Orrön Energy AB (publ) (ORRON) Earnings Call Transcript & Summary

And a warm welcome to this corporate overview presentation of Orron Energy, the latest addition to the Lundin Group and the Lundin group's renewable focused company. My name is Robert Eriksson. I'm the Director of Corporate Affairs and Investor Relations, and I will host the Q&A session that follows on the presentation today. [Operator Instructions] And with that, I would like to introduce today's speakers. It's about the new CEO of our new company, Daniel Fitzgerald and it will also be the new CFO, Espen Hennie, but I will start with handing back from over to Daniel Fitzgerald.

Thank you, Robert. And it's a pleasure to be here today to give an overview of Orron Energy and what we plan to do looking forward into the future. And I think it's important to note that we will become Orron energy only after Lundin Energy has completed the deal with Aker BP and that will happen on the 1st of July, and then we will rename Lundin Energy. And going forward from the 1st of July, we will become Orron energy, and we will contain only the renewable assets of Lundin Energy today. And from then on, we will trade as Orron Energy. And so today, the focus of today really is about our guidance for the second half of the year, an update on the company's strategy and outlook and where we expect to be in the future in terms of growth in M&A. And the first point of business, I think, is where the name comes from, and it's quite simple really where we started in this discussion to put together the sale of Lundin Energy and to leave behind the renewables business started around the middle of last year. And we were sitting on the island of Orron, which is in Stockholm archipelago and that's really where the origination of the company came from and the origination of what we're going to be doing next. And so we decided to name the company after that. If we look first at the story around Lundin Energy and the transaction that we announced last year and that we will close in -- at the end of this month, it really has been a fantastic story for Lundin Energy and Lundin Energy shareholders. And we started in 2001 at around SEK 3 a share, growing to around SEK 440 as we stand today. And that represents for every $5,000 or so that you invest or every $10,000 you invested back then, you'd be sitting on $1.5 million or so today, not including the dividends and spin out some additional shares that you've gotten through that journey. And to deliver a compound annual growth rate of just shy of 30% over a 20-year period is nothing short of extraordinary and a huge credit to the teams involved in building this company from where it was to where it is today and a great journey for our shareholders. And so that story culminates in this transaction where you take the best of Lundin Energy, and we're looking to combine that with the best of Aker BP. And what you have is a company that has 400,000 barrels a day to day growing over the next decade to an excess of 550,000 has the lowest cost in the business, lowest carbon footprint in the business and the ability to continue to pay a growing dividend over that period of time. And so you really get the best of both of these companies put together into a business that has the scale and the credentials to be relevant through the energy transition. And so as a part of this transaction, for every Lundin Energy share you hold today, you will receive some shares in Aker BP, which is going to be the leading independent E&P company across Europe and potentially globally when you look at the credentials, you will continue to partake in that journey where we put the best of the companies together. You receive a consideration in cash. And for that Lundin Energy share you hold, that will continue as a Lundin Energy share until we change the name to Orron energy, and you will continue to be a shareholder in the new business of Orron Energy going forward, which is going to contain the renewables assets of Lundin Energy today. And that's really the focus of today's presentation is to talk a bit more about what happens after the 1st of July and what we're going to be as a company going forward. And so firstly, I want to spend 2 minutes on the time line and what you can expect to come over the next month or 2 as we transition into Orron Energy. And last week, on the 16th of June, we held our AGM, and that approved a range of things. Administrative elements, the articles of association, the change of strategy, the change of name. And so all of that's now been approved by our shareholders and puts us into a place where we can execute on that process. The 22nd of June is going to be the last day that our shares the Lundin Energy shares will trade on NASDAQ with the right to receive the Aker BP dividend and the Aker BP cash consideration. So on the 23rd of June, which is an important date to mark down, if you're not already a shareholder in Lundin or Orron Energy, that is the first day we will trade publicly on the NASDAQ without the right to receive the dividend related to this transaction. And so that will be the first day we start to see the valuation of the company and the share price of the company going forward. To buy shares on that date, you can see the NASDAQ ticker underneath, we will still be listed as Lundin Energy, and we will continue to be listed as Lundin Energy until we change the name of the company on the 1st of July