (0.4)
Redundancy costs 0.2 0.5
Adjusted EBITDA 7.7 11.1
Related to oil and gas business segment 9.9 15.1
Related to Geothermal business segment (2.2) (4.0)
* Includes depreciation charge recorded in administrative expenses
Underlying operating profit
Reconciliation of operating profit/(loss) to underlying operating profit
2025 2024
£m £m
Operating profit/(loss) 5.6 (1.9)
Profit on sale of property, plant and equipment (4.5) 0.0
Other expenses - 2.0
Lease rentals capitalised under IFRS 16 (1.8) (1.9)
Depreciation charge of right-of-use assets 1.3 1.2
Share-based payment charge 0.2 0.2
Impairment of development costs 0.5 4.3
Impairment of goodwill 0.5 -
Exploration and evaluation assets impaired 0.0 1.9
Unrealised gain on hedges (0.3) (0.4)
Redundancy costs 0.2 0.5
Underlying operating profit 1.7 5.9
Net Debt
31 December 2025 31 December 2024
£m £m
Debt (nominal value excluding capitalised expenses) (11.9) (12.2)
Cash and cash equivalents (excluding restricted cash) 7.6 4.7
Net debt (4.3) (7.5)
Restricted cash was £4.5 million (€5.2 million) (2024: £4.3 million
(€5.2 million)) which provides cash backing for the performance guarantees
issued in relation to geothermal licence commitments in Croatia.
Income Statement
The Group recognised revenues of £34.7 million for the year (2024: £43.7
million). Oil revenue was £33.5 million compared to £42.0 million in 2024,
reflecting lower prices and volumes and a stronger USD to GBP exchange rate.
The average pre-hedge realised price for the year was $66.1/bbl (2024:
$76.9/bbl). Electricity revenues increased from £0.6 million in 2024 to £0.9
million in 2025 due to higher prices and volumes. Gas revenues reduced to
£nil (2024: £ 0.2 million) due to the permanent shut-in of gas-to-grid
production at our Albury site. Revenues relating to the sale of third party
oil was £0.3 million (2024: £0.3 million).
Cost of sales for the year were £28.9 million (2024: £28.8 million)
including Depletion, Depreciation and Amortisation ( DD&A) of £7.3
million (2024: £6.5 million), and other costs of sales of £21.6 million
(2024: £22.3 million). Other costs of sales decreased by £0.7 million
compared to 2024 mainly due to lower production in the year and reduction in
staff costs and other cost savings generated in a number of areas, partially
offset by impact of additional workover activity in the year and inflationary
increases.
Adjusted EBITDA was £7.7 million (2024: £11.1 million) and gross profit was
£5.8 million for the year (2024: £14.9 million).
Administrative costs reduced significantly from £7.4 million in 2024 to £4.9
million in 2025. This reduction primarily resulted from the cost cutting
initiatives taken by management with the lower cost base now continuing into
the future.
We also reduced research and non-capitalised development costs relating to our
geothermal activities from £2.0 million in 2024 to £0.7 million in 2025 as
we limit our expenditure to where we can see a clear line of sight to value
creation. This included £0.2 million (2024: £1.6 million) for our projects
in Croatia and £0.5 million (2024: £0.4 million) on our UK geothermal
business which includes expenditure on the NHS Trust geothermal projects, net
of any grants received.
Profit on sale of property, plant and equipment of £4.5 million (2024: £nil
million) arose mainly from the sale of our Holybourne site which was completed
in April 2025. We incurred a cost of £2.0 million in 2024 in connection with
preparing the Holybourne site for sale which was presented as an "other
expense" in our 2024 income statement.
No significant write off of exploration and evaluation assets was recorded in
the year (2024: write off of £1.9 million mainly relating to costs incurred
on PEDL 235 (Godley Bridge) where we decided not to renew that licence).
Impairments of both development costs and goodwill of £0.5 million each were
recorded in the year in relation to the Group's geothermal operations in
Croatia (2024: impairment of £4.3 million of development costs relating to
the Stoke-on-Trent geothermal project). The impairment charge was based on the
recoverable amount for the Group's three Croatian licences determined with
reference to their potential sale value.
We recognised a gain of £0.5 million from the release of the contingent
consideration liability relating to the acquisition of GT Energy UK Limited
(2024: £2.3 million) as the related milestones were not achieved.
Net finance costs were £4.9 million (2024: £4.8 million) including interest
and fees on borrowings of £1.3 million (2024: £1.1 million) and performance
guarantee costs related to licence commitments in Croatia of £0.1 million
(2024: £0.4 million). Finance costs also included the unwinding of discount
on decommissioning provision of £2.7 million (2024: £2.5 million), an
interest charge on lease liabilities of £0.7 million (2024: £0.7 million)
and net foreign exchange losses during the year of £0.4 million (2024: £0.1
million).
A non-cash deferred tax charge of £10.5 million (2024: £6.2 million) was
recognised during the year, due to a reduction in the deferred tax asset
arising as a result of an increase in unrecognised future deductible temporary
differences and the extension of the Energy Profits Levy (EPL) to 2030. This
impact was partially offset by a current tax credit of £1.5 million (2024:
current tax charge of £2.0 million) mainly relating to the EPL.
Cash Flow
Net cash generated from operating activities for the year was £6.3 million
(2024: £2.3 million). The increase was primarily due to a reduction in cash
outflows from operating costs, administrative expenses and research and
non-capitalised development costs of £12.9 million, a reduction in
abandonment spend of £1.1 million and an increase in cash inflows from
realised derivatives of £1.2 million, partially offset by a reduction in cash
inflows from revenue of £8.3 million and a tax payment during the year of
£2.8 million.
The Group invested £5.3 million across its asset base during the year (2024:
£5.7 million) primarily comprising of spend on the Singleton gas-to-wire
decarbonisation project, an oil plant upgrade at Bletchingley, optimisation
projects across our portfolio to offset declines and general improvements
across our fields. The Group received £6.3 million from the sale of the
Holybourne site during the year.
The Group made a repayment of £5.6 million (€6.7 million) (2024: drawdown
of £ 5.7 million (€6.7 million)) to fully settle facility A of its loan
facility with Kommunalkredit Austria AG in line with its contractual maturity
date. The Group also made a drawdown of £4.8 million (€5.5 million) (2024:
£6.8 million (€8.1 million)) under facility B to fund geothermal activity
in both the UK and Croatia as well as the Singleton gas-to-wire
decarbonisation project. The amount drawn under Facility B at 31 December 2025
was £11.9 million (€13.6 million) and net debt was £4.3 million (2024:
£7.5 million). The drawdown period under the facility ended in December 2025,
with the balance drawn being repayable in equal bi-annual instalments
commencing on 30 June 2026 and ending on 31 December 2028. In addition, the
Group held £4.5 million (€5.2 million) (2024: £4.3 million (€5.2
million)) of restricted cash in relation to the Croatian performance bonds.
