Hi, everyone. Welcome to Orrön Energy second quarter 2025 webcast. My name is Jenny, and I am working with communication at Orrön Energy. With us today, we have our CEO, Daniel Fitzgerald, and CFO, Espen Hennie, who will describe the report and the latest developments of Orrön Energy. We will end the session with a Q&A session. If you look at the bottom of your screen, you have a Q&A function, so please send across questions as we go along, and we will collect and go through them at the end. With that, I would like to hand over to Daniel Fitzgerald to kick off this presentation.
Thank you, Jenny, and welcome to our Q2 results for 2025. It is a pleasure to have you here. I will be joined by Espen, who will run through the financial results for the quarter. Before then, I will give a quick update on where we are within the business. As a short introduction, Orrön Energy is a renewable energy company. We have just shy of 400 MW worth of producing assets in Sweden and Finland, and all of those are wind farms. We have organic growth across the full life cycle. We are able to step into greenfield developments, project construction into operating wind farms and other assets, batteries, solar, et cetera. We have the ability for life extension, repowering, et cetera. So within the company, we have the ability to work through all of the stages of the life cycle of a renewable asset.
We have a large-scale greenfield pipeline, primarily in Germany and the U.K., with projects also in Sweden, Finland, and France. The U.K. and Germany are really leading in terms of the large-scale opportunities that are now moving into a monetization phase. I am pleased to share that our first project has been sold, and we will touch on that later in the presentation. That represents a really strong return on capital and something that we have been working towards for the last two years to build this element of our business and start to see the returns from that. Finally, we remain as we have done since the inception of the company, we remain fully funded for investing in growth and in investing in the platforms that we are starting to build.
In challenging market times like this, I think that is really important to ensure that we continue to have a strong liquidity position that underpins our ability to go and invest countercyclically and invest in longer-term value-accretive options for the company. If we then step into our second quarter results and first half performance, we have generated 439 GWh worth of production year to date. In addition to that, we have also had 20 GWh worth of what we call compensated volumes. These are becoming more and more important in today's markets, where we are bidding our assets into ancillary services, and we are seeing stronger revenues coming out of that side of the business. As potentially we see a little bit weaker markets like we have done in Q2, this becomes a more important share of our revenues moving forward.
As of the end of Q2, we only had MLK qualified into this. In Q3, we are moving into having Karskruv qualified into this service, and we should see more and more volumes coming out of these ancillary services. We will touch on that in the coming slide, but I think that is a really important differentiator as we see markets like they are at the moment. With the revenues, we have achieved EUR 16 million of revenues year to date, and that results in an EBITDA of EUR - 2 million. We have seen slightly higher balancing and other costs through the course of the second quarter. Espen will touch on the financial impact of that as he goes through his section. That is offset to some extent by the increased revenues from the ancillary services. As I already touched on, we do have a strong liquidity position.
We have EUR 77 million of net debt and over EUR 90 million of liquidity headroom within our finance facility, which gives us the ability to continue to draw down for funding some of the growth elements. As we are starting to move into monetization of the greenfield portfolio, we should see over the coming quarters and year, we should see a return to reduction in the debt facility as we monetize more and more of these projects. On that, we have sold the first German project. We have a slide detailing a bit more detail around that. I am pleased to share that we have received EUR 2 million upfront consideration for that, and we expect to receive a contingent payment of EUR 2 million once we satisfy the contingencies.
That represents a good return on capital and a profitable element for this part of the business, which is a really exciting position to be in now that our first projects have hit the market. In the U.K., we continue to see strong progress on our projects. We came out in our first quarter results with only two projects that are ready to permit. Our second one had the land position secured. We are now at seven projects which have all of the land secured to move them forward. Those have been submitted into the U.K. grid reform process, and we are likely to hear back in the second half of this year on the results of that. A portion of those we expect to move into a sales process as we enter into the new year, which will start the monetization of the U.K. portfolio.
