Star Energy has signed an agreement for the sale of its Croatian subsidiary IGeoPen to Enna Geo, with the subsidiary holding three Croatian geothermal exploration licenses: Ernestinovo, Sjece and Pcelic.
IGeoPen’s direct parent is A14 Energy, which Star Energy owns 71% off, with the other 29% owned by Peninsula International.
Considerations of the sale consisted of an initial EUR€1.5mn and a financial earn-out of EUR€500,000 per license, which is payable on the commercial operation date of a geothermal power plant developed at each of the three licenses.
The Group believes the sale of IGeoPen is in the best interests of the shareholders, given the delay of a premium price tariff for geothermal projects in Croatia by the Government. The Group will refocus on its portfolio, allowing management to concentrate on its core UK oil and gas and geothermal assets.
Ross Glover, Chief Executive Officer at Star Energy, said, “This transaction is about capital discipline, simplification and strategic focus. It releases meaningful cash of EUR€5.2 million, enhances financial flexibility and enables us to focus fully on our UK operations, where we see the clearest path to value creation.
“That puts management's attention firmly where we see the best route to creating shareholder value: a stronger and more resilient UK oil and gas business, pursuing inorganic oil and gas growth opportunities to create value from our £250 million of tax losses, and maintaining our UK geothermal option at low cost while we continue to push for policy change in both geothermal energy, but also in domestic oil and gas production.”