Interest paid during the year was £1.1 million (2024: £0.5 million) and
repayments made in respect of lease obligations were £1.3 million (2024:
£0.9 million).
Balance Sheet
Net assets reduced by £7.8 million to £34.8 million at 31 December 2025
(2024: £42.6 million).
Property, plant and equipment reduced by £1.1 million during the year to
£69.6 million. Additions in the year were £5.8 million and the value of
decommissioning assets increased by £1.0 million as a result of
reassessment of the decommissioning provision. The net book value of disposals
was £1.8 million and we recognised a DD&A charge of £6.1 million.
Intangible assets reduced by £0.6 million during the year to £7.1 million
primarily due to an impairment of goodwill and development costs relating to
our Croatian geothermal assets of £1.0 million, partially offset by additions
of £0.2 million and foreign exchange differences of £0.2 million.
The provision for decommissioning costs increased by £3.2 million (2024:
reduction of £1.5 million) mainly as a result of the annual unwinding of the
discount on provision (£2.7 million) and reassessment of the provision,
primarily arising from refreshing the base costs (£1.0 million), partially
offset by expenditure in the year of £0.4 million. The provision for
contingent consideration relating to the acquisition of GT Energy UK Limited
of £0.5 million was released during the year following expiry of the deadline
for achievement of the relevant milestones.
Net debt reduced to £4.3 million (2024: £7.5 million). Cash and cash
equivalents increased by £2.9 million, reflecting stronger cash inflows from
operating and investing activities. Borrowings (nominal value excluding
capitalised expenses) reduced by £0.3 million mainly due to loan repayments
on Facility A of £5.6 million exceeding drawdowns of £4.8 million under
Facility B, with the remainder of the difference relating to foreign exchange
impacts.
Trade and other payables of £6.7 million were consistent with the balance at
the end of the previous year. Trade and other receivables reduced by £1.5
million mainly as a result of a decline in revenues and the settlement of the
loan note receivable of £0.4 million.
The deferred tax asset reduced by £10.5 million from £31.1 million at 31
December 2024 to £20.6 million at 31 December 2025 for reasons mentioned
above. The current tax balance was a receivable of £1.3 million (2024:
payable of £3.1 million) as a result of tax paid in the year of £2.8 million
and a current tax credit of £1.5 million mainly relating to the EPL.
The derivative asset of £0.7 million (2024: £0.4 million) represents the
fair values of the open commodity price hedges.
Going Concern
The Group continues to closely monitor and manage its liquidity risks. Cash
flow forecasts for the Group are prepared on a monthly basis based on, inter
alia, the Group's production and expenditure forecasts, management's best
estimate of future oil prices and foreign exchange rates and the Group's
available loan facility. Sensitivities are run to reflect different scenarios
including, but not limited to, possible reductions in commodity prices,
fluctuations in exchange rates and reductions in forecast oil production
rates.
The current geopolitical climate and the impact of the war in Iran has
resulted in significant increases in crude oil price forecasts for 2026.
However, the commodity price environment is volatile, with significant
uncertainty on the resolution of the conflict in the Middle East and the
impact on the global oil market and oil prices.
The focus of the Group in 2025 has been to strengthen our balance sheet and
improve our resilience to oil price volatility. We have generated positive
operating cashflows in 2025, benefitting from ongoing efforts to minimise
operating costs. We have also materially reduced our general and
administrative costs, with these savings expected to continue in future
periods. The sale of a non-core land with the proceeds of £6.3 million being
received in April 2025 has further improved our liquidity position.
However, the ability of the Group to operate as a going concern is dependent
upon the continued availability of future cash flows and the availability of
the monies drawn under its loan facility, which is dependent on the Group not
breaching the facility's covenants. To mitigate these risks, the Group
benefits from its hedging policy with 36,400 barrels hedged for April to
December 2026 using swaps at a price of $68/bbl and 256,800 barrels hedged
with a three-way put/call options to provide downside protection.
The Group's base case cash flow forecast was run with average oil prices of
$87/bbl for Q2 2026, $80/bbl in Q3 2026, and $75/bbl in Q4 2026, with prices
falling to an average price of $73/bbl in 2027. Foreign exchange rates of an
average $1.33/£1 for the remainder of 2026 and $1.30/£1 for 2027 have been
assumed. In this base case scenario, our forecasts show that the Group will
have sufficient financial headroom to meet the applicable financial covenants
for the 12 months from the date of approval of the financial statements.
Management has also prepared a "severe but plausible" downside case, which
reflects the possible impact of global economic and political uncertainties
resulting in the oil price falling lower than in our base case. In this
downside case we have assumed an oil price of $82/bbl for Q2 2026, $75/bbl in
Q3 2026, and $70/bbl in Q4 2026, with prices falling to an average price of
$68/bbl in 2027. Foreign exchange rates of an average $1.35/£1 for the
remainder of 2026 and $1.32/£1 for 2027 have been assumed. Our downside case
also included a reduction in production of 5% throughout the going concern
period. In the event of a downside scenario, management would take mitigating
actions including reducing costs, in order to remain within the Group's
financial covenants over the remaining facility period, should such actions be
necessary. All such mitigating actions are within management's control. In
this downside scenario including mitigating actions, our forecast shows that
the Group will have sufficient financial headroom to meet its financial
covenants for the 12 months from the date of approval of the financial
statements. Management remain focused on maintaining a strong balance sheet
and funding to support our strategy.
Based on the analysis above, the Directors have a reasonable expectation that
the Group has adequate resources to continue as a going concern for at least
the next twelve months from the date of the approval of the Group financial
statements and have concluded it is appropriate to adopt the going concern
basis of accounting in the preparation of the financial statements.
Frances Ward
Chief Financial Officer
Non-IFRS Measures
The Group uses non-IFRS measures of performance that are not specifically
defined under IFRS or other generally accepted accounting principles. The
non-IFRS measures include net debt, adjusted EBITDA and underlying operating
profit.
These non-IFRS measures are used by the Group, alongside IFRS measures, for
both internal performance analysis and to help shareholders, lenders and other
users of the Annual Report to better understand the Group's performance in the
year in comparison to previous years and to industry peers.
Net debt is defined as borrowings excluding capitalised fees less cash and
cash equivalents and does not include the Group's lease liabilities or
restricted cash.
Adjusted EBITDA and underlying operating profit includes adjustments in
relation to non-cash items such as share-based payment charges and unrealised
gain/ loss on hedges.