after completion of the transaction, and we also change the ticker on the NASDAQ. And so on the 23rd of June, you can already buy our stock exposed only to the Renewables business. And then on the 1st of July, we will change our name and change the ticker on NASDAQ. And going forward, we will trade then as Orron Energy, the new renewables business in the Lundin Group. And the final one there is our Q2 results release, which will come on the 5th of August. And it's an honor to be a part of such a group of companies as you see on the screen here, which comprises the full Lundin Group of companies. And this is a 11 publicly listed entities across the mining, oil and gas and commodity space, which has a total combined market cap of around $34 billion. And this group of companies really is an entrepreneurial group of companies, and it's a special set of companies that has a constant view on where to create the most value. And it's clear that we are Orron or will be Orron -- we have -- we are hoping to follow the same path as many of these other companies, whether it was Filo Mining as a spin-out, Josemaria, which was a spin-out and now being acquired. IPC, which is a spin-out and has grown 5x in terms of market cap from 5 years ago when it was first listed. And now Orron Energy, where we come out with a group of assets that either weren't fully valued in their current environment or have the potential to create more value with a different strategy and a different focus. And if we look back at what's been done in IPC, and always, I had the pleasure of being a part of IPC for a while, we had a similar start as Orron Energy. You come out with high-quality assets, a management team that's focused on growth with a supported Board and shareholder and cash-generative assets with the ability to add leverage and go and grow the business. And it's clear that a range of these Lundin Group companies have been able to do that in the past. And hopefully, we come out with all of the right tools to be able to do that in the future. But we will retain the Lundin family support. Today, in Lundin Energy, they have around 1/3 of the shareholding, and they will continue to do so in Orron Energy going forward. And we'll stand behind the company to give the support needed and all of the tools we need to go and grow this business with an eye on creating value for our shareholders. Before we dive into Orron Energy and what we plan to do, I think it's worth spending a couple of minutes on our view of the energy transition and the parts of the energy transition that we think are relevant for our story. And I've tried to distill here a few of the key steps in the transition down to 3 simple principles. The first step is really where we are today at scale is expansion in renewables and energy efficiency. And we've seen whether it's across Europe or across the world, the penetration of wind and solar, the ambitions for offshore wind, hydro and some of the newer technologies coming out, what we're seeing today in the markets is that those technologies can be competitive without any subsidy or government intervention. And we're going to see that growth continue. Nearly every country across the EU has net-zero targets and ambition to drive renewable penetration to a level which decarbonizes a grid node. I think that's only going down one pathway. And secondly, we're going to see huge advances in energy efficiency, and we're already seeing that across the sector. And I think that part of the energy transition is moving well and has a lot of money and energy behind it. But it's not enough. It doesn't finish the energy transition. And so the next 2 steps on here are really important part on how we decarbonize energy and how we get to the end of the energy transition. And the first one is around storage, interconnection and flexibility. And today's energy systems, you tend to store the energy in the raw materials, whether it's coal, nuclear, gas-fired power stations, et cetera, all of the storages in the raw material. When we move into the renewable space, we can no longer store that energy in its primary form. You need to turn it into electricity or some other form of energy in store it then. And that journey has only really started in some parts of the world, but not everywhere. And so we need huge expansions in infrastructure and grids. We need to be able to store energy and not just store energy on the short term and intraday. We need to store it between seasons, where we can put gas into the ground today, we can stockpile coal. And so those technologies, whether it's short duration storage, grid expansion, changes in terms of how we consume generate and deliver electricity. That all needs to start and continue in each market and the same on the long-duration storage in alternative fuels. So for us to really get to the end of this energy transition, we need to move all the way to the end of this process. And what we should see over that period of time is that electricity demand should increase. Energy efficiency will increase and drive down the amounts of energy we consume globally, but the flexibility in the system must also increase. And over time, we'll also see a reducing reliance on fossil fuels and a reducing amount of CO2 emissions. And all of this is a great story, but we're only really at the infancy of this. We're only at the start. And to get to the end of this energy transition in our view is it's going to take