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

Good afternoon, good morning and welcome to this Orrön Energy webcast to prsent our third quarter financial results. Very happy to have so many of you with us today, and this will be an interactive session. So a presentation by our CEO, Daniel Fitzgerald; and CFO, Espen Hennie, followed by a Q&A. And of course, the Q&A session is the most important. We want to answer as many questions as possible. So don't be shy. And there's a Q&A function at the bottom of the screen, use that, not the chat function or raised hands or anything, but the Q&A function. Type your questions, and we will be sure to -- make sure that we answer them during the Q&A session. My name is Robert Eriksson. I'm the Director of Investor Relations and Corporate Affairs. And without further ado, I would like to hand over to Orrön Energy's CEO, Daniel Fitzgerald.

Thank you, Robert, and welcome to our Q3 results presentation for Orrön Energy, and it's great to have so many people signed up and participating with. We've seen a huge interest in the company, especially from the institutions that are coming back into us after we spun out from Lundin Energy and the retail shareholding that we've seen in Sweden. So it's great to have as many people as we do on the audience today. And this is the first time we're here as Orrön Energy presenting our results and our renewables company, reviewing our performance as a stand-alone entity, stand-alone renewables company. So it's an exciting set of results. And needless to say, you'll see through the presentation that we've been very active through this quarter as well on the M&A front. It's been a very exciting process over the last 6 or 9 months defining and acting on the strategy of this company and setting out already early in this year what we're aiming to do with Orrön energy. And through the course of Q3, I think it's been fair to say we've acted very swiftly on our strategy and moving into the M&A space, which sets us up with a fantastic platform to grow and hopefully, we'll be able to demonstrate that a little bit more as we go through the presentation today. And I'll be joined by Espen Hennie, who's our CFO. So I'll give a good overview of the company and a little bit on our strategy. And then Espen will take us in more detail through the quarter 3 results in the second half of the presentation. And I thought it's important before we focus on the Q3 results, just to spend a couple of minutes on Orrön Energy. And for a lot of people, this is a relatively new company. We changed our name from Lundin Energy to Orrön at the end of Q2, and we have only been in operation as a pure-play renewables company since the 1st of July. And from there, many of our investors and those that are interested, I think it's important to spend a little bit of time on our strategy as a company and where we're planning to go. And so the first point, I think, is that our goal is actually quite simple and that's around creating value through the energy transition. Shareholder value is really core to all of the companies within the Lundin Group, and needless to say, Orrön Energy forms a core part of that as well. But not only for our shareholders, but also for the stakeholders, communities and local regions in which we operate. We are a pure-play Nordic renewables company. And so we have power generation assets across Norway, Sweden and Finland, where primarily our asset base is in Sweden. And so we are a pure-play renewable generation company today. And as we'll touch on in the presentation, we will have power generation of over 1.1 terawatt hours by the end of 2023 once our final project is online, and that's the Karskruv project. And that's a fairly substantial number for a small company in terms of power generation, and it affords us a lot of things in terms of cash flow and cash generation. And Espen will touch on a little bit on that as we go through the financials. One of the core principles of our business is to be merchant exposed to power prices. And we will maintain our balance sheet and our debt levels and leverage ratios to ensure that we retain the ability to keep our cost base low and be exposed to that merchant power price. And I think that's an important place to be in something that's very different from a lot of the similar renewables or infrastructure companies or utility companies we see in this space. And our view on power pricing is that the long-term average where we've been around EUR 30 or EUR 40 a megawatt hour, it's not our view that, that is going to continue long into the future. I think what we've seen in the summer on power pricing has been a little bit disconnected from where long-term prices should sit, and it's seen a very difficult period through the summer for a lot of people. But when I look long term at power pricing and our reliance on thermal generation in Europe, the cost of gas, coal, the cost of carbon, I think there's a place where the front end of the power curve is going to remain high. And when we look at all of the technology we have to invest in, in the energy transition, we have to have higher pricing than where we've seen the long-term average is to ensure that we are able to invest in this technology and decarbonize the power systems. So our view on long-term pricing is that it will remain strong certainly in the medium term. And so our strategy as a company is to remain exposed to that underlying spot market price. We are a part of the entrepreneurial Lundin Group, and I think that's baked into the core of who we are and what we do. It's a group where there's a strong focus on assets and technical competence to understand the cash generation of the business, understand the nuts and bolts of how the assets move and how they operate, and that's not different with us. And so our organization today is stepping into maintaining operating turbines all the way through to financing the company. And it's rare that you see that same focus across all of the utility players we see in the