Lease costs for the year which have been capitalised under IFRS 16 have been
added to underlying operating costs and deducted in the calculation of
adjusted EBITDA.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2025
Note Year ended Year ended
31 December 31 December 2024
2025 £000
£000
Revenue 2 34,721 43,651
Cost of sales:
Depletion, depreciation and amortisation (7,315) (6,472)
Other costs of sales (21,610) (22,318)
(28,925) (28,790)
Gross profit 5,796 14,861
Administrative expenses (4,908) (7,422)
Research and non-capitalised development costs (735) (1,973)
Impairment of exploration and evaluation assets 6 (26) (1,854)
Impairment of development costs 6 (495) (4,259)
Impairment of goodwill 6 (454) -
Gain on derivative financial instruments 1,847 737
Other expense - (2,000)
Other income 4,562 3
Operating profit/(loss) 5,587 (1,907)
Finance costs 3 (4,951) (4,805)
Change in fair value of contingent consideration 10 480 2,251
Profit/(loss) before tax 1,116 (4,461)
Income tax 4 (8,951) (8,133)
Loss after tax (7,835) (12,594)
Attributable to:
Owners of the Parent Company (7,304) (11,295)
Non-controlling interest (531) (1,299)
(7,835) (12,594)
Loss per share attributable to equity shareholders:
Basic loss per share 5 (5.59p) (8.74p)
Diluted loss per share 5 (5.59p) (8.74p)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2025
Year ended Year ended
31 December 31 December
2025 2024
£000 £000
Loss for the year (7,835) (12,594)
Other comprehensive income for the year:
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translation of foreign operations (294) 117
Total comprehensive loss for the year (8,129) (12,477)
Total comprehensive loss attributable to:
Owners of the Parent Company (7,563) (11,181)
Non-controlling interest (566) (1,296)
(8,129) (12,477)
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2025
Note 31 December 31 December
2025 2024
£000 £000
ASSETS
Non-current assets
Intangible assets 6 7,104 7,736
Property, plant and equipment 7 69,577 70,657
Right-of-use assets 6,336 7,253
Restricted cash 8 4,534 4,282
Deferred tax asset 4 20,569 31,054
108,120 120,982
Current assets
Inventories 1,536 1,497
Trade and other receivables 4,913 6,381
Corporation tax receivable 4 1,284 -
Cash and cash equivalents 8 7,609 4,708
Derivative financial instruments 703 398
16,045 12,984
Total assets 124,165 133,966
LIABILITIES
Current liabilities
Trade and other payables (6,733) (6,731)
Corporation tax payable 4 - (3,073)
Borrowings 9 (3,961) (6,488)
Lease liabilities (895) (1,145)
Provisions 10 (1,429) (1,335)
(13,018) (18,772)
Non-current liabilities
Borrowings 9 (7,526) (5,246)
Other payables (97) (440)
Lease liabilities (6,086) (6,830)
Provisions 10 (62,659) (60,035)
(76,368) (72,551)
Total liabilities (89,386) (91,323)
Net assets 34,779 42,643
EQUITY
Capital and reserves
Called up share capital 30,334 30,334
Share premium account 103,298 103,248
Foreign currency translation reserve 3,673 3,929
Other reserves 38,727 38,512
Accumulated deficit (140,066) (132,331)
Equity attributable to owners of the Company 35,966 43,692
Non-controlling interest (1,187) (1,049)
Total equity 34,779 42,643
These financial statements on pages were approved and authorised for issue by
the Board on 29 April 2026 and are signed on its behalf by:
Ross Glover Frances Ward
Chief Executive Officer Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2025
Called up Share Foreign Other Accumulated deficit Equity attributable to owners of the Company £000 Non-controlling Interest Total
share capital premium currency reserves** £000 £000 equity
£000 account translation £000 £000
£000 reserve*
£000
At 1 January 2024 30,334 103,189 3,815 38,324 (121,036) 54,626 247 54,873
Loss for the year - - - - (11,295) (11,295) (1,299) (12,594)
Share options issued under the employee share plan - - - 188 - 188 - 188
Issue of shares - 59 - - - 59 - 59
Currency translation adjustments - - 114 - - 114 3 117
At 31 December 2024 30,334 103,248 3,929 38,512 (132,331) 43,692 (1,049) 42,643
Loss for the year - - - - (7,304) (7,304) (531) (7,835)
Acquisition of non-controlling interest without a change in control - - 3 - (431) (428) 428 -
Share options issued under the employee share plan - - - 215 - 215 - 215
Issue of shares - 50 - - - 50 - 50
Currency translation adjustments - - (259) - - (259) (35) (294)
At 31 December 2025 30,334 103,298 3,673 38,727 (140,066) 35,966 (1,187) 34,779
* The foreign currency translation reserve includes an amount of
£3,799,000 (2024: £3,799,000) relating to exchange gains and losses on
translation of net assets and results, and intercompany balances, which formed
part of the net investment of the Group, in respect of subsidiaries which
previously operated with a functional currency other than UK pound sterling.
** Other reserves include: 1) Share plan reserves comprising a
EIP/MRP/EDRP reserve representing the cost of share options issued under the
long term incentive plans and share incentive plan reserve representing the
cost of the partnership and matching shares; 2) a treasury shares reserve
which represents the cost of shares in Star Energy Group plc purchased in the
market to satisfy awards held under the Group incentive plans; 3) a capital
contribution reserve which arose following the acquisition of IGas Exploration
UK Limited; and 4) a merger reserve which arose on the reverse acquisition of
Island Gas Limited.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2025
Note Year ended Year ended
31 December 2025 31 December 2024
£000 £000
Cash flows from operating activities:
Profit/(loss) before tax 1,116 (4,461)
Depletion, depreciation and amortisation 7,361 6,517
Abandonment costs/other provisions utilised or released (605) (1,672)
Share-based payment charge 248 195
Impairment of exploration and evaluation assets 6 26 1,854
Impairment of development costs 6 495 4,259
Impairment of goodwill 6 454 -
Change in fair value of contingent consideration 10 (480) (2,251)
Unrealised gain on oil price derivatives (305) (398)
Gain on sale of property, plant and equipment (4,540) (3)
Finance costs 3 4,951 4,805
Operating cash flows before working capital movements 8,721 8,845
Decrease/(increase) in trade and other receivables and other financial assets 2,646 (1,397)
(Decrease) in trade and other payables (2,162) (1,334)
(Increase) in restricted cash (34) (3,872)
(Increase)/decrease in inventories (39) 25
Cash generated from operating activities 9,132 2,267
Corporation tax paid 4 (2,848) -
Net cash generated from operating activities 6,284 2,267
Cash flows from investing activities:
Purchase of intangible exploration and evaluation assets (47) (67)
Purchase of property, plant and equipment (5,234) (5,579)
Purchase of intangible development assets - (30)
Proceeds from disposal of property, plant and equipment 6,390 3
Net cash generated from/(used in) investing activities 1,109 (5,673)
Cash flows from financing activities:
Cash proceeds from issue of ordinary share capital 27 28
Drawdown on finance facility 8 4,801 12,530
Repayment of finance facility 8 (5,631) -
Repayment of Reserves Based Lending facility 8 - (5,541)
Transaction costs related to loan refinancing 8 - (610)
Repayment of principal portion of lease liabilities (1,299) (887)
Repayment of interest on lease liabilities (662) (709)
Interest paid 8 (1,137) (493)
Net cash (used in)/generated from financing activities (3,901) 4,318
Net increase in cash and cash equivalents in the year 3,492 912
Net foreign exchange differences 8 (591) (59)
Cash and cash equivalents at the beginning of the year 4,708 3,855
Cash and cash equivalents at the end of the year 8 7,609 4,708
CONSOLIDATED FINANCIAL STATEMENTS - NOTES
FOR THE YEAR ENDED 31 DECEMBER 2025
1 Material accounting policies
(a) Basis of preparation of financial statements
Whilst the financial information in this preliminary announcement has been
prepared in accordance with international accounting standards (IFRS) in
conformity with the requirements of the Companies Act 2006 ("the "Standards"),
this announcement does not contain sufficient information to comply with the
Standards. The Group will publish full financial statements that comply with
the Standards in May 2026.