There is a strong portfolio of projects that are coming forward. We need to see the results of the grid reform and what that means for our projects, and then we will be able to share more information as we come into the tail end of this year or early into next year. Finally, the higher balancing costs that we have seen in the second quarter. We have also seen higher ancillary services revenues and balancing costs are when the system operator has to step in and balance electricity markets to ensure that the supply and demand in real time are being matched. Unfortunately, with the increasing volatility in the power systems, we have seen in Q2 more of an impact from these balancing costs. The primary areas where we have seen that are in Finland and in Sweden.
In Finland, certainly for MLK, we have implemented a solution in early July, which now mitigates our exposure to balancing costs by managing our production in a slightly different way. We still see some of the challenges in the market. That, for sure, is impacting our financial results year to date so far. As we look into the future, we are starting to see futures pricing increasing. We are starting to see that not only at the tail end of this year, but also into next year. We have also hedged a portion of our volumes for the second half of this year. So 40% of our volumes have been hedged at an average price of around EUR 52 per megawatt hour. That gives us protection against a downside case where we see potentially lower pricing, like in Q3 of last year.
The market is starting to pick up again. We are starting to see increased pricing. We are starting to see some of the revenues from greenfield. I think it feels like we are on a trajectory which is going to push us higher in terms of our financial performance as we move through the second half of this year and into next year. Looking in a bit more detail at our production volumes, I think the first thing to cover is that we remain on track for the guidance range that we put out at the start of the year or the forecast range that we put out at the start of the year. We have delivered around 459 GWh worth of both produced volumes plus compensated volumes. I think those compensated volumes are really important going forward.
The way we manage our producing assets and operationally controlling our assets has become increasingly important in today's markets. The ability to restrict the amount of balancing required on our assets and reduce the costs associated with that, but also to profit from elements of ancillary services and bidding our volumes into these markets. It is quite a complex piece of work to put in place for all of these services and controls to be able to manage the assets. On MLK, which is the asset where we have probably the most cost exposure, the most opportunity, we have now put a full suite of services where we can step into both restricting the output in low pricing, increasing the output when pricing is higher, ensuring that our output is controlled to match what we bid so we minimize balancing costs.
That more and more is becoming really important in the way we operate our assets. Also with the increased cost and increased ancillary services revenues, it starts to play a much larger role in how we bid our volumes. Karskruv has some of those services implemented. We are expecting that the remainder of the services come in through the course of Q3, and we move from 20% of our portfolio being eligible for these services up to closer to 50%, and we will keep pushing through the second half of this year to lift that even further. This gives us a lot of things. It gives us resilience against some of the higher costs and low prices, but it also gives us other avenues to take revenues from when the markets are volatile or challenging or have opportunities.
More and more, we're going to see that rolling out across our production fleet. Finally, for me, before I pass to Espen, a few words on the German project sale. I think it's been a long journey for us, and I'm sure for the investor community as well, to get to the first project sale. We're now two and a half years into this venture with the greenfield portfolio. This project is a 76 MW Agri-PV project located in northeastern Germany. We've sold that project to Saxovent Renewables. We have an upfront consideration of EUR 2 million, and the project has, or the sale has closed, and we've received the initial payment. The contingent payment is requiring two elements to be met. One is the final municipal approval of the project, which we expect in the first half of next year.
Secondly, we need the EU Commission approval of the German Solar Package 1 legislation, which allows this project to be eligible for tariffs. Once we meet those two, then we will realize the second part of this payment, and we are hoping to see the conclusion of both of those through the course of 2026. This project is not the only one. It's the first of many. We have a second project, similar location of 93 MW, which is now reached, ready to permit. So the same point as we were with this project back in the first quarter of this year. We expect during the third quarter that this will hit the market as well. We should hope to see some revenues from this project either tail end of this year or at the latest, early in the new year.
This really is the start of a monetization phase in Germany, where we have a multitude of projects, a multi-gigawatt pipeline, where we expect multiple projects coming through each year. We said at the capital markets day that we expected at least five projects over the course of 2025 and 2026, and we remain firmly on track with that delivery cycle. So I'm excited to see more from the German team and the German projects. I think the multiples that we've received on this project in terms of euro per megawatt hour are very accretive for us to continue investing in this business and in line with where we have expected the market to be. Over the course of the next quarters and into next year, we should see the results from Germany.