market today. And with the heritage of the Lundin Group, I think if we have some of the shareholders today who have been a part of Lundin Group companies over many decades, I think there's been a lot of value creation for a lot of people by investing alongside the Lundin family. And they will remain invested in Orrön Energy and are a huge supporter of our company. And finally, on what we're looking at as a strategy. I think we have a ton more financial capacity for growth. And Espen is going to touch a little bit on the liquidity of the company. But we're in a net cash position today, and we've got ample debt capacity to fund future M&A. So that also sets us a little bit apart from the peer group in terms of having access to capital, having a team that's able to understand the assets and the operations that we're running with, and to take an entrepreneurial merchant price exposure company into this space is a really exciting opportunity. And so all that's well and good, but how do we actually get there? So our strategy, I think, first and foremost, we're leading off with an acquisition-led strategy. And we have to be bigger than where we started in the end of June. And so you'll see as we go through, we've been very active in Q3 on the acquisition side, and we will continue on the acquisition side while we find accretive transactions. And once we step into those portfolios, I think growing those portfolios and spending time on organic growth within the existing asset base is really key for us, going and looking at every single opportunity to debottleneck systems, to put additional generation capacity, to extend lifetimes of assets, to replace some of the older technology with new, to repower sites. There's a whole world of opportunity I see in this space, where I don't see so many parties chasing that same opportunity. And for us, to step in, with an acquisition-led strategy into a space where we can add more value to these assets over time is a really exciting place to be. And the core of both of those is we have to focus on cash generation. And that's something that will set us apart, I think, in this sector over the next 5 to 10 years is this business will be very cash generative. And Espen will touch a little bit on what we've seen in Q3. But as our production ramps up over the next 18 months or so, I think our underlying cash generation potential is much, much bigger as a company. And then on the right, you see a little bit more of where we want to focus. I think we are an industrial player. And so we're focusing today on the generation technologies in the onshore space, those things that have the lowest levelized cost of energy. And so wind, hydro and solar are definitely areas where we're spending a lot of time and energy, not only on brownfield acquisitions, but greenfield projects and everything in between that. And as we move through the energy transition, I think there has to be a lot more focus on infrastructure, on storage and on the instabilities that renewable generation brings into the grid and into our power markets. And so we're spending a lot of time now as well looking at frequency markets, looking at how to provide additional services to the grid and also looking at energy storage, which is a good differentiator and a good diversification of our revenue streams. And once we get there, I think it's important to keep an eye on our revenue streams and the trading side of our business, and that will be somewhere where we're looking to grow a little bit over the coming years. And it's also fair to say I think that technology and innovation is going to play a huge role in the energy transition. And ensuring that we stay close to those new developments and new technologies that are coming to market is something that's really key for us over the next 5- to 10-year window. And so for us, M&A led, for sure, organic growth is going to be a huge part of what we do. Cash generation is always at the forefront. And then having the backing from the Lundin family and that shareholder in the corner supporting our strategy and ample debt capacity with a team who are motivated and competent in this space, it's a really good place to be as a company. So from there, I think we dive straight into the Q3 results, and we'll spend a little bit more time exploring this over the next 10 or 15 minutes. But it's clear to say we've been very active since we started in July. We've either signed or completed 6 transactions, totaling around 500 gigawatt hours of production since July. And that started with the most material transaction, which was Slitevind, and we announced that on the 1st of August. And we incorporate in our Q3 results only 1 month of Slitevind from the 1st of September. And so for Q4, they will be fully -- we work out for all of their production. But for Q3, it's only 1 month of their production in our numbers. And following on from that, we've done 5 smaller transactions, all the way from 1% in an existing wind farm we own through to 20- to 30-gigawatt hours of production in a single asset. And that's both in private companies, in assets and in shares in our assets. And when we look at July, on an annual basis, we were generating around 300-gigawatt hours when we first spun out in July. And we've done M&A of 500, which sets us up nicely for the next coming years of power generation. And Espen is going to spend a little bit more time on the Q3 financials. We generated 83 gigawatt hours of power in Q3, impacted somewhat by lower wind and hydropower generation during the quarter. Our underlying price achieved, though, was EUR 177 per megawatt hour, and Espen will dive into that in a little bit more detail as to how we get there, but very, very strong price realization and a very small amount of hedging linked to the Slitevind deal in Q3. So it's very, very close to where the regional spot price is. And in Q3, with that production and that price, we generated $11 million of EBITDA, and we're sitting today on $11 million of net cash. So strong Q3 financials, but