The financial information for the year ended 31 December 2025 does not
constitute statutory financial statements as defined in sections 435 (1) and
(2) of the Companies Act 2006. Statutory financial statements for the year
ended 31 December 2024 have been delivered to the Registrar of Companies and
those for 2025 will be delivered following the Company's annual general
meeting. The auditor has reported on the 2025 financial statements and their
report was unqualified. The report did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
The accounting policies applied are consistent with those adopted and
disclosed in the Group's financial statements for the year ended 31 December
2024. There has been an amendment to an accounting standard issued by the
International Accounting Standards Board which was applicable from 1 January
2025. This did not have a material impact on the accounting policies,
methods of computation or presentation applied by the Group.
There are also new accounting standards and certain amendments to existing
accounting standards issued by the International Accounting Standards Board
which will be applicable from either 1 January 2026 or from periods subsequent
to that date. These have not been adopted early and are not expected to have
a material impact on the accounting policies, methods of computation or
presentation applied by the Group other than IFRS 18 Presentation and
Disclosures in Financial Statements which was issued on 9 April 2024,
effective for periods beginning on or after 1 January 2027. We are in the
process of assessing the impact of this standard on our future financial
statements.
Further details on new International Financial Reporting Standards adopted and
yet to be adopted will be disclosed in the 2025 Annual Report and Financial
Statements.
Star Energy Group plc, which is the ultimate Parent Company of the Group, is a
public limited company incorporated in the United Kingdom and registered in
England and Wales and is listed on the Alternative Investment Market ("AIM").
The Group's principal activities are exploring for, appraising, developing and
producing oil and gas and developing geothermal projects. The address of the
registered office of the Parent Company is Welton Gathering Centre, Barfield
Lane Off Wragby Road, Sudbrooke, Lincoln, England LN2 2QX.
The financial information is presented in UK pounds sterling and all values
are rounded to the nearest thousand (£000) except when otherwise indicated.
Prior year numbers have been reclassified, where necessary, to conform to the
current year presentation.
(b) Going concern
The Group continues to closely monitor and manage its liquidity risks. Cash
flow forecasts for the Group are prepared on a monthly basis based on, inter
alia, the Group's production and expenditure forecasts, management's best
estimate of future oil prices and foreign exchange rates and the Group's
available loan facility. Sensitivities are run to reflect different scenarios
including, but not limited to, possible reductions in commodity prices,
fluctuations in exchange rates and reductions in forecast oil production
rates.
The current geopolitical climate and the impact of the war in Iran has
resulted in significant increases in crude oil price forecasts for 2026.
However, the commodity price environment is volatile, with significant
uncertainty on the resolution of the conflict in the Middle East and the
impact on the global oil market and oil prices.
The focus of the Group in 2025 has been to strengthen our balance sheet and
improve our resilience to oil price volatility. We have generated positive
operating cashflows in 2025, benefitting from ongoing efforts to minimise
operating costs. We have also materially reduced our general and
administrative costs, with these savings expected to continue in future
periods. The sale of a non-core land with the proceeds of £6.3 million being
received in April 2025 has further improved our liquidity position.
However, the ability of the Group to operate as a going concern is dependent
upon the continued availability of future cash flows and the availability of
the monies drawn under its loan facility, which is dependent on the Group not
breaching the facility's covenants. To mitigate these risks, the Group
benefits from its hedging policy with 36,400 barrels hedged for April to
December 2026 using swaps at a price of $68/bbl and 256,800 barrels hedged
with a three-way put/call options to provide downside protection.
The Group's base case cash flow forecast was run with average oil prices of
$87/bbl for Q2 2026, $80/bbl in Q3 2026, and $75/bbl in Q4 2026, with prices
falling to an average price of $73/bbl in 2027. Foreign exchange rates of an
average $1.33/£1 for the remainder of 2026 and $1.30/£1 for 2027 have been
assumed. In this base case scenario, our forecasts show that the Group will
have sufficient financial headroom to meet the applicable financial covenants
for the 12 months from the date of approval of the financial statements.
Management has also prepared a "severe but plausible" downside case, which
reflects the possible impact of global economic and political uncertainties
resulting in the oil price falling lower than in our base case. In this
downside case we have assumed an oil price of $82/bbl for Q2 2026, $75/bbl in
Q3 2026, and $70/bbl in Q4 2026, with prices falling to an average price of
$68/bbl in 2027. Foreign exchange rates of an average $1.35/£1 for the
remainder of 2026 and $1.32/£1 for 2027 have been assumed. Our downside case
also included a reduction in production of 5% throughout the going concern
period. In the event of a downside scenario, management would take mitigating
actions including reducing costs, in order to remain within the Group's
financial covenants over the remaining facility period, should such actions be
necessary. All such mitigating actions are within management's control. In
this downside scenario including mitigating actions, our forecast shows that
the Group will have sufficient financial headroom to meet its financial
covenants for the 12 months from the date of approval of the financial
statements. Management remain focused on maintaining a strong balance sheet
and funding to support our strategy.
Based on the analysis above, the Directors have a reasonable expectation that
the Group has adequate resources to continue as a going concern for at least
the next twelve months from the date of the approval of the Group financial
statements and have concluded it is appropriate to adopt the going concern
basis of accounting in the preparation of the financial statements.
2 Revenue
The Group derives revenue solely within the United Kingdom from the transfer
of control over the goods and services to external customers, which is
recognised at a point in time when the performance obligation has been
satisfied by the transfer of goods. The Group's major product lines are:
Year ended Year ended
31 December 31 December
2025 2024
£000 £000
Oil sales 33,823 42,794
Electricity sales 898 550
Gas sales - 249
Other - 58
34,721 43,651
Revenues of approximately £17.5 million and £16.3 million were derived from
the Group's two largest customers (2024: £21.6 million and £21.2 million)
and are attributed to the oil sales.
As at 31 December 2025, there are no contract assets or contract liabilities
outstanding (2024: £nil).
