Star Energy (LON: STAR) is moving into geothermal project development in Croatia. This is part of the company’s move to refocus from gas to geothermal energy. The acquired business has an experienced team, and the Croatian government is supportive of the sector. The share price slipped 2.33% to 10.9p and it has fallen by one-third so far in 2023.
A 51% interest in A14 Energy is being acquired for €1.3m in cash plus €300,000 back costs. A14 owns the Ernestinovo licence in the Pannonian Basin in Croatia. Bids have been placed for further licences. Up to €1.5m more is payable if the licences are granted.
AIM-quoted Star Energy will fully carry the gross cost of up to €13.2m for up to four wells over the next five years. That is repayable from future cash flows. There is a commitment to re-enter an existing well by April 2024 and that will cost €1.47m.
Croatia has one geothermal power project in operation, with a capacity of 17.5 Mwe, and the local geology is highly prospective. It is estimated that the potential for geothermal energy is more than 1GW.
Star Energy is also seeking projects in the UK. It has an agreement with Cornish Lithium to evaluate sites for geothermal heat in southwest England.