Then with the conclusion of the grid reform in the U.K., we should start to see the monetization from the U.K. With those two, I think we should be moving into a place where the greenfield business is starting to return that capital back to Orrön Energy, which is a really exciting phase as we move forwards. With that, I'll pass over to Espen for the financials before Q&A at the end.
Thank you, Daniel, and good afternoon, everyone. I will go through the financials for the second quarter, starting here with some of the highlights. We have a reported quarterly power generation of 188 GWh for Q2. In addition to these reported figures, as Dan mentioned, we do receive compensation for another 9 GWh related to volumes that are allocated to ancillary services and also some operational downtime, which will be compensated through our availability warranties. Achieved price for the quarter was EUR 30 per megawatt hour. We will go through that in a bit more detail in a later slide. The quarterly volume and the achieved price equates to revenues of EUR 6 million. The EBITDA, excluding non-cash G&A items, totals EUR -3 million in Q2. We ended the quarter with a proportionate net debt position of EUR 77 million.
When comparing that to our debt facility of EUR 170 million, it is obvious that the company is in a very robust financial position with ample liquidity. Taking a look at our full-year guidance. The short story here is that we did deliver in line with guidance on all parameters with exception of operating costs, which have been impacted by elevated balancing costs throughout Finland and Sweden. We are increasing our full-year guidance for operating expenses as a result, from EUR 17 million to EUR 19 million. As you can see on the right-hand side of the slide, the balancing cost for the first half of 2025 are up almost EUR 2 million compared to the corresponding period last year. This is very much an industry phenomenon in the regions where we operate, although it has been more pronounced in Finland and Northern Sweden to date.
We are, of course, taking all measures we can to limit these costs. For MLK wind farm in Finland, we have commissioned an automated solution designed to reduce both exposure and associated costs related to balancing. That went live in July. We are pleased to see that the initial results are very encouraging. Also very important to take into account ancillary services revenue into the total picture when you consider the increase in balancing costs. Our ancillary revenues were almost EUR 1 million for the first two quarters of this year. Obviously this is then offsetting a significant portion of the increased balancing costs. The ancillary revenues are, to a large extent, a hedge against also future variations in balancing costs since the two items are quite strongly correlated.
As I mentioned today, our ancillary revenues are coming from MLK, but we are now in the process of also implementing it and making sure that Karskruv is going live with ancillary services shortly. Going forward, you should expect our potential for ancillary revenues to increase and be even higher than what we have reported year-to-date this year. We should be in a very good position to offset a majority, and if not all, of the increase that we are observing in balancing costs. For G&A, legal costs and CapEx, the costs and developments year-to-date have been in line with expectations and plan. We are then reiterating our full-year guidance for those items as a result. Then some key financial metrics for Q2 and the previous quarters, going back to the corresponding quarter in 2024.
If you start with revenues, they were in line with the corresponding quarter last year, which is due to very small year-over-year variations in power generation and achieved price. The same holds true for EBITDA, when we adjust for the light timing divestments in Q2 last year. I think if you look at this chart, if you look at the quarterly variations, the seasonal pattern in our revenues is very obvious, where we normally have most of our volumes during Q4 and Q1, when we also typically enjoy stronger pricing throughout the Nordics, which is also something that we expect for this year with revenues picking up during Q4 compared to the summer quarters.
With that being said, we are very pleased to see that based on current futures prices and also taking into account that the hedges that we enter into, as Dan mentioned, we do expect revenues over the next two quarters to be significantly stronger than what we experienced last year. A bit more details on our achieved price for Q2 and also year-to-date. If we start with the Q2, the Nordic system price averaged EUR 26 per megawatt hour. Whereas the average production rate and spot price of our portfolio was EUR 32. So sort of the normal premium due to the geographical location of our assets, which is favorable with a large portion in high-price regions.