3 Finance costs Year Year
ended ended
31 December 31 December
2025 2024
£000 £000
Interest on borrowings (1,121) (817)
Amortisation of finance fees on borrowings (138) (226)
Net foreign exchange loss (382) (84)
Unwinding of discount on decommissioning provision (note 10) (2,655) (2,537)
Interest charge on lease liability (662) (709)
Other interest receivable /(payable) 7 (432)
(4,951) (4,805)
4 Income tax
(i) Tax charge on profit/(loss) from continuing ordinary activities Year ended Year ended
31 December 31 December
2025 2024
£000 £000
Current tax:
Credit/(charge) for the year 891 (2,110)
Adjustment in respect of prior periods 618 136
Total current tax credit/(charge) 1,509 (1,974)
Deferred tax:
Charge relating to the origination or reversal of temporary differences (10,255) (6,570)
Credit due to tax rate changes - 1,070
Charge in relation to prior years (205) (659)
Total deferred tax charge (10,460) (6,159)
Total income tax charge (8,951) (8,133)
(ii) Factors affecting the tax charge
The majority of the Group's profits are generated by "ring-fence" businesses
which attract UK corporation tax and supplementary charges at a combined
average rate of 40% (2024: 40%), in addition to the Energy Profits Levy (EPL)
with an average rate of 38% for the year (2024: 36%).
A reconciliation of the UK statutory corporation tax rate (applicable to oil
and gas companies) applied to the Group's profit/(loss) before tax to the
Group's total tax charge is as follows:
Year ended Year ended
31 December 31 December
2025 2024
£000 £000
Profit/(loss) before tax 1,116 (4,461)
Expected tax (charge)/credit based on profit/(loss) multiplied by an average (870) 3,368
combined rate of corporation tax and supplementary charge and EPL in the UK of
78% (2024: 76%)
Tax credit/(charge) in respect of prior years 413 (523)
Expenses not allowable for tax purposes* (809) (469)
Differences in amounts not allowable for supplementary charge purposes** (8) (99)
Impact of profits or losses taxed or relieved at different rates 2,337 (3,484)
Net decrease/(increase) in unrecognised losses carried forward 1,386 (7,808)
Net increase in unrecognised temporary taxable differences (11,400) (188)
Tax rate change - 1,070
Tax charge on profit/(loss) (8,951) (8,133)
* Expense not allowable for tax purposes includes the deferred tax impact
arising from the change in estimate of taxable temporary differences expected
to realise whilst the EPL regime is in effect. On 3 March 2025, an
extension to the EPL regime to 31 March 2030 was substantively enacted,
resulting in a deferred tax charge of £0.8 million.
** Amounts not allowable for supplementary charge purposes relate to net
financing costs disallowed for supplementary charge offset by investment
allowance, which is deductible against profits subject to supplementary
charge.
(iii) Deferred tax
The movement on the deferred tax asset in the year is shown below:
2025
£000 2024
£000
Asset at 1 January 31,054 37,192
Tax charge relating to prior year (205) (659)
Tax charge during the year (10,255) (6,570)
Tax credit arising due to the changes in tax rates - 1,070
Exchange differences (25) 21
Asset at 31 December 20,569 31,054
The following is an analysis of the deferred tax asset by category of
temporary difference:
31 December 31 December
2025 2024
£000 £000
Accelerated capital allowances (25,008) (24,439)
Tax losses carried forward 34,608 34,924
Investment allowance unutilised 2,747 2,311
Decommissioning provision 8,329 18,104
Unrealised gains or losses on derivative contracts (548) (310)
Share-based payments 58 42
Right-of-use asset and liability 383 422
Deferred tax asset 20,569 31,054
(iv) Corporation tax receivable/(payable)
The movement on the corporation tax receivable/(payable) in the year is shown
below:
2025
£000 2024
£000
Payable at 1 January (3,073) (1,099)
Tax credit/(charge) during the year 891 (2,110)
Tax payments made during the year 2,848 -
Adjustment in respect of prior periods 618 136
Receivable/(payable) at 31 December 1,284 (3,073)
(v) Tax losses and other similar attributes
The Group has gross total tax losses and similar attributes carried forward of
£370.7 million (2024: £367.8 million). Deferred tax assets have been
recognised in respect of tax losses and other deductible temporary differences
where the Directors believe it is probable that these assets will be recovered
based on a five-year profit forecast or to the extent that there is offsetting
deferred tax liabilities. Such recognised tax losses include £89.5 million
(2024: £85.0 million) of ringfence corporation tax losses which will be
recovered at 30% of future taxable profits, £69.3 million (2024: £70.2
million) of supplementary charge tax losses which will be recovered at 10% of
future taxable profits, £2.2 million (2024: £4.1 million) of losses arising
under the EPL regime which will be recovered at 38% of future taxable profits
and £1.1 million (2024: £3.1 million) of non-ringfence corporation tax
losses which will be recovered at 25% of future taxable profits. In addition,
the Group recognises £28.3 million (2024: £23.1 million) of activated
investment allowance, which will be recovered at 10% of future taxable
profits.
The Group does not recognise £169.6 million (2024: £164.2 million) ringfence
corporation tax losses, £102.7 million (2024: £95.6 million) of
supplementary charge tax losses, £102.5 million (2024: £106.7 million) of
non-ringfence corporation tax losses in the UK and £5.9 million (2024: £4.7
million) of tax losses outside of the UK, due to insufficient forecast future
taxable profits or offsetting deferred tax liabilities. Additionally, the
Group does not recognise £7.7 million (2024: £7.7 million) of investment
allowance and £45.2 million (2024: £16.4 million) of future deductible
temporary differences (which would create a deduction at 40% of future taxable
profits) relating to our decommissioning provision for the same reasons. The
losses of the Group, other than those arising outside of the UK, can be
carried forward indefinitely.
5 Earnings per share (EPS)
Basic EPS amounts are based on the loss for the year after taxation
attributable to the ordinary equity holders of the Parent Company of £7.3
million (2024: £11.3 million) and the weighted average number of ordinary
shares outstanding during the year of 130.7 million (2024: 129.3 million).
Diluted EPS amounts are based on the loss for the year after taxation
attributable to the ordinary equity holders of the Parent Company and the
weighted average number of ordinary shares outstanding during the year plus
the weighted average number of ordinary shares that would be issued on the
conversion of all the potentially dilutive ordinary shares into ordinary
shares, except where these are anti-dilutive.
As at 31 December 2025, there are 5.5 million potentially dilutive share
options (31 December 2024: 6.0 million potentially dilutive share options)
which were not included in the calculation of diluted earnings per share as
their conversion to ordinary shares would have decreased the loss per share.