many decades to really get ourselves to a place where the energy systems can handle what we expect them to handle in terms of renewable generation, storage and flexibility and that requires changes across the park. And so I think we have a long journey to go. We're only at the very beginning, but there's a lot of opportunities to participate in this sector and to participate in the energy transition and to create value for shareholders. If we also spend 2 minutes on the macroeconomic picture and where we see pricing today on either the raw materials or the power, I think we're in unprecedented times today. It's quite tough and unpredictable as you can see from some of these charts, but it's -- there's a few things that stand out for me that are clear. One, today's power systems in Europe are driven primarily by thermal generation in most areas or have a dependency on thermal generation. While that happens, the pricing of power in the EU will be set by that thermal generation. Secondly, on 3 of these charts, whether it's coal, gas or CO2 pricing, all of the fundamentals pointing towards the generation of power today are sitting at record levels. And whether that's because of the EU ETS and the ambition from the EU to consistently drive up carbon pricing to decarbonize or whether it's because of a structural underinvestment in commodities, especially in the oil and gas space and certainly in the coal space, we're not seeing the money flowing into these sectors to increase supply beyond demand to pull pricing down. And so our view in the short to medium term certainly is that the fundamentals that stand behind power pricing in Europe remains strong, and we expect the medium-term power prices to remain strong and that will underpin a portion as we go through the next couple of slides as to what our strategy is and where we want to focus. And so we're going to change the track a little bit and go now into a bit more detail on Orron Energy. And the things I want to leave these 2 slides which come through later on is that we really are only started on the energy transition now, and there's a lot more opportunity in many different parts of the transition. And secondly, the price environment remains very supportive towards investments, certainly in renewables in our view. And so now we'll focus on where we're going to pitch our strategy and where we think opportunity exists. And I'm going to call on Espen soon to help me on the financial slide where he goes into a bit more detail on some of these. I think the first element is we start life in a very privileged position with 3 really high-quality assets in the Nordics in some of the highest power price regions. We start life fully-funded to invest in the [ cash ] group project, which will consume some of our cash and enough headroom to start looking at some M&A opportunities. And we start with no [indiscernible]. Espen will touch a little bit more on these 2 and the cash flow of the business, which today, half of our -- or our portfolio, 2 of our 3 assets are online, generating about half of the power as we will generate in steady state once the third one is online. So Espen will expand a little bit more on the cash, the debt position and the capacity for that. And I'll touch on a few slides on our Board and management team, where we bring a very competent management team and a very experienced Board looking at a company with the opportunity to grow. And so if you look at where Orron is going to be, we will be a pure-play Nordic renewables company at inception with all of the tools we need to grow through M&A. In terms of our strategy, I think the 4 key points that we see in terms of the market outlook. One, we're going to see huge growth in renewables, certainly across Europe and across other parts of the world as well. And I think that's clear in any news article or any part of the market that you touch. Power pricing and our view is going to remain strong in the short to medium term. And I think you can see from some of the fundamentals and some of the challenges this market is going to have to undergo, but that is likely to remain for the medium term. The third one is that the onshore space has some of the lowest levelized cost of energy of any of the renewable technologies. And that's important when we want to maintain a view on cash generation. And that space is an area that we understand and want to spend some more time and energy on in a place where you have low costs and reasonable pricing, you should be in a position to generate free cash flow and deliver some of that value to shareholders. And the final point is that emerging technology will drive the transition. We -- although we have some or nearly all of the tools in their infancy today, they're not all commercial and they're not all developed at scale to allow us to finish the energy transition. So while we start in the renewable domain, I think there's a lot of opportunity in this transition to keep abreast of the technology as it's emerging. And so there's 4 parts of the market that we want to focus on. I think Greenfield projects is important, but not the only place. And we're happy to step into the development domain and to take some Greenfield projects from inception all the way through to production. It's a very difficult space to buy producing assets at the start of their production life, and that's a very competitive part of the sector, but there are many opportunities around