Ancillary services from GOs and hedging impacted positively by EUR 4 per megawatt hour on the achieved price, before then deducting capture price discounts to arrive at our achieved price of EUR 30 per megawatt hour for the quarter. If you look at the same reconciliation on the first six months, we had an average system price of EUR 36 per megawatt hour. Again, the premium of our portfolio due to the favorable location, resulted in an average spot price of our assets of EUR 43 during the first six months, and a positive impact from ancillary hedging and GOs of EUR 3, and an achieved price of EUR 36 after netting out the capture price discount, which is similar to the average system price during the same period.
Although capture price discounts obviously are depending on a lot of moving parts and are hard to predict precisely, we do expect the yearly average to end up not too far away from the observed level in 2024. You should also expect this to fluctuate quite a bit on a quarter-to-quarter basis. The more longer-term average, we do expect to end up somewhere closer to where we are today and the 2024 level, as you can see on the chart here. Moving on to the quarterly reported cash flow and our liquidity position. Our receiver flow, excluding working capital for the quarter, was EUR -5.2 million, and we had a positive working capital impact of EUR 0.8 million during Q2. Cash flow from investing activities had a total impact of EUR -5.1 million in Q2.
Out of that, those EUR 5.1 milllion, EUR 3.9 million are CapEx, which is mainly investment into our greenfield portfolio and projects. With then the balance of EUR 1.2 million being the net cash flow impact from acquisitions during Q2. The resulting proportion of net debt position at the end of the quarter was EUR 77 million, as mentioned, which corresponds to more than EUR 90 million of liquidity headroom when we combine the cash balance with the EUR 76 million of undrawn portion under our revolving credit facility. Summing up then with cash flow outlook for the full year for 2025, where we reflect the actuals for the first half of the year. Before we start, very important to note here that here we are excluding all revenues and EBITDA and cash impact from greenfield projects.
The financial impact from the recently announced project sale in Germany, which will be reflected in our third quarter financials, will come on top of what you see here on this slide. We are applying achieved prices ranging from EUR 30- EUR 40 per megawatt hour for the second half of the year, which we view as the likely range of outcomes based on current futures. At the same time, also taking into account the price hedges that we have entered into, with details shown on the slide here. Starting with revenues, we expect to end up between EUR 31 million and EUR 36 million for the year, with a corresponding EBITDA excluding Sudan legal costs ranging between EUR 3 million and EUR 8 million, and an EBITDA breakeven price of EUR 30 per megawatt hour for the year.
Just keep in mind that that breakeven price is obviously elevated by lower-than-average power generation volumes for the year and also then partly due to higher balancing costs, which I have explained earlier, is partly or fully offset also by higher revenues from ancillary services. When we are including Sudan legal costs, which largely is a thing of the past, only a year from now, or less than a year from now, EBITDA is expected to end up between EUR -4 million and EUR +1 million for 2025. If we are moving to free cash flow before CapEx, we anticipate EUR -10 million- EUR +3 million excluding legal costs and EUR -9 million- EUR -4 million if we include them.
I think this chart, when also considering our liquidity headroom of more than EUR 90 million, highlights the resilience of the company and underlines the financial capacity we have to continue pursuing accretive growth opportunities going forward. With that, I will hand it over to Dan for some concluding remarks.
Thank you, Espen. Before we move to Q&A, I think it is important to note Q2, and certainly the first half of this year, has been challenging financially. We have seen higher costs, lower pricing than where we expect to see the long term. I am pleased to see that the futures pricing is starting to pick up as we move into the second half of this year. With the hedging that we have put in place, which is new for the company this quarter, it really protects us against the low side case where we saw in Q3 of last year extremely low prices on the system and regional pricing in the Nordics. With the hedging in place, it allows us to secure against the low side, but we still have exposure to the upside.