The following reflects the income and share data used in the basic and diluted
earnings per share:
Year ended Year ended
31 December 31 December
2025 2024
Basic loss per share - ordinary shares of 0.002 pence each (5.59p) (8.74p)
Diluted loss per share - ordinary shares of 0.002 pence each (5.59p) (8.74p)
Loss for the year attributable to equity holders of the Parent Company - £000 (7,304) (11,295)
Weighted average number of ordinary shares in the year- basic EPS 130,654,554 129,275,299
Weighted average number of ordinary shares in the year- diluted EPS 130,654,554 129,275,299
6 Intangible assets
2025 2024
Exploration and evaluation assets Goodwill Development costs Total Exploration and evaluation assets Goodwill Development costs Total
£000 £000 £000 £000 £000 £000 £000 £000
At 1 January
3,969 1,141 2,626 7,736 5,655 1,196 6,972 13,823
Additions
166 - - 166 176 - 30 206
Exchange differences
- 40 137 177 - (55) (117) (172)
Transfer to property, plant and equipment
- - - - (8) - - (8)
Impairment
(26) (454) (495) (975) (1,854) - (4,259) (6,113)
At 31 December
4,109 727 2,268 7,104 3,969 1,141 2,626 7,736
Exploration and evaluation assets
Exploration costs impaired in the financial year to 31 December 2025 were
£0.03 million (2024: £1.9 million) which were costs of early-stage projects
relating to our conventional assets where it was assessed that there was no
further development prospect.
The 2024 exploration costs impaired were substantially all related to the
capitalised exploration costs at PEDL 235.
The remaining £4.1 million (2024: £4.0 million) of capitalised exploration
expenditure relates to our conventional assets including PL 240. Management
has assessed the remaining capitalised exploration expenditure for indications
of impairment under IFRS 6 Exploration for and Evaluation of Mineral Resources
and did not identify any factors indicating a need to perform detailed
impairment testing.
Goodwill
The carrying value of goodwill relates to the acquisition of an interest in
A14 Energy Limited during 2023. The Group has identified four Cash Generating
Units (CGUs) within our geothermal business, whereby technical, economic
and/or contractual features create underlying interdependence in the cash
flows. These CGUs correspond to the three Croatian geothermal licences
(Ernestinovo, Sječe and Pčelić) and the UK geothermal business. The
carrying amount of goodwill has been allocated to the following CGUs:
31 December 2025 31 December 2024
£000 £000
Sječe licence 364 352
Pčelić licence 363 351
Ernestinovo licence - 438
727 1,141
The Group reviewed the carrying value of the Sječe licence and Pčelić
licence CGUs at 31 December 2025 and assessed them for impairment. The
recoverable amount for these CGUs was based on their fair value less costs of
disposal which was calculated by reference to a potential sale value for these
licences. Key assumptions included determination of the amount of any expected
sale consideration, timing of related cash flows and the discount rate to be
used to determine the present value of such cash flows. The recoverable amount
was materially consistent with the carrying values of these CGUs, hence no
impairment charge was recognised against allocated goodwill during the year.
The Group also reviewed the carrying value of the Ernestinovo licence CGU
(which includes goodwill, capitalised development costs referred to below and
any associated deferred tax liability and decommissioning provision) at 31
December 2025, using the same basis for the determination of recoverable
amount as explained above. The recoverable amount for the Ernestinovo licence
CGU was estimated at £1.2 million thereby resulting in an impairment charge
of £0.9 million (2024: £nil). In line with the requirements of the financial
reporting standards, the impairment charge was first allocated to fully write
off the related goodwill, with the residual amount allocated against
capitalised development costs.
Development costs
Development costs relate to assets acquired as part of the GT Energy
acquisition in 2020, and assets acquired relating to the Ernestinovo licence
as part of the A14 Energy acquisition in 2023.
The carrying amount of development costs is split between CGUs as follows:
31 December 2025 31 December 2024
£000 £000
UK Geothermal business 186 186
Ernestinovo licence 2,082 2,440
2,268 2,626
Development costs relating to UK Geothermal business
These costs relate to the design and development of a deep geothermal heat
project in Manchester, United Kingdom. Previously, this CGU also included
costs of £4.3 million related to a project at Etruria Valley, Stoke-on-Trent
which was written off in 2024 recognising that the project could not progress
in its original form.
Development costs relating to Ernestinovo licence
The development costs associated with Ernestinovo licence relate to the fair
value of assets acquired as part of the A14 Energy acquisition made in 2023.
The costs relate to the value of the licence award and work performed up to
the acquisition date in progressing with the re-entry of an existing well on
the licence. An impairment charge of £0.5 million (2024: £nil) was recorded
against capitalised development costs relating to the Ernestinovo licence as
described above.
7 Property, plant and equipment
2025 2024
Oil and gas Other property, plant and equipment Total Oil and gas Other property, plant and equipment Total
assets £000 £000 assets £000 £000
£000 £000
Cost
At 1 January 228,879 1,709 230,588 226,888 1,734 228,622
Additions 5,783 26 5,809 4,812 - 4,812
Transfer from exploration and evaluation assets - - - 8 - 8
Disposals/write-offs (5,332) (201) (5,533) - (25) (25)
Changes in decommissioning* 992 - 992 (2,829) - (2,829)
At 31 December 230,322 1,534 231,856 228,879 1,709 230,588
Accumulated Depreciation, Depletion and Impairment
At 1 January 159,297 634 159,931 154,004 624 154,628
Charge for the year 6,075 35 6,110 5,293 35 5,328
Disposals/write-offs (3,665) (97) (3,762) - (25) (25)
At 31 December 161,707 572 162,279 159,297 634 159,931
NBV at 31 December 68,615 962 69,577 69,582 1,075 70,657
*The decommissioning asset increased in line with the decommissioning
liability following a review of the estimate at 31 December 2025 (note 10).
Capital expenditure incurred during the year mostly related to the Singleton
gas-to-wire project, an oil plant upgrade at Bletchingley and a number of
projects carried out to generate near-time production and to offset field
declines by upgrading existing facilities and systems and optimising
production at a number of sites.
Impairment of oil and gas assets
Year ended 31 December 2025
Cash Generating Units (CGUs) for impairment purposes are the group of fields
whereby technical, economic and/or contractual features create underlying
interdependence in the cash flows. The Group has identified the three main
producing CGUs as: North, South, and Scotland. At each balance sheet date, the
Group assesses its CGUs for impairment whenever events or changes in
circumstances indicate that the carrying amount of the CGU may not be
recoverable. If any such indication exists, the Group makes an estimate of the
asset's recoverable amount. An impairment assessment was performed for all
three CGUs at the balance sheet date as a result of identification of
impairment indicators, mainly a reduction in oil price forward curve and
changes to the Energy Profits Levy regime in the period. An impairment
indicator was noted for the Scotland CGU given the delay in finalisation of
the sale of the underlying site.
The recoverable amounts of the North and South CGUs have been estimated by
assessing the fair value less costs of disposal using a discounted cash flow
methodology. The recoverable amount of the Scotland CGU has been estimated by
assessing the fair value less costs of disposal with respect to a potential
sale of the site.
