Star Energy Group (LSE:STAR) — Croatian Geothermal Acquisition

0:00 Good morning, and welcome to the STAR ENERGY GROUP PLC investor presentation. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review your questions submitted today and publish responses where it is appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Chris Hopkinson, CEO. Good morning, sir.

0:31 Good morning, everybody, and thank you very much for joining us on this STAR ENERGY GROUP PLC webinar. We're gonna take you I've I've got Ross Glover, my COO, with me. We're gonna take you through our interim results presentation. And then we've got a number of questions that have already been submitted. And as was just said, we welcome any further questions. We'll do our best to answer them. Quite a few of the questions that have been submitted already have been will be covered in the presentation. And, yeah, thank you very much for joining us. Let's start. So the story, as far as STAR ENERGY is concerned is about delivering and about growth. So, a year ago, when I joined as CEO, we talked about delivering on our promises, and that's something that we have been working very, very hard on, particularly on the conventional side of the business.

1:29 And what have we delivered? Well, we we've you know, obviously, we've rebranded. We've restructured, and we are delivering extremely well on our production. Production is on track as far as our guidance is concerned, and in fact, it's slightly above. We had a big drive towards the end of last year on on the production side of things. And this year, we've been focusing very much on delivering value barrels, and that's all going extremely well. I I would, you know, honestly say that our operations are of a very, very high standard. So it's operational excellence. It's delivering extremely good production. Our projects are progressing, and we'll talk a little bit later about some of the projects that we are executing at the moment and the ones that we have lined up and ready to execute.

2:21 And we have been following our strategy of campaign abandonment, and we can talk a little bit more about that later again. But it's about abandoning whole fields, which has a positive impact on our OpEx, but also allows us to deliver savings as we go through those abandonment programs, and that's been working extremely well. As far as growth is concerned, within our conventional business, we've been focusing on incremental production gains. We have been doing some very good asset stimulations on our well stock, which have been delivering results which are well above our forecast, and that's been due to some innovative new ways of doing things that we've been executing.

3:08 The projects that we have have got very, very strong economics. And on the other side, which is the geothermal, and we'll talk a lot more about the geothermal as we go forward in this presentation. But on geothermal, we have our NHS projects. And, obviously, we have the Croatian geothermal acquisition, which gives us a diversification out of The UK and also a diversification into power generation.

3:37 So as far as our financial highlights are concerned, I think, you know, I'm not gonna read through every line on this slide. It's all been in our results that were announced. But I think the straw the the things that are important to mention here are strong operating cash flow. Oil prices are, you know, improving and are pretty good at the moment, and that's helping us. But it's really backed by the very, very good production that we have managed not only achieve, but we're managing to maintain.

4:07 Net debt is reducing, and it's in line with, you know, our our requirement to reduce that net debt as far as our RBL is concerned. We're on track to pay off the debt, in June next year.

4:24 OpEx is also, coming down a little bit. I think this has been it a it's bit of an interesting story, the OpEx, because the underlying performance is absolutely excellent. And it's masked, unfortunately, by the fact that we have high inflationary, pressures, as everybody does and everybody knows, you know, cost of materials, cost of power have all come up. And, unfortunately, that doesn't really then translate into a an overall OpEx reduction of very much at all. But underlying this is an enormous amount of hard work that has gone in to allow us to actually maintain these kind of OpEx levels. And hopefully, as inflation comes back down again, maybe we'll hear some more news about that today. But as inflation continues to drop, we'll see those OpEx numbers come down. Obviously, we have the ring fenced tax losses.

5:10 Everybody knows about those. And our profits levy charge for, is gonna be, 900,000, payable next year.

5:24 Ross, do you wanna take us through some of the oil and gas highlights?

5:36 Good morning. So as as Chris said, oil and gas, the business, what's the the I suppose the headline messages that is now stabilized. We have stabilized our production. As Chris said, it's sitting sort of above our guidance for this year. And fundamental to that is actually our our well uptime across our portfolio. So sort of a year ago, we were sitting at 68%. That actually dipped further in q three of twenty twenty two. We're now sitting at sort of well uptime about 80% across the portfolio. And while there is still further work to do there, actually, the further work to do is more around maximizing production from the high producer, low OpEx wells. So it's this this focus on value.

