NOS Nova AS (EOAN) Earnings Call Transcript & Summary

Good morning, and welcome to this webcast. My name is Bjørgulf Haukelidsæter Eidesen. I'm the CEO of Horisont Energi. Last evening, we announced that Horisont Energi and E.ON is entering a cooperation agreement, including an investment where E.ON acquires 25% stake in Horisont Energi. I will run you through a short presentation, and then we will take question, and please use the Question function. So let's go to Slide 2. The main headlines of the agreement is the following. We have entered into a long-term strategic operation with E.ON, which covers our main business areas of Horisont. The agreement is solidified by E.ON taking 25% ownership stake in our company, becoming a more tailored part of our business in the partnership. We focus on all key business areas of Horisont Energi, and these include development and commercialization of carbon dioxide removal, also known as negative emissions. We will develop full scale end-to-end carbon capture and transport and storage service to the entire European industry, where E.ON will also use their existing customers' facilities and our new customers' facilities. We will also jointly develop clean ammonia or clean ammonia value chains in Europe. The main responsibilities within the CCS end-to-end business, where we'll be -- where E.ON will do the carbon capture and liquefaction part; and Horisont Energi will be responsible for transport and sequestration of CO2. And through this cooperation, it will enable E.ON and Horisont to play a decisive role in decarbonization of industrial sectors in Europe whilst scaling up the commercialization of CCS and clean ammonia. So let's go on to Slide 3, on the financial details. So the private placement, we will have a subscription of about 5.7 million shares of E.ON at the share price of NOK 65 per share. The total investment in Horisont will be NOK 370 million -- about NOK 371 million, giving E.ON on a fully diluted basis 25% ownership stake in the company. So arrangement for the subsequent offering to existing shareholders, this will be the shareholders as of yesterday, the price per share will be on the same close as E.ON share at NOK 65 per share. And this subsequent offering is fully underwritten. We will arrange an extraordinary assembly to complete the transaction with E.ON. That is planned on 20th January this month. So this is a meeting we'll be called for today. So that concludes the presentation. Then we move on to the Q&A part, so with just our Slide 4. So please post the questions that you might have in -- using the Question function. We'll take your questions.

While we wait, I can mention that we shared 3 press releases yesterday: one press release covering the cooperation with E.ON, and one press covering the details of the private placement and one press release covering the details of the subsequent offering. Use the chat function -- I mean, the Question function if you have any questions. And it will be posted there, and we will all be able to see your questions. Yes. The first question is around funding. And the question is whether we could describe and talk around the funding of the company and for how long we are funded now. The question referred that we have a NOK 117 million in cash in our Q2 second half report. And now we get funded with around NOK 420 million in cash through the private placement and subsequent offering. In addition, the project was funded -- in addition, we were funded with the project, Barents Blue, of NOK 480 million of Enova. So through these cash injections, we have quite long-term funding for our development activities. We were already fully funded for the Barents Blue project. Now we also have funding for developing our first carbon storage -- pure play carbon storage project, so also, in addition to clean ammonia activities as well as the train 2 -- and the train 2 activity for the Barents Blue project. So we have now a funding which will move us all the way to investment decision and around '23 -- '22, '23 and beyond all the way to at least '24. So we have a very robust funding situation for the company going forward. On the time line, going forward in terms of the FEED and the final investment decision, this is the next question of the Barents Blue project. We have a plan to initiate the FEED studies around March. And then based on a start-up of FEED studies in March, the final investment decision is expected early '23. So that is mainly driven by the permitting plan for the onshore ammonia plant. The next question is, what is the most important part of this agreement to Horisont? Well, what is really good about the cooperation with E.ON is that we get a strategic partner on all 3 business areas of the company with very close strategic alignment. And the business area of Horisont is carbon storage and clean ammonia. And getting a very solid business partner that complements our business on the downstream side for the carbon storage, we get a partner that will be out in the market to sell carbon capture and liquefaction services to industry customers, providing CO2, our transport and storage activity, so we will have a full