that, we think we can focus on. Brownfield and repowering is a very interesting part of the market as well and certainly less competitive than the Greenfield. And we see a range of opportunities in that space as well. We want to be a first mover in some of the emerging technology, less on the technology development and more on seeing that technology being deployed commercially. And so that's an area we will continue to keep a focus on. And the fourth one is to maintain as much as possible the merchant price exposure. And from day one, we will be fully merchant exposed on the power pricing environment. And so our role in the energy transition, I think what we bring from the Lundin Energy side and the Lundin Group of companies is we have a comfort in being a player in the industrial domain. Being a player in projects in understanding the risks of large projects and bringing capital to bear in some of these markets. And so I think the space that we will focus on is the industrial part of this from generation all the way through to trading, stepping into some of the grid and ancillary services and keeping an eye on the technology piece. And the 3 key things that we want to take through this is, one, a focus on cash generation and a short life cycle between investments and cash generation. And I think that differentiates us in this sector. The lowest cost technologies as we touched on before, and I think that ties into the cash generation and the value creation if we can step into that market and a first mover in some of the more emerging technologies and if we take a little bit more of a look at our assets, we have a power generation profile in assuming average weather conditions. Starting today at around 150 gigawatt hours for the second half of this year, for the full year next year, around 300. And once Karskruv comes online, that will boost us up to around 600. And that will obviously vary depending on the wind conditions and the hydrological balance in Norway as we have exposure to Finnish and Swedish wind and the hydro power plant in Norway. We'll have 190 megawatts of installed capacity at the end of 2023 when Karskruv is fully online. And we touched on before that we'll have around EUR 10 a megawatt hour all-in operating costs once Karskruv is fully online from end of 2023 onwards. We have 3 high-quality assets. So we have the first one online with Leikanger and that's fully online, and we've seen really strong year-to-date production and you can see some of the details in each of these boxes with the installed capacity and expected power generation from each asset. MLK is a suite of 24 GE turbines in Finland, and that came online and was handed over to us at the end of Q1 this year and has been in operation since. And the Karskruv project remains strongly on schedule for delivery at the end of next year for COD. And we've already started construction of a lot of the foundations and civil works at side, and that's progressing ahead of schedule. And the final message for me before I pass over to Espen is around the management team and Board. And I think it's clear to see from the individuals we have in the Board. Grace's Chair brings a load of experience from many of the public -- large public companies across the Nordics and internationally as well. Behind her, we have a team from the Board from Lundin Energy, which brings decades of experience in either running public companies or growing public companies into delivering significant value. And on the management team, we've expanded our management team a little bit, which we haven't disclosed before. Obviously, you know of Espen and I and Espen was key in managing the Corporate Finance structure for Lundin Energy in refinancing our $5 billion facility at the end of 2020, raising a $2 billion bond through 2021. And with all of the experience on Corporate Strategy and Business Planning, he brings a wealth to us as Orron Energy for a relatively small company to have that competence behind us is really good. As General Counsel, we bring Henrika Frykman and Henrika has been critical in supporting Espen with her team on getting the financing and all of the structures in place being key in delivering the M&A for us in terms of the 3 renewable assets that we have delivered in managing the Sudan legal case as well. A new addition to the team is Carl Sixtensson and he joins us from DNV and will be with us in the second half of this year. And Carl's been on this journey for a little while as well. He's been involved in all of the due diligence and supporting us on the acquisition of the 2 wind farms and also is supporting us as owner's engineer on our wind farms today. So have a great knowledge of our asset base and brings almost 15 years of renewable experience within into Orron Energy. And finally, Robert Eriksson will round out the senior management team, and he's been with the Lundin Group for many years and experience across all the Lundin Group of companies across media, communications, Corporate Affairs and Investor Relations. And so with this Board standing behind us, the support from the Lundin family sitting behind that and a management team, which is built for M&A and has the competence on day one to step into it. I think we have all the tools we need to grow this company into something else in the future. And now I'll hand over to Espen to give a bit more detail on our guidance for the second half of the year and what to expect.