6:35 We have in the past chased every barrel out there. We are now not chasing every barrel out there. We are starting to chase the valuable barrels out there. We have been chasing the valuable barrels that are out there. Some of the ways that we've been working on both the OpEx and the the the production uplifts are are small CapEx spends with very quick paybacks. So an example of this is well stimulation program that we've had throughout our our wells. Very simple, asset stimulation program. Nothing particularly special about it other than a couple of our engineers have come up with a sort of a unique way of doing it within our well stock, and we've seen production, sort of enhancements twice what we'd expect to get out of out of that well simulation program. So, you know, very low CapEx on a on a per per well basis, and we're not getting, you know, lots and lots of barrels out, but we're getting five, ten, twenty, thirty barrels a well uplift, in some cases. So hugely important, for an asset portfolio like ours.

7:52 We talked about OpEx. Again, what have we been doing on on OpEx? Small expenditure, simplifying sites, streamlining operations, and actually making conscious decisions, to not work over some high, OpEx wells. And, again, that focus on value is is fundamental. That feeds into our decommissioning program, very successful decommissioning program through the first half of this year. We've seen well on well cost reductions circa just under 10, and it's really proving our thesis that that campaign abandonment works and drives out cost.

8:39 We're doing that currently with a third party rig. We are looking at the market and considering our options around secondhand rigs or whether it's better to to to to go or go out and and give a long term contract to a service provider. That that's sort of a question that needs to be answered. And the way we're answering that is gathering more data around the existing campaign. Onto the development opportunities within the oil and gas business. Many of you will have seen these projects before. What we have been doing is these are now all largely at FID stage.

9:24 Corringham is actually past that. We have we we've we've all nearing completion of the well pad at Corringham. But the other two, Glentworth and Bletchingly, we are waiting for, environmental permits. That has been one of our big frustrations, continues to be one of our big frustrations is the environment agency delaying the issue of permits. We're not looking for anything special in these permits. It is just a very, very long backlog within the environment agency, and that's a backlog that is faced by by almost all industries that need to go through the environment agency. It's not not specific to to us and oil and gas. You know, you can note that or note very strong economics in all three projects. These economics are actually at $75 a barrel oil price.

10:13 You know? So Glen Glenworth and Coringham, which are oil projects, you can see a significant increase in those or or an improvement in those economics with the current oil price. And, really, FID is dependent on or first, getting the environmental permits on on the on the projects where those are outstanding and then on our on our capital allocation within the organization. Outside of these specific projects, we continue to work up longer term, development opportunities. They are really focused on our core fields around Welton, Singleton, those sort of areas. That's where we see, the potential for, I suppose, the most value, with infill drilling and and that type of activity. But but, you know, those are at early stage still.

11:12 Now turning to our geothermal business. As you know, we have a geothermal business both in The UK and Croatia. I'll I'll I'll talk to The UK opportunity and then hand over to Chris on the on the Croatian opportunity.

11:30 As you're all aware, the geothermal opportunity for us in The UK is around heat and the provision of heat. And, really, what why are we doing this? Aside from the complementary skill sets that we have within the business, it's an enormous market in The UK. There is still and continues to be a very strong drive to decarbonize, and that's very, very strong within the the public sector. But the hard to decarbonize areas are heat and space heating. It is an enormous market.

12:07 The space heating market there, you know, there's 750 terawatt hours per annum. Well, that's equivalent to 11,010 megawatt geothermal plants. Now there is, of course, not going to be the opportunity for 11,010 megawatt geothermal plants because the geology may not be right in certain areas. Nevertheless, it's a huge, huge market. Within our pipeline, we've been maturing that pipeline. We have 35 qualified opportunities, within that. That is broad range of, projects such as our Stoke project, which is feeding heat into district network a heat network. It direct supply to NHS trusts and supply of of of heat into industrial users.

12:59 So it's a fairly broad range. Just to mention on the Stoke project, there has been a question about whether the the the grant application has been rejected. I can categorically say that is not the case. We continue to work with Stoke City Council and SSE on on that project, and we are collectively advancing it.

13:29 Just turning to the opportunities that we see within the NHS, and you will have seen a couple of announcements from us in the part in the last few months about, our success, with Insure Hospital and Salisbury Hospital. There have also been there there have been a number of reports, within the last few months about the opportunity within the public sector estate and specifically, most recently, within the NHS estate. Report is available for anybody to look at, but the headline is, you know, there are over 300 hospitals, requiring decarbonization. Many of those sit within geologically prospective areas for us. And so the so the the NHS appears to be looking to geothermal for a solution.

