Star Energy and Union Jack Oil have reported falling profits in interim accounts published this week.

After tax profits at Star Energy, formerly IGas, fell 97% in the first half of 2023, compared with the same period in 2022.

Union Jack saw net profits fall 72% and revenues 18% in the six months to June 2023, compared with 2022. (More details see section headed Union Jack predicts “rich pickings” and looks “further afield” for opportunities)

Star Energy profits hit by taxes and falling prices

Star Energy half year accounts, published today, reported net production was up 11% but total revenue, on lower commodity prices, was down 22%.

The company also had a tax bill of £3.7m, compared with a credit of £13.2m in the same period last year.

Star Energy’s chief executive, Chris Hopkinson, said:

“Maximising returns from our conventional oil and gas business remains a key focus for us, given its free cash generation, particularly with improving commodity prices. 

“Consistently strong production and strong dollar offset lower commodity prices compared to the same period a year before.”

The accounts reported that revenue fell from £30.5m in the first six months of 2022 to £23.8m in 2022. After tax profit was down from £19.4m to £0.5m over the same period.

Production volume rose to 2,071 boepd (barrels of oil equivalent per day), up from 1,865 boepd in 2022.

Operating costs were higher but administrative expenses fell slightly.

Star Energy site updates

Bletchingley, Surrey: Environmental permit decision on gas-to-wire project expected by end of 2023.

Corringham, Lincolnshire: Site construction upgrade nearing completion to drill additional well.

Glentworth, Lincolnshire: Planning permission granted for new oil site with initial appraisal well and up to six horizontal wells. Environmental permit decision expected by end of 2023.

Springs Road, Misson, Nottinghamshire: Plugging and abandonment due in remainder of 2023.

Salisbury and Manchester: NHS hospital trust geothermal contracts awarded.

Stoke-on-Trent: No update on grant funding for geothermal project.

Other sites: Star Energy said it had fully abandoned three wells and geologically abandoned a further three. It did not identify the wells. It gave no details of plans to resume oil production at Avington in the South Downs National Park.

Star Energy key figures for six months to 30 June 2023

Revenue: 23.8m (six months to 30 June 2022 £30.5m)

Sales volume: 361,549 barrels of oil, 4,870 Mwh of electricity and 988,421 therms of gas (six months to 30 June 2022 316,171 barrels of oil, 6,231 Mwh of electricity and 938,203 therms of gas)

Sales value: oil £21.9m, electricity £0.69m gas £1.14m (six months to 30 June 2022 oil £27.3m, electricity £1.39m, gas £1.7m

Brent crude prices: $79.8/bbl (six months to 30 June 2022 $107.6/bbl)

Adjusted EBITDA (earnings before interest, taxes and depreciation): £9.4m (six months to 30 June 2022 £10.7m)

Profit after tax: £0.5m (six months to 30 June 2022 £19.4m)

Operating cash flow: £8.5m (six months to 30 June 2022 £16.4m)

Operating costs: £12.3m (six months to 30 June 2022 £10.8m)

Admin expenses: £2.6m (six months to 30 June 2022 £2.8m)

Exploration write-offs: Nil (six months to 30 June 2022 £6.5m)

Impairment charge or reversal: Nil (six months to 30 June 2022 £10.5m plus £1.5m for Lybster licence)

Decommissioning costs: £1.6m (six months to 30 June 2022 £0.6m)

Net finance costs: £1.9m (six months to 30 June 2022 £2.9m)

Net debt: £4m (six months to 30 June 2022 £9.7m)

Cash and cash equivalents: £1.5m (six months to 30 June 2022 £2.7m)

Net production: 2,071 boepd (six months to 30 June 2022 1,865 boepd)

Net assets: £59.3m (six months to 30 June 2022 £58.3m)

Annual production estimate for 2023: 2,000 boepd

Ring fence tax losses: £259m

Union Jack predicts “rich pickings” and looks “further afield” for opportunities

Union Jack accounts, published earlier this week (11 September 2023), suggested:

“Several rich pickings remain which could be transformed into substantive discoveries over the coming years.”

But the company’s executive chairman, David Bramhill, said:

“the rate of progress can only be described as painfully slow due to the wider UK regulatory process”.

He said to mitigate future risk, the board had been “compelled strategically to seek growth opportunities further afield in politically safe regimes and with sympathetic views towards the oil industry”.

The company said it was “seeking projects that will be self-funding in the short term, without placing undue strain on our balance sheet”.

The interim accounts, for the six months to June 2023, reported net profits down to £0.57m, from £2.03m in the same period in 2022.

Revenue was down from £4.38m in the half year to June 2022 to £3.58m. Admin expenses were up from £0.79m in 2022 to £0.96m in 2023.

Union Jack site update

Biscathorpe: Awaiting decision by planning inspectorate on sidetrack targeting the Dinantian Carbonate and long-term oil production.

Keddington: Trajectory for sidetrack oil well agreed (planning permission in place) and rig procurement underway.

North Kelsey: New application to be submitted for time extension to allow drilling and testing.

West Newton-B: Drilling a 1,500m horizontal oil/gas well awaited.

Wressle: Drilling programme targeting oil in the Penistone Flags planned for 2024. Planning application in preparation. Water cut has remained at about 3.72% from late June into July and August 2023., .

Union Jack key figures for six months to June 2023

Gross profit: £1.6m (six months to 30 June 2022 £2.83m)

Net profit: £0.57m (six months to 30 June 2022 £2.03m)

Revenue: £3.58m (£4.38m)

Cash balances: in excess of £9.250m

Total admin expenses: £0.96m (six months to 30 June 2022 £0.79m)

Net assets: £22.3m (six months to 30 June 2022 £22.7m)

Cash and cash equivalents at beginning of period: £7.15m (six months to 30 June 2022 £5.9m)