Thank you, Daniel, and a good afternoon to everyone. So these are our cost projections and also liquidity forecast for the second half of the year. As we have mentioned, we will start by end June with a cash position of $130 million. And assuming EUR 100 per megawatt hour electricity price during second half, which is somewhat lower than the current forecast -- current forward prices, we expect to end the year with a net cash position of $110 million. Capital expenditure for the second half is expected to be around $20 million and consists of costs related to the cost to wind farm in Sweden. We anticipate an OpEx of around $2 million. As you have seen in an earlier slide, we reiterated EUR 10 per megawatt hour OpEx forecast from 2024 onwards when we have all 3 renewable assets producing electricity. But we might experience slightly higher unit OpEx in the interim period, which is expected to be the case for second half of this year. Our G&A expenditure, excluding noncash items, is around $3 million. And please note that this organization is deliberately sized for growth, also through M&A. So you should not expect any corresponding significant increases in the G&A costs or levels on the back of potential acquisitions. And finally, our costs related to the Sudan legal case, consisting of the sense of the company and its representatives are expected to total approximately $4 million for the second half. The company strongly refutes that any grounds for allegations with wrong doings by any of its representatives and will continue to vigorously defend itself. From June this year, we will only have remaining capital commitments related to development of the Karskruv farm in Sweden and zero CapEx beyond 2023 when the project is scheduled to be completed. Remaining commitment is around $100 million, as you can see on the chart here, which is a reduction compared to the $110 million we communicated early March on the back of euro weakening relative to U.S. dollars as this capital -- this CapEx commitment is a [indiscernible] based in euros. As shown in the chart, most of the costs will appear during 2023 with a slight overweight during first half based on current schedule, although phasing might change somewhat according to project milestones. It is important to note that our CapEx is fixed in euro terms, and we are not exposed to risks related to price increases as this is fully covered by our suppliers and contractors. In the current inflationary environment, that is a very good place to be. Just a slide on our tax balances and how that impacts payable taxes going forward. On the back of our CapEx related to the 3 renewable assets that we have developed and are developing the Karskruv assets. We have accumulated significant tax balances and tax yield in Sweden and Finland in particular, where we are not anticipated to be paying tax cash for many years. Furthermore in Sweden, the company has a large tax loss carryforward position related to other costs in earlier years, pushing the date for when we will be paying cash taxes even further out in time, as you can see from the chart on the right column. In Norway, our tax balances depreciates over a very long period, most of it between 40 and 67 years, meaning that although we are benefiting from lower tax due to past CapEx, we are currently in a tax paying position for [indiscernible] profits. For Finland and Sweden, most of our tax balances depreciates over 25% decline in balance or 5-year linear rules. We have for information included applicable tax rates for each country at the bottom of the slide. And as you can see, we are exposed to corporate income tax in all 3 countries with exceptional Norway, where we are also paying an additional ground rent tax as per the hydropower tax regime, resulting in a total tax rate of 59% for Leikanger, which was obviously fully reflected in valuation at the time of acquisition. Daniel, had mentioned it already, but it's very important to keep in mind the very attractive positioning of the true renewable assets in our portfolio with all being in high power price areas throughout the Nordics. Looking at average prices from 2019, the 3 locations have enjoyed price premiums between 16% and 21% on average relative to the Nordic system price, which represents a significant added cash flow potential. And since we have not entered into any price hedging at the moment. We are fully exposed and fully exposed and benefiting from these premiums. We expect the situation to persist going forward, partly supported by even higher prices in the interconnected European markets, as you can see here on the chart represented by U.K. and Germany. As previously mentioned, we anticipate year-end cash position around $110 million based on EUR 100 per megawatt hour Nordic electricity price during second half. And here we are sharing the breakdown of the relevant items and illustrating that we have a business that is fully funded outside of capital commitments. And for the capital commitments, we have set aside sufficient cash. And this situation is expected to improve significantly once the cost giving farm is generating power from late 2023 and doubling our generation capacity. So all in all, we are a very favorable liquidity position, as I said, with a self-financing business outside CapEx even on the low generation volumes that we're having today, which will increase significantly going forward. If you put that in context in terms of future liquidity potential and debt capacity. We are currently exploring different options for securing debt facilities in the order of $100 million to $150 million, which is expected to be placed at competitive terms based on the very strong interest we are experiencing for our assets. Adding the additional debt on top of our current net cash position and adjusting future capital commitments of $100 million, it is clear that we will have a quite significant capacity for potential acquisitions of up to $180 million and that is before adding any leverage potential related to the potential targets. And if you're assuming a standard 50% leverage, it's great to see that, that results in a total capacity of $360 million. This is -- you should expect more news from us on this over the coming months, which we expect to have in place over the next 6 months. That was my last slide on the financial part. So with that, I will hand over back to Daniel for some concluding remarks.