14:21 The first indication of that is that there are five five tenders were run at the back end of last year. Two of them have been awarded, and so far, we have won both of them, and we expect some further success from those five tenders. There will be more, we are assured, at the back end of this year and the beginning of next year. Just a little showcase of what what is project with Salisbury, for example. It's in a number of phases. The first phase is the feasibility and design phase. I think the key to note here is that, certainly in the case of Salisbury, the feasibility and design phase is grant funded, and we see that with a lot of the NHS and and actually a lot of the geothermal projects is that we're able to access government grant money.

15:17 And that could be government grant money that is targeted at district heat networks. It could be government grant money that is targeted at decarbonizing the public sector, but we are able to access that, and that obviously supports all the work that we do, for the NHS trust or for the end customer. And it obviously reduces our cash burn quite significantly on these projects, often to zero. I say there's three phases. We've talked about the feasibility and design. Now that is ongoing at both within Shaw and Salisbury at the moment. It's about an eighteen month period, and we'll we'll we'll cover anything from the acquisition of further seismic data, through to planning and permitting for the the sites, on which the geothermal plant will be located.

16:11 Moves into the next phase of construction, fairly significant capital cost there. Again, we're able to access fairly significant amounts of, money to support that, And where grant money does not cover that construction phase, we know that there is a readily available debt market. We understand some of the the terms or the terms on which debt is is is offered to these projects, and it is, it is fairly attractive, when it's compared with some of the other, sort of debt facilities that we look at as a business as a whole. And what are we after in the end? We're after these long term twenty plus year off take agreements with the NHS trust. So government backed index linked revenue streams, which which are are very, very valuable from an investment perspective.

17:13 So, yeah, I think that's a that's that's an NHS trust project in a nutshell. We're targeting IRRs in a sort of late teen to 20 to 25% level. That's a project IRR. We're obviously able to bring a lot of both grant and debt money to that, and therefore, the equity requirements are relatively limited. So I suppose a headline on The UK geothermal side of things, it's a huge opportunity. It's a huge opportunity, which is quite often backed by long term government revenue streams,

17:54 which are very valuable to us. We are we we we are constantly developing our pipeline, and we see the the pipeline itself as being very valuable.

18:13 I'll just hand over to Chris now who, will take you through the Croatian geothermal opportunity that we have. Okay. Thank you very much, Ross. Croatia, Why have we decided to diversify into a market outside The UK? Well, there are a number of very, very good reasons for that. First of all is that Croatia sits on a hotspot in Europe. If you look at the, the little, map of Croatia on the slide at the moment, the red area is the hotspot. It's the Parmanian Basin, and we are seeing temperatures there of a range between a 160 degrees centigrade and 230,240 degrees centigrade.

19:04 To put that in perspective, in The UK, we're talking 90 to a 110 degrees centigrade. So The UK is very much in the heat generation, window, and Croatia is plunk in the middle of the power generation window. So we diversify away from just being a heat provider into being an electricity generation provider.

19:28 Second reason that Croatia is very interesting for us is the sheer quantity of data that we have. So the Yugoslavian oil company in its time following good Soviet practices, drilled pretty much on a grid the whole country and didn't only drill a lot of wells, but they drilled them all to about 5,000 meters. And then they tested all of the formations including the geothermal brine. So what do we have in Croatia? I mean, the things that we need in order to lower the risk, for a geothermal project is we need to know that it's hot, and we know that because we have a lot of wells, and we and we understand the geothermal gradient very, very well. And we need to know what is the flow rate.

20:13 And we have and I'll talk a minute in a minute about an where we have three

20:19 wells that on the block that have already been drilled and have been flow tested, so we know the flow rate. And if we look at the licenses that we've applied for in the tender round, we have between six and nine wells on each of those blocks with flow rates. So the risk profile in Croatia is extremely low. It's as close to being a development project as you can get.

20:45 Croatia is also part of the EU. They've adopted the euro, so we don't have exchange rate risks, and the regulations are easy to follow. The Croatian government is very, very keen on geothermal. They have recently announced that they are targeting a gigawatt of electricity generation through geothermal. And one of the things that we have seen already in the work that we've already started on our first project in Astinaware is we've seen that planning, permitting, and environmental,

21:18 you know, it's very, very well regulated, but the support from the government is there, and we get those planning permits and environmental permits, etcetera. We get them extremely quickly and far quicker than we have been experiencing in The UK.