end-to-end service. That is very valuable to Horisont, which will enable scaling up of the carbon storage business. On the other side, on the clean ammonia side, we would also have a -- part of that complement is taking on the downstream part of the clean ammonia value chain. So it will be complete end-to-end clean ammonia value chain together with E.ON. So it really complements the full business of Horisont Energi, and it's a very, very important step in our business development. The next question is about who will be the main owners of Horisont after the transaction. I guess of the large owners, it will be my company, Føniks Innovasjon, still a large shareholder; and then it will be E.ON; then it will still be KLP, the largest Norwegian investment fund; it will be a QVT, a family office from New York which has been part of the company also since we went on the stock exchange; Ferncliff Listed DAI, owned by Spetalen, Øystein Stray Spetalen; and then Saga Pure. Those will be the large shareholders, that is the -- which is also the large shareholders today. Then the next question. Yes. The next question is about if we can elaborate our plans and ambitions of additional CO2 storage units beyond Polaris. So we have previously announced that we are working on additional storages. We are working on, let's say, our next large carbon storage project, to shape that project. And the plan is to initiate that project now in '22. So you can expect news about second carbon storage from Horisont Energi through -- sometime in '22. The next question is whether E.ON has indicated any favored carbon capture technology. Will they be totally technology agnostic? As some might know, we have chosen hot potassium carbonate carbon capture technology on the Barents Blue project. I guess our starting point together with E.ON is that we should be technology-agnostic on carbon capture technology to select the best carbon capture technology for the individual case in the industrial market. There will be different types of technologies that will be the best one and the lowest cost from time to time. Yes. Then there was a question about whether the E.ON transaction in any way will impact our relationship with Equinor and Vår Energi. What is very positive is that the E.ON cooperation complements what we do with Equinor and Vår Energi. So together with Equinor and Vår Energi, we do carbon storage and we do ammonia production. So together with E.ON, we will focus on the downstream part of the value chain, and this will complement the cooperation that we already have with Equinor and Vår Energi. And it's a very positive development. Will there be -- a question on whether there will be any changes to the organization. Well, Horisont Energi, we will grow our organization through '22. We expect to grow with 20 to 25 employees. And on the E.ON side, there will probably be made, let's say, adjustments to fit the new business areas in their operation. Now the next question, whether we can elaborate our current plans and how the E.ON growth opportunity may impact Horisont Energi. We will start by developing this end-to-end CCS service. That is the main focus area from the beginning, on the outset, to establish this European service. And then we will also start to develop the basis for potential new clean ammonia value chains in Europe. So that is the second step. On the -- we'll also start working with the carbon removal commercialization, and this should now influence the way forward and move this business development. We think we will move it quite a long way throughout '22. Okay. That is all questions for now. If you have any additional questions, please post them in the chat. I can elaborate a bit upon the carbon removal part on the previous question. Carbon removal is a key part of decarbonizing not only the industry but in reaching the climate targets. And carbon removal is based on retrieving CO2 from the natural cycle and use different types of technologies to store it permanently or semi-permanently. Horisont Energi will focus on permanent storage of we could it call the green CO2, the biogenic CO2. And commercializing this as a service is what we intend to do together with E.ON. And this is a significant part of the carbon market going forward. So that is a -- there is a large amount of biogenic CO2 that needs to be captured and stored to reach the ambitions on carbon removal globally and in Europe. And in the European road map, carbon removal is a significant part of reaching the climate targets and getting to be carbon neutral by 2050 and carbon negative after 2050. Because the world needs to be carbon-negative to deal with the overshooting of CO2 injected into the atmosphere or permitted into the atmosphere. This will be a very important part of [indiscernible] and an important part of our carbon storage business and the CCS services together with E.ON. Okay. It seems like there are no additional questions. Any final questions, please post them and we can answer them. I guess that is it. Well, thank you all for attending this webcast, and keep updated on Horisont Energi, on our website and our LinkedIn. And see you next time. Thank you.