Thanks, Espen. And I think you can see from this that we have certainly the seeds of a great company and a platform that we can grow from. We're going to focus initially in the Nordics. That's an area where we've spent a lot of our time and energy over the last few years to understand the market and understand the opportunities. And I think that for us is a place where we need to start with acquisitions to get the scale that we need more technologies, more opportunities across a bigger footprint and try and establish the organic growth model that's been a success factor for many of the Lundin Group companies over many years. And so that acquisition-led approach is underpinned by cash-generative assets with financing capability to such an extent where we can take a huge step in terms of M&A. And then we need to generate the opportunities ourselves through an organic growth model, and I think that's where you'll see us take the first 2 steps is set up the M&A first and then move into the organic growth. We have a view on long-term cash flow. And I think where we should be judged is less about the size of company we are on day one, year one, year five and more about the opportunities to add value to shareholders over this period. And that really is our focus on cash generation and on the ability to add value based on where we purchase assets and generate opportunities. We have a board and a management team and a major shareholder that stands behind this company doing exactly what we've been set out to do and enough firepower to go and do it. And so the final point just before I pass back to Robert on the Q&A side is that we will trade as a renewables company from the 23rd of June onwards. And so that's the opportunity to really test and see what the value of this business is in the market. And if you're not a shareholder today to take the opportunity to buy a share at that point in time and be a part of one of the newest lending group companies in the renewable domain. And so with that, I'll pass back to Robert for the Q&A.