The future cash flows in the discounted cash flow models for the North and
South CGUs were estimated using the following key assumptions:
· Group's estimate of proved plus probable reserves at the balance
sheet date
· Oil price (Brent): $60-$70/bbl for the years 2026-2028 and
$75/bbl thereafter
· USD/GBP foreign exchange rate: Range of $1.32:£1.00 -
$1.30:£1.00
· Post-tax discount rate: 10.3%
Outcome of impairment reviews:
The 31 December 2025 impairment assessment resulted in a recoverable amount
greater than the carrying amount by £5.3 million in the South CGU
(recoverable amount of £28.3 million) and £0.4 million in the North CGU
(recoverable amount of £27.0 million). At the Scotland CGU, no impairment
charge was recognised, with the recoverable amount assessed to be materially
consistent with the carrying value of the CGU of £0.2 million (which includes
the carrying value of the associated decommissioning liability).
Sensitivity of changes in assumption:
The principal assumptions in the discounted cashflow methodology are future
production, estimated Brent prices, the USD/GBP long-term foreign exchange
rate, and the discount rate. The impact on the recoverable amount that would
result from changes to the key assumptions which management believe are
reasonably possible in the prevailing macroeconomic environment at 31 December
2025 are shown below:
CGU 10% reduction in price 10% reduction in production Increase in USD/GBP long-term foreign exchange rate to $1.35 Increase in discount rate by 1%
£m £m £m £m
North (6.18) (6.13) (2.04) (1.59)
South (6.69) (7.81) (2.59) (1.69)
The sensitivity analysis above does not take into account any mitigating
actions available to management should these changes occur, such as
implementing cost savings and other process efficiencies.
No impairment charge has been recognised for the North, South or Scotland
CGUs.
Year ended 31 December 2024
At 31 December 2024, an impairment assessment was performed for the North,
South and Scotland CGUs as a result of the identification of impairment
indicators, mainly a downward revision in the reserve estimates and changes to
the Energy Profits Levy regime in that year. An impairment indicator was noted
for the Scotland CGU given the delay in the finalisation of the potential sale
of the underlying site.
The recoverable amounts of the North and South CGUs were estimated by
assessing the fair value less costs of disposal using a discounted cash flow
methodology. The recoverable amount of the Scotland CGU was estimated by
assessing the fair value less costs of disposal with respect to a potential
sale of the site.
The future cash flows in the discounted cash flow models for the North and
South CGUs were estimated using the following key assumptions:
· Group's estimate of proved plus probable reserves at the balance
sheet date
· Oil price (Brent): $75-$70/bbl for the years 2025-2029 and
$75/bbl thereafter
· USD/GBP foreign exchange rate: Range of $1.25:£1.00 -
$1.30:£1.00
· Post-tax discount rate: 9.9%
Outcome of impairment reviews:
The 31 December 2024 impairment assessment resulted in a recoverable amount
greater than the carrying amount by £5.8 million in the South CGU
(recoverable amount of £35.1 million) and £1.9 million in the North CGU
(recoverable amount of £33.1 million). At the Scotland CGU, no impairment
charge was recognised, with the recoverable amount of £0.5 million assessed
to approximate the carrying value of the CGU (which includes the carrying
value of the associated decommissioning liability).
8 Cash and cash equivalents
31 December 31 December
2025 2024
£000 £000
Cash at bank and in hand 7,609 4,708
Cash and cash equivalents do not include restricted cash.
Restricted cash
31 December 31 December
2025 2024
£000 £000
Non-current 4,534 4,282
Restricted cash represents amounts held in a deposit account with a commercial
bank as collateral in support of performance guarantees issued by Tokio Marine
Europe S.A. (an insurance company) for licence commitments relating to
the Sječe and Pčelić exploration licences. The deposit is subject to
restrictions during the tenure of the related performance guarantees and hence
not available for general use of the Group.
Net debt reconciliation
31 December 31 December
2025 2024
£000 £000
Cash and cash equivalents 7,609 4,708
Borrowings - including capitalised fees (11,487) (11,734)
Net debt (3,878) (7,026)
Capitalised fees (397) (503)
Net debt excluding capitalised fees (4,275) (7,529)
2025 2024
Cash and cash equivalents Borrowings Total Cash and cash equivalents Borrowings Total
£000 £000 £000 £000 £000 £000
Net debt as at 1 January 4,708 (11,734) (7,026) 3,855 (5,358) (1,503)
Interest paid (1,137) - (1,137) (493) - (493)
Drawdown on finance facility (note 9) 4,801 (4,801) - 12,530 (12,530) -
Repayment of finance facility (note 9) (5,631) 5,631 - - - -
Repayment of RBL (note 9) - - - (5,541) 5,541 -
Foreign exchange adjustments (591) (445) (1,036) (59) 229 170
Capitalised transaction costs - - - (610) 610 -
Cash backing of performance guarantees - - - (4,282) - (4,282)
Other cash flows 5,459 - 5,459 (692) - (692)
Other non-cash movements - (138) (138) - (226) (226)
Net debt as at 31 December 7,609 (11,487) (3,878) 4,708 (11,734) (7,026)
9 Borrowings
31 December 31 December
2025 2024
£000 £000
Finance facility - secured (current) (3,961) (6,488)
Finance facility - secured (non-current) (7,526) (5,246)
(11,487) (11,734)
The carrying amounts of each of the Group's financial liabilities included
within borrowings are considered to be a reasonable approximation of their
fair value.
On 9 April 2024, the Group secured a €25.0 million finance facility with
Kommunalkredit Austria AG (Kommunalkredit) comprising of a facility A to fund
the repayment of the outstanding balance on the previous reserves based loan
(RBL) facility and a facility B to provide funding for the Group's geothermal
development activities . Facility A carried a fixed interest rate of 9.4% and
was fully repaid on 30 June 2025 in line with its contractual maturity.
Facility B carries an interest rate of Euribor + 6%. Following an amendment in
July 2025 the drawdown period was extended to 31 December 2025, and the drawn
balance is repayable in 6 equal half-yearly instalments commencing from 30
June 2026.
The Group is subject to the following financial covenants under the facility
agreement, to be calculated and tested for compliance at 30 June and 31
December for each year of the agreement, in addition to when drawdowns are
made, or as otherwise required by the facility agreement:
· Loan Life Cover Ratio ("LLCR") of greater than or equal to
1.25:1.
· Net Debt to Earnings before Interest, Tax, Depreciation,
Amortisation, and Exceptional items ("EBITDAX") ratio of less than or equal to
2.00:1.
· Current ratio of the Group as defined in the facility agreement
of greater than or equal to 1.00:1.
· Debt Service Cover Ratio ("DSCR") of greater than or equal to
1.10:1, for both projected and historic figures.
· Proved and developed reserves value to Net Debt ratio of greater
than or equal to 2.50:1.
The Group complied with all the covenants applicable during the year and at
the balance sheet date.