When we look longer term, the assets we have a significantly long lifespan. When we look at the price forecast as averages into the future, we do see that the revenues out of the operating assets are much, much stronger. With the controls we have put in place, as Espen touched on MLK, with some of the balancing, reducing some of the balancing risk, we have the ability to manage our OpEx and our costs. I do see that the assets we have will deliver long-term cash flow, but impacted this year by some of the lower pricing and increase in costs. We are starting to see greenfield revenues coming through, and that large-scale portfolio is a multi-year portfolio that we are going to see projects coming out of year- on- year.
I am really excited to see that starting to gain traction and deliver some returns back. I think as markets pick up, we are still building the foundation for growth in this company. We are constantly adding new projects and new opportunities into our asset base. We have the ability to extend lifespans and repower projects. All of that is still alive. It is just sitting in the background at this point in time, given where markets are. Company is still in strong shape financially. We see a future that is starting to pick up now and we are starting to see revenues coming in. It really is a turning point, I hope, in the second half of this year. With that, I will invite Espen to come and join me again, and we will move into Q&A.
Great. We have received a lot of good questions online. If you are joining us and you have not yet submitted a question, and you have a question, please do so now. We will start going through them at the moment. There is a few questions around the market. How do you see a path to profitability unless market conditions change?
Yeah, I think there's a number of things coming. When I look at greenfield projects, there is significant value in the greenfield projects that are coming. We're seeing futures pricing picking up, and there's no doubt we need to see higher pricing than Espen touched on EUR 30, EUR 35 a megawatt hour. We need to see pricing at or above those levels to see some of the return to profitability. Also with the Sudan costs, we're still spending EUR 7 million a year on Sudan legal fees, which as of next year, it drops to probably around half of that level, and hopefully from there it drops to zero. I think as the market moves slightly, we see more revenues from greenfield and Sudan dropping away.
I think there's a forecast where we see the return to profitability, much stronger cash flows, and the ability to redeploy that capital.
Then there's a question around the volatility and balancing markets. Do you see this systematically higher for the Nordic market going forward? How much do you think is driven by the introduction of the automated quarter-hourly balancing model in March?
I think it all has an impact. The change to much higher resolution on the market has had an impact. We're seeing more volatility from more renewables coming into the market. We're seeing the impact of that, and we're starting to see the response by operators and others on how to manage this. For us on MLK, now when we bid a volume into the market, we have the ability automatically to match that. When we match that, we have zero exposure to balancing, and that helps the more players that are doing this, the more players that are active in the market to manage their production, the less cost there's going to be to balance the grid. I think it is a state of flux where people are getting comfortable or getting up to speed with how the system has changed.
With more volatility, we will see balancing costs increasing. That is directly related to the ancillary services that we are providing. So we have seen a similar increase in the ancillary services revenues, and we need to get more of our assets qualified into that market to then be hedged on both sides of it.
Given that the market for wind assets is weakening, which has been, of course, widely reported in the media, especially SE1 and SE2, what significant risk is there that Orrön will have to take impairments?
I think maybe you touch on impairments and I can touch on market there. There is no doubt it is challenging. SE1 and SE2 are really challenging and the media has covered it well in Sweden. We see an achieved price or even a regional price or an achieved price significantly below where the variable costs are. And with the rest of our assets, we will take decisions to shut down production where it is more profitable to not produce. And I think for a lot of players in SE2, that is the reality as it stands today. As we see demand increasing, which we expect to do over time, we will see the pricing coming back up.
As of today, there will be no new wind investments in wind, solar, any technology investments in SE1 and SE2 if the price we are seeing today persists long term. I think we do not have a great deal of exposure into that, so it is less of an impact for us. And maybe on impairments, you want to touch the broader portfolio?
I will. Thanks for the question. Obviously that's something we are reviewing periodically. I think it's important to note that we have high quality assets with many, many years left of cash flow with low break evens. Also to take into account that many of our assets, in particular the one we have in SE2, and we have very limited exposure to SE1, basically zero, are already quite heavily depreciated. So we haven't seen any triggers or signs or any risk around that to date. Given the high quality of our portfolios and the low break evens compared to future price expectations, it is important to keep in mind, as Dan said, that current prices are basically below break evens for all new supply when it comes to renewable technologies in the Nordics.
