Oil and gas tie-up to leave Lundin Energy with renewables only

Vestas turbines in Sweden. Courtesy of Vestas Wind Systems A/S.

December 22 (Renewables Now) - Lundin Energy AB (STO:LUNE), a Sweden-based independent exploration and production (E&P) specialist, is taking steps to become a standalone renewable energy business through the divestment of all its oil- and gas-related activities.

The company has agreed to sell its E&P business to pure-play oil and gas company Aker BP ASA (OSE:AKRBP), thereby helping the latter to become the largest listed E&P company focused purely on the Norwegian Continental Shelf (NCS). The cash-and-stock deal values the assets being divested at about NOK 125 billion (USD 13.7bn/EUR 12.2bn).

In the meantime, Lundin will keep its portfolio of onshore renewable assets in the Nordics. When fully built out, the plants are estimated to produce about 600 GWh of electricity per year. This business will be debt-free and will have a cash balance of USD 130 million (EUR 115.5m) upon completion of the E&P divestment. The sum should be enough to cover all capital expenditure and other working capital requirements until late 2023, Lundin said in a statement.

“After the completion of all currently planned projects, this business is expected to be free cash flow positive and will form the basis of a viable, independent renewables company,” Lundin noted.

According to information on its website, the company’s renewables portfolio includes the 86-MW Karskruv wind project in southern Sweden, a 50% interest in the 132-MW Metsälamminkangas (MLK) wind project on the east coast of Finland, and a 50% stake in the 77-MW Leikanger run-of-river hydropower plant that is already in operation north of Bergen in western Norway.

If the E&P transaction is finalised, Lundin’s existing shareholders will retain their current ownership in the listed Swedish firm and its renewable energy operations, and also take hold of a 43% interest in AkerBP. Lundin Energy’s largest long-term shareholder is the Lundin family through Nemesia Sarl, having a 33.39% interest.

“The Lundin Family are in full support of this transaction and have given our irrevocable undertaking to vote in favour of this transaction,” commented Ian Lundin.

The proposed combination is expected to be completed late in the second quarter or early in the third quarter of 2022.

(NOK 10 = USD 1.099/EUR 0.976)

(USD 1.0 = EUR 0.888)

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