Star Energy Regulatory News (STAR)

2 Feb 2006 07:00

Star Energy Group PLC02 February 2006 Star Energy Group plc Trading Statement Star Energy Group plc, the energy company with interests in onshore UK oil andgas production and gas storage projects will announce its preliminary resultsfor the year ended 31st December 2005 on 3rd April 2006. In advance of theseresults, Star Energy is providing the following trading update. Humbly Grove Gas Storage Project The Company is pleased to announce that control of gas nominations at theCompany's first gas storage facility at Humbly Grove was handed over to thecustomer, Vitol, yesterday, 1st February 2006. Commissioning of the 10 bcffacility began on 4th November 2005 when Star Energy commenced gas injection tothe store. Despite teething problems, initial performance indications are atthe upper end of expectations Star Energy's EPC contractor AMEC has recently provided revised estimates forthe final cost of completing its work on the project. These estimates show costsof £61.6 million compared to AMEC's target costs of £51.0 million. This wouldresult in total costs being some 17% over budget, and the Company considers thisto be unacceptable and excessive. The Company is currently reviewing these EPCcosts with AMEC and unless an agreement can be reached, the Company will referthe matter to the dispute resolution procedure under the contract with AMEC,which provides for adjudication and arbitration. Further Gas Storage Projects Events in the gas markets over the past few months have confirmed the valuablepotential that Star Energy has as a leading provider of gas storage capacity ata number of onshore locations. The Company is currently intending to progressall of its potential opportunities (at Welton, Albury, Bletchingley andGainsborough) as rapidly as possible, with the objective of commissioning inexcess of 80 bcf of new capacity within the next 5-7 years, with the nextproject expected to be commissioned in 2008. The critical step in achievingthis will be to obtain the relevant planning permissions and the Company nowbelieves that increased interest and involvement by central government will helpfacilitate the process. The Company's Welton planning application is due to bedetermined by Lincolnshire County Council on 22nd February 2006. Oil and Gas Production The acquisition of Pentex in August 2005 added valuable incremental productionat a time of relatively high oil and gas prices, as well as additional potentialstorage projects. The integration of the Pentex organisation has progressedwell and according to plan. Total daily production for the Star Energy Groupaveraged some 4,500 boe (net) by the end of 2005. The Company is seeking waysto raise production during 2006 and is expecting to undertake a 5 well drillingprogramme during the year. Financial Outturn 2005 For the 12 months period ended 31st December 2005, the Board expects, subject toaudit, pre-tax profit to be in the region of £1.75 million. 2nd February 2006 Note: EPC = Engineering, Procurement and Construction Enquiries: Star Energy 020 7730 6663 Roland Wessel, Chief Executive College Hill 020 7457 2020 Ben Brewerton / Nick Elwes This information is provided by RNS The company news service from the London Stock Exchange