Great. Then we got quite a lot of questions actually around the greenfield pipeline. Looking at the U.K. process, can you confirm that you're positioned to receive grid connection offers and what is a realistic timeframe for your first product sale in U.K.?
Yeah. Ahead of the grid reform in the U.K., we had confirmed grid for all of our projects. With the grid reform process, we need to now go and confirm those positions, and there's a number of new criteria that the U.K. system operator has put in place. So we have seven projects that have already been submitted into that process. The window for applications is still open, and we're qualifying potentially one or two projects that we may add into that should we secure the land positions in time. Then we need to wait and see the outcome from that process to see how to move forward. There's some of our projects that are guaranteed to get a Gate 2 connection because of the size scale type of project, and there's some that we will await to see what the system operator provides.
Now, longer term, there's a pathway in the U.K. where you move into the Gate 1 process, which is a more softer commitment, and then Gate 2, which is a much firmer commitment on grid. All of our projects that we have to date will remain in Gate 1 as a minimum and have the ability every year to move forward through the Gate 2 process. So we expect to see some of the results from the Gate 2 giving us confirmed grid of the right date and location, which then allows us very quickly to move into a sales process for either a portfolio of projects or individual projects, depending on the outcome. So by the end of this year, I think it would be difficult to see any results from a sales process.
We should see the results of the grid reform through the course of Q3 or Q4. Then we step into sales potentially early in the new year. I would say it is in the early part or certainly first half of next year when we see the results of a process, but we will share more information as we receive it from the system operator later this year.
For the German project that you sold end of July, what was your IRR for this project?
Yeah, I think we will disclose more details in the Q3 results with the profit on sale and everything linked to the project, which will be in our Q3. At this stage, what I will say is that it is a healthy return on capital employed. I think IRR is probably the wrong way to look at this investment given the returns on capital deployed into the project. But we certainly see multiples that are very healthy to continuing investing, and it underpins the business case that we originally set out to achieve on this.
On that note, we also just received a question around the pace of sales in Germany. Are you expecting one product sale per year or for more?
I think we should expect two to three as we said earlier. First project sold. Second project is at the same stage that this one was around three or four months ago. So the second one we expect to launch imminently, which then proceeds tail end of this year or next. So I would say at a minimum two to three projects a year in Germany, and they are smaller scale than what we see in the U.K., where the U.K. is more like gigawatt scale projects. These are closer to 100 MW of projects. So two to three a year in Germany, and then once we see the outcome of the grid reform process, we will be able to share more in the U.K.
Are you also looking at the BESS in Germany given the strong penetration of renewables and the phase-out of fossil fuel?
Yeah. So across our portfolio, we have solar, battery, and data centers in both the U.K. and Germany. In the Nordics, we have solar, wind, and batteries. So we have exposure to all of those. In the U.K., we have a couple of data center projects that are in this Gate 2 application, and we will move forward on all opportunities we have within that greenfield portfolio.
In terms of the full pipeline, what does it look like in terms of scale, projects at RTP or expected to reach RTP soon, et cetera?
Yeah, I think there is a large-scale pipeline. We have everything from initial land leads through to ready to permit projects across the country. We said earlier multi-gigawatt in Germany, which is right, and you should expect that two to three sales processes a year is about the right level as we mature this. We could have some years which are stronger than that and some years which are less, depending on the progress. We have come out before with around 3 GW-4 GW in Germany. We are around that level, depending on how you look at the early-stage projects. In the U.K., we came out originally with, in total, a 40 GW pipeline, of which 36 GW was the U.K. We are still at that level.
I think as we mature this platform, though, it is more important to look at the tangible projects that have reached all the permits that are hitting the sales process to be able to forecast the revenues. I think that two to three projects a year in Germany of around 100 MW a project is right. The U.K. is a bit more difficult until we see the outcome from the grid reform.
Great. Going into more of the business strategy, have you considered a potential sale of, for example, MLK, given that it is in Finland and that it is in a potentially not that attractive price area, according to some people looking at the risk cost?
