Swedish company Lundin Energy has set out its plans for a standalone renewables unit once it has completed the combination of its oil exploration and production business with Aker BP.
Lundin said its current renewables portfolio consists of three newly constructed assets in the Nordics and it is looking for growth opportunities.
They are: a 50% interest in the 132MW Metaalamminkangas wind farm in Finland, which is planned for commercial handover in March 2022; 100% ownership of the 86MW Karskruv wind farm in Sweden, which is under development; and a 50% stake in the operational 77MW Leikanger hydropower plant in Norway.
It said the clean power business will be fully funded from the start, with a cash balance of $130m to build out the Karskruv project and is expected to generate free cash flow from late 2023, when all projects are fully operational.
“The company is in a strong position to take advantage of these opportunities with cash generative assets in some of the highest price regions in the Nordics, has the ability to raise capital for acquisitions and growth, and with a board of directors, management team and major shareholder fully aligned to grow the business,” Lundin Energy said.
It added that the renewables business will be focussed on cash generation, fully exposed to spot market electricity prices.
The initial focus is on the Nordics and renewable energy, but the company intends to screen further opportunities across Europe and in emerging and other technologies.
Lundin has retained SEB as strategic advisor to support in this growth phase.
“The long-term vision is to grow the business into an industry-leading energy company, with scale and sufficient cash flow to be able to provide progressive shareholder returns, supporting the energy transition and contributing towards Europe’s goal for a sustainable energy future,” the company said.
It will retain key members of the Lundin Energy board of directors and management team, with knowledge of the current asset base and a track record of building public companies that have delivered value for shareholders over many years.
The intention is that the board, post completion of the combination with Aker BP at the end of the second quarter 2022, shall consist of chair Grace Reksten Skaugen, Jakob Thomasen, Ashley Heppenstall, Aksel Azrac and Daniel Fitzgerald (pictured).
Fitzgerald will be chief executive and Espen Hennie chief financial officer.
More information including guidance for the renewables company for 2022 will be published in the second quarter 2022.
Fitzgerald said: “The energy transition is still in its infancy and with the EU’s ambitions to become carbon neutral, significant investments will be required across the whole energy system to meet these goals.
“Lundin Energy’s renewables business will start trading in a very strong position as a fully funded, cash generative, pure play Nordic renewables company.
“Initially debt free and holding three high quality renewables assets in some of the highest priced regions in the Nordics, we have significant capacity to raise capital for acquisitions and growth.
“We see many opportunities across Europe, within both established and emerging technologies.
“With our track record in delivering shareholder value, we have all the building blocks needed to create an industry leading company which is well positioned to thrive through the energy transition.
“Lundin Energy has been a huge success story for shareholders over the last 20 years, culminating in the proposed combination with Aker BP, allowing shareholders to remain invested in both the leading independent E&P Company in Europe and this new and exciting renewables company.
“I believe that with the proposed Board and management team, the continued support of the Lundin family as a major shareholder and the Lundin entrepreneurial spirit, we will be able to grow this Company into an industry leading energy business.”