Lundin Energy AB presented its guidance for the second half of 2022, where the Company will be renamed to Orrön Energy and contain only the renewables assets of Lundin Energy.
Company Strategy and Market outlook
Orrön Energy will be a pure play renewables company with high quality and low-cost renewables assets in the Nordics. Orrön Energy will have a strong portfolio of cash flowing assets, no debt and up to MUSD 180 of financial capacity to fund further growth and M&A. The demand for renewables in Europe is expected to grow significantly in the coming years, while power pricing is expected to remain strong. Not only is there significant investment and growth required in power generation and transmission, the technology to decarbonise energy systems is still in its infancy. Orrön Energy intends to take advantage of these opportunities; aiming to create value through the energy transition, with an acquisition and organic growth led strategy.
Orrön Energy will start trading on Nasdaq Stockholm from 23 June 2022, initially under Lundin Energy’s ticker “LUNE” until the approved name change to Orrön Energy (ticker: ORRON) has been registered which is expected to occur on 1 July 2022.
Fully funded with up to MUSD 180 financial capacity for acquisitions
Orrön Energy will have cash of MUSD 130 and no debt at inception on 1 July 2022, which will more than cover the expected future capital costs of around MUSD 100 for the Karskruv project. The Company intends to establish credit facilities which could add MUSD 100 to 150 of extra capacity, allowing up to MUSD 180 of liquidity for acquisitions.
Power generation and operating costs
Net power generation for the second half of 2022 is estimated to be approximately 150 gigawatt hours (“GWh”) assuming average meteorological conditions, increasing to approximately 600 GWh per annum from 2024 onwards when all committed projects are expected to be fully operational. Operating costs are budgeted at approximately MUSD 2 for the second half of 2022, and long-term operating costs from 2024 onwards are expected to remain at around EUR 10 per megawatt hour.
Capital expenditure
Capital expenditure guidance for the second half of 2022 is approximately MUSD 20 and mainly relates to the Karskruv windfarm project in Sweden. Karskruv is planned to be operational in late 2023 and will add 290 GWh to Orrön Energy’s annual net power generation. With the asset situated in the SE4 price region in southern Sweden, it constitutes an important contribution to the Company’s growth plans.
G&A and Sudan legal costs
General and administrative costs are expected to be around MUSD 3 for the second half of 2022, excluding non-cash items. The management team has been retained mostly from Lundin Energy, and is set up to manage future growth and pursue M&A opportunities from inception.
The Sudan legal case will remain with Orrön Energy and the Company refutes that there are any grounds for allegations of wrongdoing by any of its representatives and will continue to vigorously defend itself. Legal costs in relation to the defence of the Company, and its representatives, are expected to be approximately MUSD 4 for the second half of 2022.