it's only just a start of our journey as a company, and that's expected to grow over the coming quarters as our production grows. And I think not many people can argue with the shareholder value creation in the quarter. We started life at SEK 7 a share when we first spun out of Lundin Energy, and we're now in the mid-20s. So it's been a fantastic summer, where for those shareholders who managed to get on board early, we've -- they've made a fantastic return. And as I look into the future, there's so much room to grow in this space. And one thing that we didn't expect was the amount of volume that we see in the stock. And on a daily basis, we're trading around $20 million, or 11 million shares. And even before we started this call, we'd already traded 11 million shares today. And that gives a great opportunity for shareholders to step into something that is very liquid. The stock -- there's ample liquidity in the stock, there's volumes to trade into, and there's a lot of opportunity to grow that position. And I think we're seeing that as a unique opportunity in this space to have us stop this liquid with cash to grow, with the ambition and competence that we have in the organization. So we truly believe it is a unique investment opportunity. So spending a small amount of time on the M&A space. As we touched on, we've concluded 6 acquisitions, which total around 500 gigawatt hours of annual production. And that's added just shy of 200 megawatts of installed capacity into our asset base since July. And we've done that at EUR 0.9 million per megawatt acquisition price. And when you look in the market today, that's a fraction of where you can pick up new build, and it's also a fraction of where CapEx is for new wind farms today. So in our minds, it's a very attractive point to pick up assets. And on the right-hand side, you can see the 3 assets that we spun out of Lundin Energy with, and you can see all of the smaller assets that we've acquired across primarily the South of Sweden. And that's a fantastic asset base that gives us ample opportunity to go and identify future potential within those assets to go and increase the power generation and capacity of those systems. And not only have we acquired the assets, the teams that we've acquired through Slitevind and some of the other follow-on transactions are a fantastic addition to Orrön. And these teams bring more than 30 years' experience in this sector from the early days of wind and starting out some of these really new projects, all the way through to greenfield projects today and brownfield operations today. Repowering, life extension, new greenfield opportunities, this is all within the teams that we now have under our Orrön Energy banner. And the integration of those teams is a fantastic combination of our capital and competence and commercial and industrial logic with teams on the ground who are able to effectively go and execute on this strategy. So it's been an exciting journey on the M&A front, but what we've bought is only just a start of what this company can be, not only through the M&A space, but really unlocking our teams to go and chase opportunity within this sector, with our mindset is something that's going to be good to watch over the coming months and years. And so a couple of minutes on longer-term guidance and how we look at generation guidance. And I think it's fair to say we're not going to be weather forecasters for power generation guidance. But what we can share is the capacity or power generation potential of our assets under average conditions. And so if we look back at historical average wind and hydropower conditions, rainfall, timing, et cetera, what we will do is give the market an indication of how much power we believe we can produce with those suite of assets over, on an annual basis, using average conditions. And so when we started life in late June this year, we had assets that could generate around 300 gigawatt hours per year of generation. At the end of Q3 already, we're at 700 gigawatt hours with the inclusion of Slitevind. At the end of this year and early next year, we will be at 800 gigawatt hours folding in the other 5 smaller transactions that we've completed in Q3, and we'll complete in Q4. And then when Karskruv comes online at the end of next year, we'll be over 1.1 terawatt hours of production. And so we grow from 300 gigawatt when we started only a few months ago, we increased 3.6x to over 1 terawatt hour of production. And then on the right-hand side, you can see where this production is, and the highest priced regions in the Nordics are SE3, SE4, Finland and the southern part of Norway. And around 80% of our production is from those areas. And that's a really important thing to note as we look at some of the imbalances in the power system in the Nordics and the lack of infrastructure between some of the southern and northern sections, especially in Sweden, where we see significant multiples on power price in the southern regions of Sweden compared to the north. And so most of the assets we're acquiring have been focused on SE3 and SE4, and that's where you see a bulk of our production going forward. And a few words on our Karskruv projects. Our Karskruv project is planned to be online at the end of 2023, and we're firmly on track today with the delivery of the foundations of the civil works and some of the electrical works. We're ahead of where we expected to be at this point. And some of the deliveries in Q2 have been ahead of where we expected to be. Q3 is no different. And we will see through the spring -- late spring and summer of next year, we'll start to see the final elements of grid connection and turbine supply coming to bear on site as we erect the turbines. And so today, we're on track for end of next year as a first power generation, and that sets us up for a really strong 2024 with over 1 terawatt hour of generation capacity. And so with that, I think I'll pass over to Espen, who's going to take us through the Q3 financials before we close out at the end.