Thank you, Dan. Thank you, Espen. I think we have some issues with my phone in the beginning. Is it better now? Good. It's important that we can hear the questions and the answers. [Operator Instructions] And with that, I would like to start off with the first one. Do you have a preference in solar or wind for near-term growth? Or are there any other opportunities to see besides solar and wind?

I think all of the technologies are a possibility. You have a natural hedge between solar and wind, where it's windy in the evenings and windy in the winter. Sunny during the day and more sunny in the summer, you have a natural hedge between solar and wind to generate a relatively flat power profile. I think you need to look at hydro as an option. You need to look at pumped hydro storage, where possible, also battery storage and other forms of short duration storage and the ability to provide some of the grid services. So I think our landscape is across all of that. We don't have enough scale with only the 3 assets we have. So I think we need to grow in terms of scale, and we need to diversify in terms of technology. So no preference beyond either one of those 2, but certainly looking at projects to add value.

Thank you, Dan. And we have another question and that's regarding any recommendations out yet from analysts covering Lundin Energy and about to cover in or have you seen any price indications yet?

Not yet. I think there was one analyst this morning from [ Sparebank ] that had an indication. But it's hard to see at this point. We have great assets. We have huge cash flow generation in a price environment that's very constructive. And so I think you'll see us trading on the 23rd of July, and we'll see where that sits. What we do see though is a lot of appetite for this, and there's a range of companies and institutions who couldn't hold Lundin Energy because of the oil and gas exposure who are now looking to get back into the stock. And there's a big following behind the Lundin family to be a part of this new growth vehicle. So I think there's a lot of demand there's really good quality assets, and we'll see where the market trades once we start on the 23rd of June.

Thank you, Dan. And we'll continue here with more questions. You mentioned that the CapEx is inflation protected. Could you talk about the inflation exposure on your OpEx? And how much it could deviate from your EUR 10 per megawatt hour guidance in a high inflationary environment.

Thanks for that. Good question. So first of all, I just want to -- just for the sake of good order, I just want to clarify that our EUR 10 per megawatt hour we also labeled it in a slide that's in real terms. So based on today's sort of cost environment, there's a mix for our base of OpEx. Parts of it are fixed and other parts, obviously, we are also exposed to inflation as the rest of the economy and the company. So they have a certain adjustment factors which are linked to different CPI and consumer price indexes and cost indices, the relevant ones for the services that are provided. So but definitely, less exposed than many other companies and industries and I will say. So and I think in a high inflation environment, we've got to expect that power price remains strong. And I think you have a big distance between where power prices are currently trading in our cost base and we have significant tax shelters as well. So I think even if we do see inflation continue, we see a forecast where we see good strong cash generation in the medium to long term.

Thank you. We have yet another question here from a shareholder. From your the Lundin Energy Q1 report, I see that there is a receivable of USD 33 million related to one specific project. Will this be converted to equity in MLK.

We're not really commenting on sort of the financing structure on the asset level, but we might revert to that later in later reporting or annual report. So we're not sharing any information on that at the moment.

Thank you, Espen. And then we have a question relating to the average remaining life of the assets. Can you provide some color around that?

Yes. I think all 3 assets were recently constructed in the last 2 to 3 years. For [indiscernible], we have around a 60-year asset life and for the 2 wind farms we have around 30-year asset life. So they are 3 Greenfield projects with latest technology and significant life left on the assets.

Thank you. And the next question is about an interesting area, namely geothermal energy or Bioenergy. Do you see any opportunities there?

Think there's opportunities everywhere. The more we look at the energy transition, the more we realize you need absolutely everything to get to a place where we decarbonize the energy systems across Europe, whether it's all of the different technologies, whether it's carbon capture, infrastructure. So I think there are opportunities in geothermal and bioenergy and the other element we found is that in each market, it's very different going from the Nordics to say the south of Spain or into Greece. So we're looking at opportunities in both of those. I think our initial opportunities, you should think about them in terms of adding some scale on the generation side in the lowest-cost technologies.

Thank you, Dan. So very good. We're getting a lot of really interesting questions here. So let's crack on looking at Orron's role in the energy transition on Slide #9 in the presentation you just gave, of the areas of interest, which ones do you expect to see the highest returns from? And will you be targeting all of those subsectors in the energy transition space.

I think there's a lot of opportunity to be coming into this domain with, I sense a lot of the time of thinking around how to help play a role in the energy transition is different to that of a utility company or an infrastructure fund. And so we're looking at assets and projects with a view on how to create maximum return. So you're right, there's spaces in this that we see huge opportunity. For instance, battery storage in the Nordics is something that's only just starting to get market penetration where we've seen in the U.K., for instance, it's already developed. And the returns on some of these opportunities, we see double or 1.5% to double in the Nordics versus what we tend to see in the U.K. So absolutely, we're targeting all of these -- we need to go and look at the firepower we have for M&A and go and place it in the best possible return envelope. So I think you'll see us targeting all of those subsectors where it makes sense for us and where we have the capability and competence to dive into it.