21:35 So moving on to the next slide. So the acquisition that we have made. So, STAR ENERGY has acquired 51% interest in a fourteen ENERGY that owns, IGA PEN, which in itself owns our existing license, which is an AstinaVer. We that license is extremely prospective, and I'm gonna tell you a little bit more about that in a second. We've also, as I mentioned and we've announced before, is we have submitted three bids for exploration licenses in geothermal in the middle of that basin along the same line as Ernest Dinova. And those block those bids are extremely prospective, and we have an enormous amount of data on them already.

22:25 And we are hoping to hear by the end of this year about the success of those bids. Obviously, we don't know how successfully we're gonna be, but I think a good indication is that there were 11 companies bid over the five licenses that were put up.

22:40 And some of those companies were were were yeah. They're fairly big companies. There's a huge amount of interest in Croatia at the moment, but we are early into the game. And, you know, we think that we've positioned ourselves very strongly with our partner. And, you know, a few words about our partner. They are a Croatian company who have been heavily involved over the last few years in the geothermal business in Croatia. There is one existing geothermal plant, which is rated for 17 megawatts. It's currently due to grid restrictions producing about 10 megawatts and has been for the last couple of years. The team that we have partnered with constructed that geothermal plant, and it is operating extremely successfully.

23:28 This team has also spent you know, their their past has been in the oil and gas business and the service business in, Croatia, and they have a huge amount of knowledge. So, you know, when we when we were applying for the or putting in our bids for the exploration, licenses, that there was information that they had about particular wells that have been drilled because they were actually involved in drilling them. So they're very, very professional group with a huge amount of detailed knowledge about the geology and about the oil and gas industry, which, of course, helps us in Croatia.

24:02 The way that this deal works, obviously, as I said, we have 51% interest. We provide through GT Energy Croatia a carry on the first exploration well on each of the blocks. That carrier is repayable through free cash flow once the licenses are up and running. And, you know, it's it's a very highly prospective area, and we don't intend to stop just on the licenses that we are currently that we currently own and are currently looking at acquiring. But there are further opportunities in Croatia. There's more licensing rounds coming up. There are other licenses similar to that we can also acquire, and we see this as a huge opportunity to grow a European platform in the in in not just geothermal, but also in the energy, or electricity generation part of the geothermal business.

25:05 A little bit more detail about the license. It's a 76 plus square kilometer exploration license right in that basin. As I said, we've got three exploration three wells have already been drilled and tested. We have a decent amount of two d two d seismic across the block. Our our requirement for this license is we have to reenter the three well. We have already been working on this and preparing the site. We have the planning permission and permits and environmental permits already in place. The intention is to start that reentry so that we can test that well. It's an exploration license requirement. We will test that well again, and then we will submit to the agency to extend or to trans transfer our license into a development license.

25:58 We the preliminary information we have from the three wells that have been tested is that we will put on a 10 megawatt electricity generation plant. That will include four producers and two injectors. And we will make use of the wells we currently have on the block for that, so we won't be drilling all of those. And then we will be connecting into the grid, which is about two kilometers away from our site. We've already been out to Croatia, obviously, and we have met with the the people at the grid.

26:32 And the they they are they have room to take the electricity that we'll be generating, but there is a preferential treatment for geothermal energy. So we are very you know, we know that the grid is there for us and that we will be able to deliver our electricity into the grid at that that substation.

26:57 So to recap, what we've just been talking about, it's all about unlocking value. We are still focusing on our conventional business. It underpins and provides a foundation for what we want to do in our move gradually into the geothermal side. So we are definitely a transition business. We are we are transitioning into geothermal because we recognize and understand that our skill sets are ideally suited for that. We know how to drill wells. We know the subsurface, and we can pump fluids through pipes. So and that and that's been demonstrated in our success with the n NHS projects. We see the geothermal as a huge opportunity.

