Star Energy has acquired 51% of the issued share capital of A14 Energy in a €1.3m (£1.1m) deal, as it looks to transition into the geothermal energy space.

The UK-based energy firm suggested the move will diversify its regulatory risk as well as provide an entry into the electricity generation sector.

A14 Energy owns, via its Croatian subsidiary, IGeoPen, the Ernestinovo geothermal waters exploration licence in the Pannonian Basin in Croatia. The IGeoPen team will leave Star Energy well positioned to deliver geothermal energy in Croatia.

The geothermal sector is a fundamental component of the energy transition, with the ability to provide long-term baseload electricity and heat generation. Star Energy has decades of experience of sub-surface analysis, onshore drilling, well management and environmental control from its portfolio of oil and gas operations in the UK.

As part of the transaction, the interest in A14 Energy has been acquired by Star Energy’s subsidiary, GT Energy Croatia (GTEC), from Peninsula International for a total cash consideration of €1.3m (£1.1m). Star Energy will pay €100,000 (£85,800), relating to the provision of cash backed guarantees to the Croatian Hydrocarbon Agency, as well as €200,000 (£171,600) in back costs relating to the ongoing appraisal of the Ernestinovo licence.

Furthermore, GTEC has entered into a shareholders’ agreement with Peninsula in order to jointly develop and submit bids, and thereafter to own, construct and operate geothermal projects in Croatia.

GTEC and Peninsula, through IGeoPen, have jointly submitted three bids for geothermal licences to the Croatian Hydrocarbon Agency as part of the current licencing round and are expecting the results of the bids by December. A further aggregate amount of up to €1.5m (£1.3m) will be payable upon the successful award of these licences.

Star Energy CEO, Chris Hopkinson, said: “We are very pleased to announce our first overseas investment in geothermal as we look to build momentum in this part of our business.

“Whilst the business has, and continues to build, a material pipeline of business opportunities in the UK, we identified a significant opportunity in Croatia which will allow faster development and diversification of Star Energy’s geothermal interests. The Croatian Government is actively promoting the sector with a focus on electricity production which should allow accelerated development.

“This is an important next step in our strategy to transition over time into a significant player in the geothermal market and to deliver future value for our shareholders.”

Director of A14 Energy, Dragutin Domitrovic, added: “We are excited to be working with the team at Star Energy. The combination of our understanding of Croatia’s geology and Star Energy’s successful track record of operating projects onshore will be mutually beneficial to both companies. This represents a significant opportunity to accelerate the development of geothermal projects in Croatia.”

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