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(Sharecast News) - Star Energy Group reported lower-than-expected 2025 production on Wednesday, but said it strengthened cost discipline and liquidity as it prepares for modest output growth in 2026.
Net production for the year ended 31 December averaged 1,886 barrels of oil equivalent per day.
The AIM-traded company said it expected output of around 2,000 daily equivalent barrels in 2026, supported by a flexible capital programme focused on quick-return and resilience projects.
Production in 2025 was impacted by unplanned National Grid outages and a pipeline failure at Gainsborough and Welton, as well as water disposal constraints at Stockbridge, where production was expected to be reinstated in the third quarter of 2026 following well conversion works.
The group said it delivered general and administrative savings of more than 2m year-on-year and reduced geothermal expenditure by approximately 1.2m compared with 2024, while continuing to progress higher-value geothermal opportunities in Manchester and Southampton.
It said it invested 5.3m in oil and gas assets during 2025, including 2.7m on the Singleton gas-to-wire project, and expected to spend around 6.3m in 2026, of which 2.6m was earmarked to complete Singleton ahead of a targeted second-quarter 2026 start-up.
The project was forecast to add approximately 74 barrels of oil equivalent per day.
Cash as at 31 December stood at 7.6m, excluding restricted cash, with 11.9m drawn under its loan facility.
Restricted cash of 4.5m related to performance bonds for Croatian licence commitments.
The company said it also completed the sale of non-core land in the first half for 6.3m and recorded a realised oil hedging gain of 1.2m.
Energy Profits Levy payments totalled 1.7m and 1m in respect of the 2024 and 2023 tax years respectively.
"Our focus remains on deploying our capital as rigorously as possible combined with delivering a strong operational performance," said chief executive Ross Glover.
He added that despite oil price volatility and operational challenges, the company "strengthened the resilience of the core oil and gas business, delivering material administrative cost savings of more than 2m and maintaining effective downside protection through our hedging programme."
Glover said the Singleton gas-to-wire project had been delayed by regulatory approvals and grid connection works but that commissioning remained targeted for the second quarter of 2026.
Looking ahead, he said the company would continue to improve profitability in oil and gas while seeking to generate value from geothermal assets and evaluate acquisition opportunities that can utilise its substantial UK tax losses and allowances.
At 1215 GMT, shares in Star Energy Group were up 0.74% at 13.6p.
Reporting by Josh White for Sharecast.com.