27:44 As Ross explained, in The UK, very little geothermal has been done. If you look at Germany, France, Holland, they've been doing geothermal for many, many, many years, and they they've been doing it very, very successfully. This is not a new technology. And and, actually, the geology that we have in The UK is very similar to the geology in Germany. So we're not doing anything new. We are just taking advantage of the fact that The UK, because of low gas prices in the past, has not done geothermal, and they're just starting to recognize that geothermal is really the only solution for the heat decarbonization that we've been talking about. So grow the geothermal business, but focus on making sure that we are being as operationally efficient as possible and that we are maximizing the value coming out of our conventional business.

28:38 And that's really the story as far as where STAR ENERGY is trying to go at the moment. So thank you very much everybody for listening. And I think now we will go on to answering some of the questions that have been submitted. Chris, Ross, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions just by using the q and a tab situated on the right hand corner of your screen. Just while the company take a few moments to review those questions submitted today, I'd like to remind you that recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor dashboard. As you can see, we have received a number of questions throughout today's presentation, and thank you to all investors for submitting their questions. Could I please ask you to read out the questions and give responses where appropriate to do so? And I'll pick up from you at the end.

29:28 Okay. So thank you for the questions. So first question, could you explain the tax charges for h one twenty twenty three and why existing tax loss provisions are not applicable? Well, the existing tax loss provisions are not applicable, and you're absolutely right. Unfortunately, it's something that it it doesn't just affect us. It affects offshore as well, and it's something we've all been lobbying very hard for. But, unfortunately, that is just the situation at the moment. They are not applicable. We'll continue to lobby for it, but that's unfortunately where we are. I'm sorry. That's not obviously not applicable within the EPL regime? Yeah. The EPL. Yeah. Okay. Excuse me. Next question. Please note that the core business is delivering solid operational progress.

30:19 At your current levels of production circa 2,100 barrels of oil equivalent per day and $90 oil price, what sort of cash does the business throw off before you have to make any CapEx decisions? Well, we're currently generating about a a free cash flow of about 13 to 14,000,000 a year. Obviously, $90, which is slightly above, you know, where we have been over the last few months, we're gonna generate a little bit more than that. I'm not sure I completely understand how much we have to throw off before CapEx decisions are made.

31:04 We're obviously continuously looking at our capital allocation. And, you know, 14 maybe if we're lucky, 15,000,000 a year is a decent cash flow. And once we've paid off our debt, which we'll continue to do, that gives us the operation that gives us the ability to self fund some of the projects that we're moving forward with. I think, you know, we we've looked at more debt or replacing the debt that we currently have through our RBL. At the moment, it's not an easy market. You know, debt is expensive for this type of business. And what we wanna be careful of is we don't want to sort of burden the business with very expensive debt at the moment. We'll just continue to look at the situation as it evolves.

31:56 Okay. Why allocate funds that could be utilized for high IRR coringen projects to Croatia and geothermal long term and high risk projects? Shall I Yeah. Why don't you Okay. I think I think, again, this sort of goes back to the capital allocation point. I think I I made the point within The UK geothermal sector, we're not actually allocating terribly much in the way of funds, our own cash to UK geothermal development that is largely supported by grant funding. And when we look to Croatia, you know, we talk about risk and high risk projects. Coringen, yes, is a is a relatively low risk infill project, but so are the light so are the Croatian projects.

32:46 Chris talked about the huge amount of data that we have available to us for for these all in Croatia. So it does come down to a capital allocation point, but I would, you know, I would say, you know, Corium, absolutely, it's a project that we should do, but so is. So is. What what's, as Chris indicated, you know, let's we we need to allocate that capital to sort of paying off the debt, getting getting rid of that, and then we're onto a self funding basis. While we do that, we can probably support these pro we can support these projects, but, you know, we need we need to look at where the risk actually lies. Croatia is not that high risk.

33:41 K. Next question. Are any rigs being acquired with the business? If so, how many, how old, and what spec? I think this relates to Croatia. The answer there is that, no, we're not acquiring any rigs. What we have acquired is or we are we've entered into a partnership with a very experienced team. There is a very strong supply chain in Croatia. I wish we had a a supply chain in The UK like there is in Croatia. But the the only assets of or the only asset that we have in Croatia is is our share of a license and the team. Okay. What is the indicative IRR and payback period for the prospective Ernest de novo 10 megawatt geothermal electricity plant?