The next question is about maintenance CapEx for the assets of order and energy. Can you give a little bit more color on that?

Yes. So that's very simple. It's basically zero. So as you know, with the renewable assets, it's also zero depletion. So whatever is required in terms of maintenance is covered through our OpEx contracts basically. So it's covered in what we are guiding and what we are expecting for operating costs. And so we have a long-term availability warranty from the manufacturers where an availability is guaranteed from the manufacturer for a fixed OpEx schedule through its life spend. So any maintenance CapEx that is due is due by the manufacturers.

Thank you, Espen and Dan. And we also have a question on the Sudan legal case. You've now guided for costs for the case for the second half of this year. But could you also provide a little bit more details into the timing of this case? When could the trial start? How long will it go on for, et cetera?

No problem. I think the first thing to note on the Sudan case is that we've been sitting here for 12 years in a case where the prosecutor is not taken into account the facts and chose to move forward with an indictment on in an [indiscernible] irrespective of what the facts are portraying. And so it's incomprehensible that we've had this investigation going on for so long. And when we look at the facts underlying the case with a team of international experts in this domain, there's absolutely no chance that we think we can be in a position where the defendants have found guilty. And so in the fullness of time, we will be proven innocent. We will be acquitted of all charges as will our representatives. And so ultimately, I think this case will finish with the right outcome, but unfortunately, we're going to have to go through that process. And so it's very uncertain as to exactly where we think we're going to end up. What we will be doing is guiding on the costs associated with this. And as Espen touched on, we will continue to vigorously defend ourselves against these charges. And for the second half of this year, we expect to spend about the $4 million that we touched on and we may be in a position where the case is thrown out of court by the end of the year, we may be in a position where it goes ahead in the district courts into next year. And so with that uncertainty, what we will do is guide every half year or every year in our capital markets update, we'll give an indication of where we are and what we expect to spend in the coming months and year.

Thank you, Dan. And the next question is about the total tax loss carryforward value for Orron. Can you dwell on that in a little bit more detail?

Of course. So what we shared in the slide was our tax balances, and we've also shown on that slide, the relevant tax rates for different countries. So if you basically then multiply the tax balances that we're showing on that slide with the relevant tax rate, you get sort of the net value, the net value of the tax shield, so to say. And then the question is sort of when you realize that value. But I guess it's quite obvious from that slide that we have, especially in Sweden, a very significant value which will provide a very significant tax shield for many, many years from any profits and cash flows we have in Sweden and also Finland. And obviously, as I said earlier, it's also high value related to past CapEx for [indiscernible] But due to the very much longer depreciation period, we are currently in tax position, but we'll still reap the benefits of the tax balances there.

Thank you,. And we have a few more questions, but I remind everyone that if you would like to ask a question, it's the Q&A function at the bottom of the screen. So now is a good time to use that button. And the next question is again about the share price range, but this is not about what the analysts are expecting. But what do you expect in terms of trading on the 23rd of June, which will effectively be the first day.

I think I should be sitting in a hedge fund if I put my expectations forward it's hard to tell. I think this is a really unique opportunity to be a part of what is a company that is going to be thinking about the energy transition in a different way. And with a strong focus from the Lundin family and the track record of the family and the team in creating value for shareholders, we've got some really good quality assets, we've got a growth profile and capacity to go and move very quickly through M&A. So I don't know exactly where it's going to trade. We're going to step out into the market on the 23rd of June and see where the market values us.

Thank you, Dan. And with that, we actually have no further questions at this time. I would certainly like to thank all of you for attending today's presentation. We very much look forward to see Orron start of trading and having you as shareholders, and we will keep -- we'll make sure to keep you updated for us what will be a very interesting year and beyond, I believe. So thank you very much, all of you for attending, and thank you, Dan and Espen.

Thank you very much.

Thanks all of you.