Thank you, Daniel, and good afternoon, everyone. I'll go through the financials during the third quarter, and starting with the highlights on this slide. As already mentioned, power generation was 83 gigawatt hours during the quarter, slightly below expectations due to lower wind speeds in the Nordics and also somewhat lower precipitation in Norway. But on the flip side, we saw very strong electricity pricing more than offsetting the lower volumes at an average price of EUR 177 per megawatt hour realized during Q3. We had CapEx of $0.2 million during Q3, but please note that we are reiterating our second half CapEx guidance of $10 million, meaning that the balance is expected to occur during the fourth quarter. Operating expenses came in at $2.1 million, slightly higher than normal on a per unit basis due to lower volumes. And as you might have seen, we're also increasing our second half operating cost guidance from $2 million to $6 million. And this is explained by the addition of Slitevind, which also adds significantly higher volumes during the second half. And the updated guidance is also reflecting that certain elements of our cost base is directly linked to electricity prices, which we are now seeing significantly higher than what we were expecting in our previous guidance. The quarter had strong cash generation. We are reporting a consolidated CFFO of $5.4 million, and we have a proportionate EBITDA of $10.8 million, which is a very strong EBITDA margin of 70%. We were also ending the third quarter with a very strong liquidity position. We have a net cash of $11 million. This is on a proportionate basis. So it includes our proportionate share of cash in the joint ventures. And we have also adjusted for certain short-term liabilities related to the E&P transaction, which closed in June, and these short-term liabilities are expected to be paid out over the coming few months. So moving to realized electricity prices. The average system price during Q3 was EUR 176 per megawatt hour. And as Daniel mentioned, since the majority of our assets are situated in high-priced regions, the average regional spot price corresponding to our Q3 production was EUR 220, which is a significant premium to the average system price and just highlights the quality of our asset base. We realized a small hedging loss during the quarter, which is reducing our average price by EUR 6. This is, as also mentioned earlier, related to hedge contracts entered into by Slitevind prior to the acquisition, of which all are maturing by the end of the second quarter next year. The capture price discount negatively impacted our realized price of EUR 37, meaning that we are ending up at an all-in average realized price of EUR 177, marginally above the average system price, which is a very good outcome, given the capture price discount, which typically also is higher in periods with higher electricity prices and higher volatility. Looking at the underlying cash flow generation, and we think this is the most relevant metric to display the underlying cash flow generation potential of our portfolio because this is all on a proportionate basis, meaning that it takes into account our net ownership of all our assets. We had revenue during the quarter of $15.5 million, when we are deducting OpEx and G&A of $2.1 million and $2.6 million, respectively. We're ending then at an EBITDA of $10.8 million and 70% margin, as mentioned. Current tax during the quarter was $5.7 million. This is all connected to our Norwegian hydropower plant, where we are in tax position, as we have mentioned earlier. And please note that $1.6 million out of this $5.7 million is linked to the proposed retroactive Norwegian tax change, which is effective from 1st of January 2022, but it was announced in September, so we have reflected a full year-to-date impact in the Q3 results. So our current tax is overstated due to that impact. We had an operating cash flow, then including the higher-than-normal tax of $5.1 million. And if you then deduct small amounts of net interest expense and CapEx, that leads to an all-in operating cash flow after interest and CapEx of $4.7 million. And if we then turn to our reported consolidated cash flow, we ended Q2 with a cash position of $187 million. Our continuing operations had an organic CFFO of $6 million. And please be aware that this element or this item is partly driven by timing of dividends that we are receiving from our JVs. So you should expect this to be lumpy, and it may vary significantly between quarters. We had a small negative impact from changes to working capital. And as you know, we did the Slitevind acquisition during the quarter, which led to a net cash outflow of $79 million, also including then the cash that we actually acquired through the acquisition. Our discontinued operations had a negative CFFO of $60 million during Q3. And this is -- these are costs related to the E&P transaction that closed in June. And as mentioned, we have also booked short-term liabilities of $18 million, also related to the transaction, which, like I said, will be paid out during the next few months. But a small increase in debt and then ending the quarter with a cash position of $62 million. And if we then look at our debt position and liquidity a bit more in detail, sort of underlying our liquidity headroom, which is very strong and robust. We have a gross cash position, as mentioned, on a consolidated basis of $62 million. We have a debt position of $52 million. Then there are these liabilities, as mentioned, related to the E&P transaction, which we deduct, we treat as a debt there. And when you add our net share of cash in our joint ventures, that's $19 million net to us. And this adds up to $11 million of adjusted net cash position at the end of the third quarter. Then focusing on the -- our total liquidity headroom. Our cash -- we have a cash position of $62 million. And we have an RCF in place, which is almost fully unutilized, so we have $92 million left of headroom there. Adding these 2 together, you can see that we have a total liquidity position of $154 million at the end of Q3. But it's very important to note that we see significant additional debt capacity supported by our asset base, which is providing a lot of flexibility in terms of future M&A. And the current facility that we have put in place, the $100 million facility, was just a bridge in connection with the Slitevind acquisition and to cover our short-term Karskruv CapEx. And like mentioned, we see significant upside potential to -- in terms of debt volumes on top of that. Turning then to our guidance. As mentioned, our operating expenses guidance, we have increased from $2 million to $6 million for the second half. This is driven by the additional Slitevind, which then is more than offset by the higher volumes that Slitevind contributes. And then there are, as mentioned, certain elements of our cost base that are directly linked to the electricity prices, which are now higher than what -- than previously anticipated. Total G&A cost guidance is reiterated at $7 million. In this amount, we have $3 million related to the Sudan legal case. And please also note that this $7 million also takes into account all the announced acquisitions today and in the report. And our capital expenditure forecast and guidance for the second half is also reiterated at $10 million, whereas mentioned the majority will occur during Q4. So with that, I'll hand it over to Daniel for some concluding remarks.