34:38 So on a de novo CapEx is probably looking at it in in the region of 55 50 to €60,000,000. We're looking at IRRs in the the sort of 30 plus range. And I think key for us is is speed of execution. You know, Chris indicated how quickly we've we've managed to get the planning and permits through for the initial work there. We know that there's debt available to these projects. So, you know, they are good, strong economic projects that we can execute fast. Okay. Next question. What are the cash drilling costs per meter or per day for this type of drilling? Again, I think this relates to Yeah, Ross. I mean, you you just mentioned that, you know, there's a very strong supply chain.

35:40 The main drilling company in Croatia has already indicated prices for us for the drilling, and it's less than half of the cost of doing it in The UK. And and this is an outstanding drilling company. We've been there. We've done due diligence. And I I second what Ross said, I wish they were drilling for us in The UK because the the prices are very, very low and the quality is very, very high. Could you update as to the other shareholders who own 49% of a fourteen ENERGY? So, yeah, I I mentioned something about who the team are during the presentation. They are it's not a huge company. There's a small team of people with a massive amount of knowledge related to the oil and gas industry and, therefore, related to the geothermal opportunity. They've been working on geothermal for the last four years.

36:38 They are Croatian nationals who've set up this business specifically based on their experience in the current plant that was built, and they came to us looking for a partner who would join them in developing further opportunities in Croatia because they themselves saw that there was, you know, an enormous amount that could be done with the support that they're getting from the government. Have you locked in the key staff from a 14 ENERGY? And do you plan to build around this team? Yes. We have. They are absolutely locked in, the the key staff, to work with us. Obviously, we've been through the whole process of setting up this joint venture, and that's part of what we've done.

37:25 And we will continue to build around that. We will have our own secondees who will be part of that joint venture team. And, yep, they're already on the ground and working. How are relations with the Croatian authorities? How supportive have they been? Look. That's again, it comes back to the team that we're working with. The team that we're working with has excellent relations with the Croatian authorities. The Croatian authorities have indicated to us that they're extremely happy that we've joined this joint venture. They are looking for direct foreign investment coming into the country, and all indications we've had. And, again, it comes down to the fact that we got our environmental permits within a few weeks.

38:15 You know, the indications we've had at a government level and at a regional level is everybody is extremely supportive, excited to have us in country. And so far, that's been, you know, demonstrated by the speed of execution that we're starting to see. K. What sort of revenue stack do you see in Croatia? Is there a premium for dispatchable power? Are there any ancillary services revenues available? Shall I Yeah, Ross. Lucas. So I think, you know, it's first and foremost, it's sale of electricity. So sale of electricity can really be done in two ways. The Croatian government offers a contract for difference arrangement, very similar to The UK's contract for difference arrangements.

39:11 That is a twelve year CFD. So that that's the principal revenue stream. And so what I should say is there is the option of, obviously, taking the CFD or applying for the CFD or selling bilaterally. And that would be by way of a bilateral power purchase agreement. And we can sell power throughout Europe. That that is EU regulation. There is also the opportunity to obtain carbon credits. We need to look at the structure of the projects, but but these projects can access carbon credits. And that would be a a that that could form a a fairly significant you know, not a major portion, but a significant portion of revenue.

40:05 And as well as that, there is you know, there there are ancillary options like sale of waste heat to to the surrounding areas. It's an agricultural area, it would be for greenhouses and that type of thing. But, frankly, right now, that doesn't really enter our our economics. We are very much focused on you know, it's a pure sale of electricity. If we can get the carbon credits, we will structure the project so we can get the carbon credits so that will add to the value. And I think then if there are follow on heat sales opportunities, great, we'll have those, but it's not part of the the core plan. Right. Sorry. Next question. Please, could you discuss your group CapEx plans for 2023 and 2024?

40:54 By this, I mean, the investments you're planning to make in the business and the well abandonment costs that you expect. Yeah. I think this comes down to, again, capital allocation, and availability of CapEx, of, you know, financing, and it's about being prudent. You know, cash flows are strong as we've already discussed. We don't want to burden ourselves with very heavy debt. So we have a good portfolio of projects, which are all economically very strong, And we will be deciding as we go into 2024 exactly where to allocate that CapEx based on where we generate the most amount of value.

