Star Energy is looking to diversify from a conventional UK onshore oil and gas producer into a geographically diversified energy company. In seeking to leverage its extensive skills developed through decades of operations in the oil and gas industry into the geothermal industry, we see the company as approaching the energy transition pragmatically and sensibly. Star currently produces c.2000 barrels of oil equivalents per day in the UK and is using these cash flows to support its nascent geothermal operations in the UK and Croatia, where it has the opportunity to become a market leader. Our base case valuation sees the shares at 46p based on the existing oil and gas base and development of its two NHS trust geothermal projects in the UK and its Croatian licence position.