Thanks, Espen. So just before we move into Q&A, I think we're in a fantastic position as a company. We've started already only 5 months ago, at the start of July, with a fantastic group of assets, $130 million of cash. And I think you've seen over Q3, we've generated some good revenues, some strong production and moved very quickly on the growth front to build the core of this business. And so we are delivering on our M&A strategy. That M&A-led approach and building an organic growth pipeline is something that we set out at the very beginning of this company, and we're continuing with that strategy as we go not only through Q3, but we continue that through Q4 and into next year. As Espen touched on, we're fully funded for growth, and we see ample headroom on the debt side to be able to pick up future acquisitions using our own resources internally to grow, which is a great place to be for a company of our size and scale to have that capacity and to be in a net cash position today is fantastic and a little bit different to some of the rest of the industry today. We've touched on the generation capacity. So as of now, we already have projects or acquisitions that get us to 1.1 terawatt hour of production from 2024 onwards. But we're not sitting still in. So you should expect that this number over time continues to grow as we add more projects and assets into the mix. We should never underestimate the backing of a cornerstone shareholder, who is supportive of a long-term strategy to create value. And it's clear that within the Lundin Group and with the backing of the Lundin family, this vehicle is set to grow in the renewable space with a long-term vision and a long-term growth ambition. And the Board that we have today have been in many of the Lundin Group companies and other companies across the Nordics and globally where they've demonstrated their ability to grow profitable and valuable companies over many, many years. So we have a very fortunate position where we have a strong shareholder, a Board and a management team, who are all lined up to create value with this vehicle. And this is unique to be our size and scale, to be cash generative, to be linked to electricity prices and completely unhedged in this market with a net cash position and significant financial capacity for growth that doesn't exist in this space. And not only that, we have liquidity in the share that people can trade in and out of this stock and participate in what's going to be an exciting 4, 5, 10, 20 years in the energy transition space. So we truly believe that this is a unique opportunity to get in at an early stage of a Lundin Group company set to grow through the energy transition. And so with that, I think I'll pass back to Robert, and we'll move into the Q&A, I think.

