Post-merger with Aker BP, Lundin Energy leaving behind oil & gas business to focus on renewables

Following the completion of the merger of Aker BP’s and Lundin Energy’s E&P businesses, the latter will remain with renewable energy assets, which will operate as a standalone business, focusing on creating opportunities within the energy transition and contributing to a sustainable energy future.

In an update on Monday, Lundin revealed a company description for the new, renewables-focussed business, including the business overview, strategy, board of directors and management team.

After completion of the proposed combination of Lundin Energy’s E&P business with Aker BP, the renewables business will remain as a standalone company with three assets in the Nordics. The business will be debt-free, focussed on cash generation and well-positioned to build on its proven track record of creating shareholder value while contributing to a sustainable energy future, Lundin Energy said.

Lundin Energy’s renewable business will become the new renewables company within the Lundin Group of companies, with full support from the Lundin family.

The current renewables portfolio consists of three newly constructed assets in the Nordics; a 50 per cent interest in the 132 MW Metsälamminkangas wind farm in Finland, which is planned for commercial handover in March 2022, 100 per cent ownership of the 86 MW Karskruv wind farm in Sweden, which is under development, and a 50 per cent interest in the 77 MW Leikanger hydropower plant in Norway, which is fully operational.

The business will be fully funded from the start, with a cash balance of $130 million to build out the Karskruv project and is expected to generate free cash flow from late 2023, when all projects are fully operational. The Sudan legal case will remain with Lundin Energy as the company refutes that there are any grounds for allegations of wrongdoing by any of its representatives and will continue to vigorously defend itself.

Lundin believes it is in a strong position to take advantage of opportunities presented by Europe’s plans to achieve a net-zero emissions economy by 2050, which requires significant investment in renewable energy.

The business will be focussed on cash generation, fully exposed to spot market electricity prices and has already started to review acquisition and growth opportunities. Although initially focussed on the Nordics and renewable energy, the company intends to screen further opportunities across Europe and in emerging and other technologies. The company has retained SEB as a strategic advisor to support this growth phase.

Lundin’s long-term vision is to grow the business into an energy company with the 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 will retain key members of the Lundin Energy board of directors and management team, with knowledge of the current asset base and a proven track record of building public companies.

The intention is that the board of directors, post completion of the combination with Aker BP at the end of the second quarter 2022, will consist of Grace Reksten Skaugen (chair), Jakob Thomasen, Ashley Heppenstall, Aksel Azrac, and Daniel Fitzgerald and that the senior management team will consist of Daniel Fitzgerald as the CEO and Espen Hennie as CFO.

Daniel Fitzgerald, intended CEO of the renewables company, commented: “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.”

The two companies have recently signed a merger plan and filed it for registration with the Companies Registration Offices in Norway and Sweden, respectively. The completion of the combination with Aker BP is planned to occur late in the second quarter of 2022. It is conditional upon, among other things, the combination being approved at the Annual General Meetings of Lundin Energy and Aker BP, respectively, and receipt of necessary governmental clearances. Lundin’s general meeting will be held on 31 March 2022.