Star Energy’s 2025 trading update: cost cuts, cash discipline, and a share price revival
Star Energy Group has posted an unaudited trading update for the year to 31 December 2025, and it’s a notably pragmatic one. The company has tightened its belt, protected cash, and kept optionality for 2026, even as some operational bumps held back volumes. The market seems to like it: the share price moved from 7.4p on 2 January 2025 to 9.5p at year end and stood at 13.5p on 24 February 2026.
Below I break down the key numbers, where performance was strong, where it fell short, and what could move the shares next.
Key numbers at a glance
| Average net production (2025) | 1,886 boe/d |
| 2026 production guidance | c.2,000 boe/d |
| Cash (31 Dec 2025) | £7.6 million (excl. restricted cash) |
| Debt drawn (loan facility) | £11.9 million (€13.6 million) |
| Restricted cash | £4.5 million (€5.2 million) for Croatian licence performance bonds |
| G&A savings (year-on-year) | More than £2.0 million |
| Geothermal spend reduction (vs 2024) | c.£1.2 million |
| Oil & gas investment (2025) | £5.3 million (incl. £2.7 million on Singleton gas-to-wire) |
| Forecast abandonment spend | £1.4 million |
| 2026 capex guidance | c.£6.3 million (incl. £2.6 million to complete Singleton) |
| Singleton gas-to-wire start-up target | Q2 2026; forecast c.74 boe/d |
| 2025 realised oil hedging gain | £1.2 million |
| Energy Profits Levy payments | £1.7 million (2024 profits) and £1.0 million (2023 profits) |
| Non-core asset sale proceeds | £6.3 million (H1 2025) |
Notes: Figures are unaudited and may change.
Operational performance: softer volumes, clear fixes in motion
Production averaged 1,886 boe/d in 2025. Boe/d stands for barrels of oil equivalent per day – a standard way to combine oil and gas output into one metric. Management admits this came in below expectations, and explains why:
- Gainsborough and Welton were hit by unplanned National Grid power outages during summer upgrade works, plus a process pipeline failure. The grid works are now completed, no 2026 shutdowns are scheduled, and the pipeline issue is fixed.
- Stockbridge faced water disposal constraints. Star plans to convert a production well into a water injector and expects production to be reinstated in Q3 2026.
On balance, there’s a credible path to improved uptime. The 2026 guide of around 2,000 boe/d looks sensible given the resolved grid issues and ongoing field-by-field optimisation work. It is not a high-growth outlook, but it is a stabilising one.
Singleton gas-to-wire: delayed but nearing the line
The flagship gas-to-wire project at Singleton – generating electricity on site for sale to the grid – saw delays due to drawn-out regulatory approvals and the final grid connection. All major plant items are installed, and Star continues to target commissioning in Q2 2026, with forecast production of around 74 boe/d equivalent.
Gas-to-wire can be attractive for onshore operators because it sidesteps some gas export bottlenecks and can capture local power pricing. The remaining £2.6 million to complete in 2026 is a meaningful slice of capex, so hitting that Q2 date will matter for delivery credibility and cash generation.
Cost discipline and balance sheet: the standout positives
Two things jump out. First, general and administrative (G&A) costs have come down by more than £2.0 million year-on-year, with discipline set to continue into 2026. Second, geothermal spend has been trimmed by around £1.2 million versus 2024, while keeping focus on the highest-value opportunities in Manchester and Southampton.
On liquidity, cash at year end was £7.6 million (excluding restricted cash), with £11.9 million drawn on the loan facility. Restricted cash of £4.5 million is tied up in Croatian licence performance bonds – ringfenced, but worth noting. The £6.3 million sale of non-core land in H1 2025 was well-timed and, alongside operating cash flow, supported continued investment and a reduction in net debt.
The hedging programme also did its job in a choppy oil price year, delivering a £1.2 million realised gain. Hedging – locking in future prices to protect against downside – remains in place for 2026 given a forecast of market oversupply. That prudence is welcome in a small-cap producer.
Tax, capex and optionality: setting up for 2026
Star paid the Energy Profits Levy – the UK’s windfall tax on oil and gas producers – of £1.7 million and £1.0 million in relation to taxable profits for 2024 and 2023, respectively. Despite that drag, 2026 capital expenditure is being kept flexible at around £6.3 million, including £2.6 million to complete Singleton.
Management is keeping the door open to acquisitions that make use of Star’s substantial UK tax losses and allowances. That can be powerful: the right deal structure can materially enhance after-tax returns. Execution will be key, but the intent is clear – grow value per share, not just volume.
Geothermal: spend trimmed, options preserved
Geothermal outlay was cut in 2025, but the company continues to progress its most attractive UK and Croatian opportunities, specifically flagging Manchester and Southampton. This strikes me as sensible capital sequencing. In a tighter oil and gas market, preserving the pipeline while lowering cash burn is the right balance until policy frameworks are more supportive.
Why this update matters for shareholders
- Resilience over reach: Star has prioritised cash, cost, and uptime rather than chasing growth for growth’s sake. That’s de-risking the equity story.
- Clear operational remedies: The 2025 issues were mostly external or discrete. With grid works complete and a water injection fix planned at Stockbridge, there’s a visible path to steadier production.
- Near-term catalyst in Singleton: Commissioning in Q2 2026 is the main operational milestone. Delivery here will support the 2026 production target and demonstrate project execution.
- Strategic M&A angle: Using tax losses to enhance returns on acquisitions could be a differentiator if pricing is sensible.
Balanced take: what’s good, what to watch
Positives
- Material G&A savings of more than £2.0 million underpin a lower cost base.
- Strong liquidity management, including £6.3 million proceeds from non-core disposals and active hedging delivering £1.2 million of gains.
- 2026 production guidance of around 2,000 boe/d feels achievable given resolved outages and planned field optimisation.
- Capex flexibility gives room to manoeuvre if market conditions shift.
Risks and sensitivities
- Singleton timeline: further delays to the grid connection would push out the c.74 boe/d contribution and weigh on sentiment.
- Stockbridge reinstatement: converting to water injection is a logical fix, but Q3 2026 is still a future-dated milestone to deliver.
- Commodity prices: downside is partially hedged for 2026, but sustained weakness would still pressure cash flow.
Outlook and catalysts to watch in 2026
- Singleton commissioning in Q2 2026 and early runtime performance.
- Field-by-field optimisation results and any uplift toward the c.2,000 boe/d guidance.
- Progress on Stockbridge water injection and production reinstatement in Q3 2026.
- Any accretive acquisitions leveraging UK tax losses and allowances.
- Updates on geothermal in Manchester and Southampton as policy clarity evolves.
Final word
This is a steady, confidence-building update from Star Energy. 2025 volumes disappointed, but the root causes look addressed, and management has leaned into cost control, hedging, and balance sheet discipline. With a tangible Q2 2026 catalyst at Singleton and a sensible production guide, the near-term focus is execution. If they hit the milestones they’ve set out here, there’s scope for the recent share price momentum to remain supported.