Thank you, Daniel and Espen for the presentation. And yes, we do have a few questions from the audience, which is good to see. So without any further ado, I think we'll move over to them. And the first question is about expansion outside of the Nordics. Might that be of interest for Orrön in the long term?

Yes, I think it's a great question, and it's something we said at the start that we were -- our focus was going to be Nordic initially because that's where we understood the market and we understood where transactions were trading, and you've seen how quickly we've been able to move in the Nordics because of that. So I think it continues in the Nordics as a core, but we are looking. We've spent some time in the Baltics. We've spent some time in the U.K. and in some of the southern reaches of Europe. But as of today, we're still seeing more than enough deal flow in the Nordics. And for us to step into a new jurisdiction, I think it needs to be of the right scale and of the right opportunity, size and value accretive to step into it. So potentially not for the next 1 or 2, 3, 4 transactions, but it's an area we're looking at to expand a bit more across Europe. But certainly, there's a lot more to be had in the Nordics, I think, for this company.

Thank you, Daniel. And the next question is about legislation in Sweden. Do you see any risk of a new legislation coming in that is affecting Orrön Energy in a negatively way -- in a negative way?

Yes. I think it's an interesting and very topical question just on legislation and changes because it's a really difficult place for governments and for society to manage pricing, to manage security of energy supply and to incentivize this energy transition. So I think there's a lot of discussion in the regulatory and political space on what to do. Our company is going to focus quite simply on acquiring low-cost production and doing it in a place where the levelized cost of energy is low. So yes, there might be legislation, there might be changes that impact us. But the discussions that the EU is having now of setting a price at EUR 180 a megawatt hour and capping it there long term, we've never forecast our business at EUR 180 a megawatt hour long term. And if we roll back the clock 6 months, even 9 months, nobody was speaking about production -- power prices at this level. So for us, yes, of course, there's potentially some impact. But I'd say that this business is still strong at EUR 50 or EUR 60 a megawatt hour. And so getting up to those levels and taking some upside away at EUR 200 or EUR 300 a megawatt hour, maybe there's some impact. But as I see it today, if long-term power prices come down to EUR 20 or EUR 30 again and stay there long term, then we don't have investment in the energy transition. That's not what we need to do, to decarbonize our power systems. For me, yes, impact, but I don't think it changes our business model and our strategy.

Thank you, Daniel. We have a question about dividends. Do you think the Board would consider dividends and might there be room for dividends from 2024, if everything goes according to your plans?

I think it's -- when you run a business that has stable cash flow -- stable and somewhat predictable cash flows for 20 or 30 years, you have to have a discussion around dividends. And I think it's too early today. We need to grow the scale and size of this business and diversify our cash flow and diversify the asset base that we have. And then I think it's a discussion for the future. But I wouldn't expect any dividends in the short term, and I think the opportunities to grow are much more accretive for shareholders than stepping into dividends...

Yes. Sorry, I think we momentarily lost the colleagues here, and so I'll let -- bear with me, and I'll see if we can get them online again. Technology can be a problem sometime. I'm sure we can get my colleagues online again. Bear with me. Always annoying when it happens. I can remind everyone in the meantime that we will present our year-end financials on the 15th of February, and we will be able to answer questions at that point as well, of course. But I'm sure that we will have my colleagues on momentarily. I got a message here, saying that they are in the process of logging on. And I, of course, encourage everyone, we know that we have a very large shareholder base, institutional shareholders, but also Swedish retail. So we're always open for questions. I'm here. We have -- the colleagues' back. Everything back to normal. Technology can cause problems, but we didn't give up. So we continue with the question. Sorry for that. The next question comes from one of our attendants here, and that's on the hedging positions disclosed in the third quarter report. Could you let us know how you decide the amount of hedging for your portfolio?

Yes, no problem. And apologies, I answered this question, but I don't think we were live at the time. So our hedging -- our strategy on hedging is quite simple. I think the view for the company on hedging is not to have any. We should be merchant exposed to electricity prices. And so we don't intend to hedge any of our portfolio, and we don't see hedging matching our view on long-term pricing. There's a disconnect and a discount on hedging. So with some of the companies we acquire though, they may have a different view, and so Slitevind had a different policy on hedging. But all of those hedges will roll off by Q2 of next year for Slitevind. And then we won't be hedging any more within our portfolio. So our view on hedging is quite simple, we shouldn't hedge.