Collateral against borrowing
A security agreement was executed between Apex Corporate Trustees (UK) Limited
(as security agent for Kommunalkredit Austria AG) ("Apex"), Star Energy Group
plc and certain subsidiaries, namely; IGas Energy Limited, Star Energy
Limited, IGas Energy Enterprise Limited, Island Gas (Singleton) Limited,
Island Gas Limited, Dart Energy (East England) Limited, Dart Energy (West
England) Limited, IGas Energy Development Limited, IGas Energy Production
Limited, Dart Energy (Europe) Limited and GT Energy UK Limited (as chargors)
dated 9 April 2024 ("Star Energy Debenture"). On the same date, Scottish bonds
and floating charges were executed between Apex (as security agent) and Dart
Energy (Europe) Limited and IGas Energy Production Limited (Star Energy Group
companies, as "Scottish Chargors") ("Scottish BFCs"). A further security
agreement was executed between GT Energy Croatia Limited (a Star Energy Group
company, as chargor) and Apex (as security agent) dated 26 April 2024 ("GT
Debenture").
Under the terms of the Star Energy Debenture and GT Debenture, Apex has fixed
charges over certain real property (freehold and/or leasehold property),
petroleum licences, all pipelines, plant, machinery, vehicles, fixtures,
fittings, computers, office and other equipment and chattels and all related
property rights, shares of certain subsidiaries as well as the assigned
agreements and rights and all related property rights and first floating
charges over property, assets, rights and revenues (other than those charged
or assigned pursuant to the aforementioned fixed charges). Under the terms of
the Scottish BFCs, Apex has a first floating charge over all of the assets of
the Scottish Chargors.
10 Provisions
2025 2024
Decommissioning provisions Contingent consideration Total Decommissioning provisions Contingent consideration Total
£000 £000 £000 £000 £000 £000
At 1 January (60,890) (480) (61,370) (62,411) (2,731) (65,142)
Utilisation of provision 433 - 433 1,147 - 1,147
Unwinding of discount (note 3) (2,655) - (2,655) (2,537) - (2,537)
Foreign exchange adjustments (23) - (23) 10 - 10
Changes in fair value of contingent consideration - 480 480 - 2,251 2,251
Reassessment of decommissioning provision (953) - (953) 2,901 - 2,901
At 31 December (64,088) - (64,088) (60,890) (480) (61,370)
31 December 2025 31 December 2024
Decommissioning provisions Contingent consideration Total Decommissioning provisions Contingent consideration Total
£000 £000 £000 £000 £000 £000
Current (1,429) - (1,429) (855) (480) (1,335)
Non-current (62,659) - (62,659) (60,035) - (60,035)
At 31 December (64,088) - (64,088) (60,890) (480) (61,370)
Decommissioning provision
The Group spent £0.4 million on decommissioning activities during the year
(2024: £1.1 million) related primarily to the Group's share of costs of
plugging and abandoning a well at Ellesmere Port and restoration of a site
on the Egmanton field.
Provision has been made for the discounted future cost of abandoning wells and
restoring sites to a condition acceptable to the relevant authorities. This is
expected to take place between 1 to 32 years from year end (2024: 1 to 31
years). The provisions are based on the Group's internal estimate as at 31
December 2025. Assumptions are based on our cumulative experience from
decommissioning wells which management believes is a reasonable basis upon
which to estimate the future liability. The estimates are based on a planned
programme of abandonments but also include a provision to be spent between
2026-2030 on preparing for the abandonment campaign and for abandoning wells
and restoring sites which for regulatory, integrity or other reasons fall
outside the planned campaign. The estimates are reviewed regularly to take
account of any material changes to the assumptions. Actual decommissioning
costs will ultimately depend upon future costs for decommissioning which will
reflect market conditions and regulations at that time. Furthermore, the
timing of decommissioning is uncertain and is likely to depend on when the
fields cease to produce at economically viable rates. This, in turn, will
depend on factors such as future oil prices, which are inherently uncertain.
The Group applies an inflation adjustment to the current cost estimates and
discounts the resulting cash flows using a risk free discount rate. The
provision estimate incorporates the long term UK target inflation rate of 2%
subject to a higher rate applied for 2026 since the prevailing inflation rate
at the balance sheet date is higher than the target inflation rate. The
discount rate used in the provision calculation as at 31 December 2025 ranged
from 3.0% to 6.5% (2024: 3.0% to 6.3%). The increase in the risk free discount
rate during the year is mainly due to the increase in the yield on UK
government bonds for periods comparable to the life of the provision.
At 31 December 2025, the Group reassessed the decommissioning provision which
resulted in an increase of £1.0 million in the value of the liability. The
change comprises an increase of £2.3 million due to a change in the base
costs, offset by a £0.5 million decrease due to change in discount rate and a
£0.8 million decrease due to a change in the expected timing of abandonment
activities.
Management performed sensitivity analysis to assess the impact of changes to
the risk free rate on the Group's decommissioning provision balance. A 0.5%
decrease in the risk free rate assumption would result in an increase in the
decommissioning provision by £4.7 million. Management also performed
sensitivity analysis to assess the impact of changes to the undiscounted
future cost of abandoning wells and restoring sites on the Group's
decommissioning provision balance. A 10% increase in the undiscounted future
cost would result in an increase in the decommissioning provision by £6.0
million.
Contingent consideration
The carrying value of provision for contingent consideration at the beginning
of the year related to the acquisition of GT Energy UK Limited, which was
payable in shares and was dependent on the achievement of a business
development milestone by the 5(th) anniversary of completion of the GT Energy
share purchase agreement (SPA). The milestone completion date lapsed during
the year without the milestone being achieved, hence the provision for
contingent consideration was released in full during the year.
In the previous year, provision for contingent consideration of £2.3 million
was released following the cancellation of the geothermal project In
Stoke-on-Trent (see note 6) which meant that it was not possible to achieve
any of the milestones in the GT Energy SPA with the exception of the "business
development" milestone referred above.
11 Subsequent events
· On 24 April 2026, the Group announced that it had signed an
agreement for the sale of its three Croatian geothermal licences. The
consideration for the sale includes €1.5 million payable on completion
(€1.3 million net to Star Energy in accordance with the A14 Energy Limited
shareholder agreements) and a financial earn out of €0.5 million per licence
on commencement of operations. The sale releases €5.2 million of restricted
cash and removes future capital commitments, strengthening our balance sheet
and enhancing financial flexibility, while enabling value-accretive capital
allocation. Given the delay in the announcement of a premium price tariff for
geothermal projects in Croatia by the Croatian Government, the Group believes
that the sale of its Croatian subsidiary (IGeoPen doo za trogovinu i usluge)
is in the best interests of its shareholders. The transaction delivers a clear
strategic refocus of the Group's portfolio, allowing management to concentrate
on its core UK oil and gas and geothermal assets. Completion is expected in H2
2026.
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