Yeah, I think Finland is a relatively strong price area. We have seen increased capture price discount and other challenges in Finland over the course of this year. I would say, like always, all of our assets are for sale at any point in time, and if the transaction looks accretive for us, then we will move forward on it. I think at this point in the market, if we are able to realize revenues from an asset that are above where our holding values are on the asset, then we will certainly look to move forward with something like that, and that allows the ability to deploy that capital into a number of more accretive opportunities. I think you should not be surprised if something comes to market like we did with Leikanger, but there is nothing to share at this point in time.
Previous quarters, you've kind of dismissed price hedging. Now you've entered into hedges, and can you give us some more information around why you decided to do this at this time and place?
Yeah, I think I'll pass to Espen in a second. The price hedging, we have said we don't believe it's the right thing to do for a number of quarters. That's correct. We've also said that when the conditions are right and we start to see a bit more accretive markets, that we will step into opportunistic hedging. We've only hedged the second half of this year at this point in time, and we've hedged an average of around EUR 52 a megawatt hour. If we compare that to the achieved prices in Q3 of last year at close to single digit, low double digit, achieved pricing, I think it's a very prudent measure to step in when markets are recovering like this. It's not like we're locking up a 10 or 20-year hedge at this level.
It's two quarters to protect in what we have seen in the last quarters as a very low price. Espen, have got something to add to this?
No, I fully agree, and I think that's a key point that you need to distinguish between locking in significant portion of our volumes long term and now taking a more short-term opportunity on what we viewed as attractive pricing over the next six months to reduce some downside risk, basically, especially over the summer quarter, but also Q4 pricing, which we viewed as quite attractive when we looked at it. Keep in mind that this is around 40% of our SE3 and SE4 volumes, so typically around a quarter of our total volumes. If you look at it generally, we are obviously, first and foremost merchants, but then we now have a portion of hedged volumes also to protect the downside risk.
Given where the share is trading today, what is happening around the buyback discussions that you mentioned previously?
Yeah, I think there's no doubt that we remain undervalued. Even when we bring news like the greenfield sale, which I think is a very accretive return on capital, we still see undervalue in the share price. I think the financial performance year to date has been challenging, no doubt. As it stands today, we have a mandate from the AGM to buy back shares. The discussion is very much alive within the company management and Board to explore this. I think we need to see some further capital coming into the company to move into a buyback scenario. But as soon as that is available, then we will look to execute on it. I think the best thing we can do from a capital allocation perspective today is to buy back our own shares.
Secondly, we need to ensure that we're starting to see revenues and focusing on getting the revenues into the company from greenfield.
How do you prioritize between M&A opportunities, project developments, or buyback in the current market environment?
I think it's challenging to move into large scale M&A today, with the use of debt. I think the use of equity to move into something is much more attractive, but not at these price levels. I think the best thing we can do is ensure we're delivering revenues from greenfield, seeing the benefit of that greenfield platform. We start to secure the revenues from the producing asset side, then we have a lot more capital to deploy into this. But I think all of these options are on the table. They're all measured equally against each other, and the most accretive use of capital is where you will see the capital deployed to.
Are you prepared to accept lower valuation on product sales in order to accelerate cash flow and strengthen the balance sheet?
I think all assets are for sale at the right price. It depends, if we roll back to 2022, it's a very different price to where assets are valued today. But if we look at the value of an asset in our share, then you're willing to accept a very low value on the asset to be able to buy back shares. So I think each case is individually assessed on its own merits, what it means for the company, what the valuation is, and what the use of those proceeds is. But I think a fair value in today's market for an asset allows us to redeploy that capital into a much more accretive use, like a share buyback or an expansion or project development, which then I think is very accretive for shareholders. So all options are on the table.
You should expect us to explore them all.
Perfect. There are no further questions. With that, I would like to thank you both, and thanks everyone for joining this webcast. Please reach out or send us an email in case you have any further questions, and wishing you a great afternoon.
Thank you very much.
Thank you.