Thank you, Daniel. Good that we got back and good that we got over the technical issues. So we continue with a question on the stock market reaction today on the third quarter report. Do you have any comments on the reaction? And I think the share price is down slightly by about 1%, 1.5%, as we speak.

Yes, I think if I could comment on the moves we've had on our share price over the last 3 months, then I probably wouldn't be sitting here if I could predict it. And this company is going to be exposed to a whole range of things in this sector that other utility and infrastructure companies aren't exposed to. So to me, I don't know where the reaction to the Q3. We traded yesterday. We traded down as we came into the Q3. Through the last couple of weeks, we've traded up significantly on no news. So for me, I don't think we get drawn into commenting on why we're up or down. Our job's to run the company and to share what we're doing and share the opportunities where we have to create value, and it's up to shareholders to decide what the price of the stock ultimately is at the end of the day.

And nuclear power, that's something that is widely discussed these days in Sweden as well. Do you have any long-term road map to get into nuclear?

Yes. I think nuclear probably is off the table for us. It's difficult for us as a company of our size to be in any sort of large-scale nuclear project. Just isn't what we do. I think we stay in the simpler technologies. We stay onshore for now in the lowest cost bracket. Nuclear has a role to play in the energy mix, and I know in Sweden, there's some debate around what that energy mix should be. In my view, renewable will play a part of the power mix long term, no question. Whether there's a growth in nuclear, a growth in a new power generation technology that's not on the market today, I'm not sure. But our view is that all of these things will come and go as will coal, lignite and other elements. Our job is to stay in the renewable space and to generate power and step into the energy transition elements of the renewable space. So for me, nuclear is not on the table, but who knows what the future holds.

Thank you, Daniel. So we have already spoken a bit about legislation, and here comes another question related to that. How does the EU price cap, the suggested one, impact your financials in the near term? And does it alter your growth strategy on where to go and what technology to pursue in M&A?

I think legislation has to play a role, and all governments are struggling with power prices and power markets through the summer of this year. And so we have to be mindful of that. We saw a change in Norway coming through. We've seen a cap on pricing across the EU. But I'd say we're in a place where we never forecast a business at EUR 180 per megawatt hour, which is what the EU is proposing as a cap. So for us, if we're capped at EUR 180, we make a hell of a lot more money than we ever expected to make as a company. So yes, this legislation will have an impact somewhere, but I think we're in a strong position where our asset base has some of the lowest cost across this industry. And while we stay there, then the impact of legislation is not as material as for some of the other producers.

And we have a question on interest rates. They have gone up quite a bit since the inception of Orrön. How does this impact your strategy and your views on the transition?

Well, I think, of course, interest rate is linked to sort of the inflationary -- underlying inflationary situation we have in the markets globally. I think it doesn't have a prominent impact on our future strategy. I mean if you have high inflation, you typically also see higher commodity prices, and that's also what we are observing. It's also very important to note that we have 0 inflation risk on our remaining CapEx. We have very low cost base on our operating costs, and we are enjoying low margins on our funding. So no, I wouldn't say it significantly impacts our future strategy in terms of Orrön growth potential.

And I think like legislation, interest rates come into that same economic discussion around where to acquire and how to grow. And as we grow, we're going to need to utilize some of that debt, and we just have to demonstrate that the spread between our cost of capital and what we get in the projects is big enough to make a strong enough return for shareholders.

And the follow-up to that was, do you see any changes in the pools of capital available to Orrön from the different interest rate landscape compared to 6 months ago?

No, not really. I mean we see a very strong interest in being part of the Lundin base for our company, and we have -- we enjoy very strong support from the Lundin community for future financing. So no, not any significant changes there. I guess, to the contrary, there are very positive developments we have shown over the last 6 months. The growth, the acquisitions at attractive prices and now the cash flow where we are starting to generate, we show increase significantly going forward on higher volumes. I mean that has improved our position and our potential and the opportunities we have on the financing side significantly.

Thank you, Espen. What do you believe will happen if we see a collapse of the power price?