41:40 You know, if we can find financing at the right cost and we could do them all at once, it's obviously something that we would look at because these are good projects. But if that, cost of financing is too high, we can self finance, and, you know, it's been a matter of just ranking the projects against each other and deciding which one we self finance first. K. Can you please run through the economics in Croatia and the risks? Shall I take that? Shall I start? Yeah. You can start that. We can jump in and out on that. I mean, the we've covered quite a bit of this already, actually. Yep. So I think the the, you know, the the economics it it's a different economic model to heat in The UK. I think that's the key.

42:30 You know, this is power generation. CapEx is higher, you know, quite significantly higher, but but, you know, the speed of execution and the return is greater. So we'll we are looking at 30 plus percent IRR on these projects. We execution time from for example, we'd expect to have a field development plan in with the Croatian Hydrocarbon Agency during the course of next year, and FID relatively soon after that, with production, eighteen to twenty four months following that.

43:18 So, you know, a much faster speed of execution, in Croatia. I think the risks we've talked about, the geological risks, which we think are low based on all the information we have. You know, I think I think the the main thing we probably see is is some timing risk, and that that comes down to we we know, and anybody can search up, that there have been some delays in terms of the Croatian government issuing generator permits. That's for wind, solar, geothermal, the lot. We know they're aware of that. We know they're working on it. But I think, you know, we it's it's really time and risk is is is one of the key risks that we that we see out there.

44:08 Anything to add to that, Chris? No. I think you've covered it very well. Okay. Okay. Why is the market slash institutional investor base not supportive of STAR ENERGY? It appears large holders are selling down their holding per notifications, and there have been no holding notifications as to significant new buyers in the STAR ENERGY share register. Well, look. I mean, we are just as frustrated by this as you are. I mean, we all hold shares ourselves. It's extremely frustrating that the share price is where it is today. You know, I I think that a large part of this has been related to the moratorium on shale and the fact that shale just doesn't seem in the medium term to be something that we're gonna be able to be involved with, and we were originally a shale company.

45:00 We've worked very, very hard on our operations as far as our existing conventional business is concerned, and we've demonstrated much better production numbers. We've demonstrated higher efficiency. That's not reflected at all in the share price. Where, you know, we are now a growth company. We're very focused on growing, not only growing by executing projects in conventional, but growing into the conventional side into the geothermal side of the business. Price has been affected recently fairly badly by one of our shareholders who's been selling down, and they will continue to sell down until they get to zero, unfortunately. This was a shareholder who came in purely on the back of shale.

45:47 We met with them a couple of days ago. They like the geothermal business. It just doesn't fit their investment criteria for the fund that they've invested through. They're purely they were purely coming on the back of shale. We've met also, obviously, this week and last week with all of our other major shareholders, and they are supportive. They're equally frustrated with share price at the moment. Our major shareholder is particularly excited about the geothermal opportunity. So, you know, we've got a lot of support, but it's not currently reflected, and that's frustrating for for all of us, and we'll just continue. I think we need to do a better job of explaining what we're doing with geothermal and and the upside that we see there because I do think there is a significant upside. It's a very exciting area for us to move into.

46:39 And, hopefully, we'll start to see some reflection in the share price. And and as you asked in your question, hopefully, we'll start to see some people coming into that share register who really understand that type of business because it is, as Ross just said a minute ago, it is on a sort of cash flow and investment profile. It's quite different to a traditional oil and gas. So there are no further questions, at the moment. Chris, Ross, thank you. And I think you've addressed all those questions you can from investors. And, of course, the company can review all questions submitted today, and we'll publish those responses on the company platform. Before redirecting investors to provide you with their feedback, which I know is particularly important to yourself and the company, Chris, could I please just ask you for a few closing comments?

47:30 Yeah. So closing comments. First of all, thank you very much for listening to our story today. I'll just come back to where I started with. So what we're about now is delivering on our promises, and we've been doing that. We're delivering on production. We're delivering on projects. We're growing and making our conventional business more efficient and more profitable. And it's about growing into the geothermal side, which we are, from a skill set point of view, absolutely ideally suited for. And we've demonstrated that through the fact that we're picking up NHS projects, and it's growing and diversifying that geothermal business into Europe. And we're doing that through Croatia. So thank you very much for everybody for listening. Thank you, Ross, and goodbye.

48:15 Chris, Ross, thank you for updating investors today. Now please ask investors not to close this session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This will only take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team of STAR ENERGY GROUP PLC, we'd like to thank you for attending today's presentation. Good morning to you all.