But so many things will happen. Specifically for us, I think that we're going to be merchant exposed to power prices. And so while our cost base remains low, which it does, and we'll focus on that, we will see volatility in power price. If we're generating up at the levels we've seen in Q3 for the next couple of years, then it's a different place to if we're generating power into a market at EUR 20 a megawatt hour. And I think people have to see through the short-term moves in power price and look at a longer-term average. From quarter-to-quarter, month-to-month, the price will move and it may move significantly. But what I don't see is a long-term power price at EUR 20 or EUR 30 a megawatt hour because we don't invest in the way that we need to in the energy transition to complete this decarbonization of the power systems. And so we need a higher price than the long-term average to sustain it. And then secondly, today, Europe is dependent on thermal generation, nuclear, fossil fuels, gas, coal. And while that exists in the power mix and while we see carbon pricing in the EU where it is, I think it's really hard to see a longer-term -- medium- and longer-term power price that's down to a collapsed level and staying there for years and years.

Thank you, Daniel. Would you see Orrön Energy in the future focusing more on one specific type of renewable energy projects, for example, wind or solar?

Yes. I think the -- wind, solar and hydro is certainly where we're looking today. In the Nordics, wind is by far the most dominant. We're not seeing as many new hydro projects, and solar's only just starting to gain market share in the Nordics. So wind, for sure. Across the Nordics, for sure. But solar and hydro, we're looking at, as we are batteries and new technologies and blending wind and solar together on our side of the grid, putting battery storage against wind opportunities, talking to industrial players about decarbonizing their systems through renewable power. There's so much opportunity in this space to grow and we're looking at the best way to deploy all of the renewable technologies in a way that makes the most sense for the site, for the opportunity, for the grid connection. So I don't know exactly which one will dominate in the coming months and years, but we're looking at a range of opportunities to continue to grow.

So Slitevind was a major acquisition, and that was acquired just before a sharp increase in energy prices. What do you think is the possibility now to acquire similar assets in the current market compared with the market just a few months ago?

Yes. And again, I think I touched on this a few questions ago. We have to look long term at these assets. These -- the assets we're buying are sometimes 30 years remaining life. Most of the time, 20 years remaining life. So if we're buying an asset from monthly variations in power price, it doesn't reflect the underlying value of the assets. But specifically, to answer the question, the multiples we paid on the Slitevind transaction, we signed one just before the Q3 results this week, and that one was done on exactly the same terms. And nearly all of the transactions we've done, all of 6 of those, have been on very similar if not the same terms and multiples as the Slitevind transactions. So we don't see that this short-term impact on power pricing is moving assets significantly in the space, which we are operating. And it is potentially moving some of the greenfield assets. But again, that -- the power prices have moved on 20- and 30-year horizon, not on a month-to-month basis.

And a question on the new transactions, the new acquisitions. How does Orrön plan to fund these acquisitions? Will there be any equity raisings in the near future? Is that something you're looking at?

So I think if you look through our Q3 report and also our presentation, I mean, at the end of Q3, we had available liquidity of $154 million. We had a cash position of $62 million. So we're clear. I mean we are funding these transactions with available liquidity, available cash. Definitely, no need for equity. And we have significant additional debt capacity, as I mentioned, on top of what we have put in place today, supported by our asset base, which is generating strong cash flow at low cost and in regions with premium pricing. So these are funded through current liquidity and facilities, as mentioned, without altering our future flexibility or potential.

Thank you, Espen. That's very clear. And these 5 new assets, are they still 100% exposed to the spot price?

Yes. So the underlying assets, most of them are. Some of them have a very small portion of hedging. So in the final transaction we did, which is around 40-odd gigawatt hours is a very small portion of hedging on that portfolio. So I think what people should expect is as the hedges that we've disclosed in our Q3 report roll off at the end of Q2, there's very little that remains beyond that period, and there's none that remains beyond the 2023 calendar year.

Thank you, Daniel. And that actually concludes the Q&A session because we have no more questions. And we would like to thank everyone dialing in on a Friday afternoon, as it is here in Europe at least. And as I said, in the middle interruption we have here, we're very proud and very happy to have so many dedicated shareholders, and we will continue to keep you updated. As I also mentioned, our year-end financials will be presented on the 15th of February. And in the meantime, don't hesitate to reach out to myself or to my colleagues should you have any questions. And thank you very much, Daniel and Espen.

Thank you very much. And as we touched on, I think it's a great place to be as a company. It's an exciting opportunity within the energy transition to go and create value. And I think we're ready off to the races, having completed so much in the first number of months, and there's so much more to do. So big thanks to all our shareholders who have dialed in and all of the following that we've had, and look forward to the next quarter of results where we can come back and share what we've been up to.

Thank you.

Thank you.

Thank you.