Good afternoon and welcome to Orrön Energy's webcast for Q3 results. Joining me today, we have our CEO, Daniel Fitzgerald, and CFO, Espen Hennie, who will run through the report and latest developments in Orrön Energy. We will finish with a Q&A at the end of the presentation, so feel free to send across as many questions as you have, and we will collect and go through them at the end. With that, I would like to hand over to Daniel to take the close.
Thank you, Jenny. Welcome to our Q3 results presentation, where I'll be joined by Espen to run through the financials after we give an update of how we've performed during the quarter and where we are pointing as a company. I think we've largely delivered in line with our strategy during the quarter. We have seen further headwinds on the production side, both with volumes and pricing, but pleased to share that we do have our first project sales in the greenfield portfolio. We're on track with a range of those developments. As we look forward into the markets into next year, we start to see increasing futures pricing and increasing performance across the assets, which should lead to higher revenues and higher cash flow for the business as we move forward into Q4 and into next year.
As a quick recap, Orrön Energy is the renewable vehicle within the Lundin Group of companies, and the Lundin family being a very long-term value-focused shareholder, still standing behind the strategy and supporting our growth in this sector. We have 380 MW of operating capacity, and in a normal year, that should generate around 1,000 GWh of production, and that gives us a long-term recurring cash flow into the company. Within that asset base and some of our greenfield projects, we have the opportunity to add organic growth. We can extend lifetimes of assets. We're looking at colocation of both demand and batteries. We're looking at opportunities to then increase production out of the existing asset bases and use the grid connections and facilities and infrastructure that we have in a more accretive fashion. That's active across all of our countries of operation.
Combined with that, we have greenfield projects which are running across five countries, and we're starting to see the first monetization out of that platform, which is really exciting to see and gives us a lot of strength as we move into later this year and early next year. As we have done all along, we remain fully funded, fully financed. We have a debt facility with sufficient headroom to move into significant M&A and transformational M&A. In markets such as these, there are many opportunities that are starting to come to the fore that we will consider and look at. We do not need to touch the equity side of the equation.
I do know that the share prices can perform a little bit better than what we've seen in the last quarters, but this side of our balance sheet gives us ample flexibility to go and grow into the future without needing to touch the equity side of the equation. If we look then at the first nine months of this year, we've produced around 600 GWh year to date, and that's been impacted somewhat by both weather, where we have seen and continue to see some lower wind speeds, not only within Orrön Energy but also within our peer group and any of the producers across the Nordics. We do see a weather pattern over the last quarters that has been less favorable than we expect. We also had an impact in our production from price curtailment, and I'll touch on that a little bit more in the following slide.
When we look at the revenues and EBITDA for the company, we've generated revenues of EUR 23 million, leading to an EBITDA of negative four year to date. Espen will touch a little bit more on the detailed numbers for Q3. It is important to note in this, we have seen weak pricing this year. We're seeing futures pricing increasing as we move into next year. We've had Sudan costs, which is more than the negative amount on the EBITDA here. Excluding Sudan, we would be in positive territory on a proportionate basis. Also, as we look into Q4 and Q1, these seasonally are our strongest quarters. We expect an uplift not only on volumes but also on price as we move into the winter months of the year.
Those market c onditions have been improving since the summer of this year, and it feels like we're out of the bottom of the trough in terms of pricing. We have hedged some of the volumes in the second half of 2025. We continue that hedging program into 2026 at an average of around EUR 58 a megawatt-hour baseload pricing. That gives us a bit more certainty on the revenue side of the business and allows us still, with the unhedged volumes, to profit from market improvement while protecting ourselves against the downside scenario, which we have seen both in 2024 and 2023, certainly in the weaker months and quarters of the year. Very pleased to share in our greenfield platform that in July, we sold our first project, and that was a 76 MW Agri-PV project for a total of EUR 4 million consideration. Now, half of that has been paid upfront.
We have a profit of EUR 1.1 million, which is flowing through our profit and loss this quarter. Any of the future contingent payments that we receive on this have no cost associated. We will see those coming straight through the profit and loss at the headline amount. This does really return a good performance in terms of invested capital. Now we are starting to see multiple projects that are going to hit key milestones over the coming 6-12 months. We expect this recurring revenue to continue in our business as we look forward. If I look in a bit more detail at power generation, we have a slide here which looks at the power generation by quarter over the last three years. You can see there where seasonally we produce more and less.
There is no surprise that Q3 is a weak quarter seasonally against where we normally perform on an average basis. Even saying that, we have been impacted by weather in the quarter. We have seen lower wind speeds, and we expect now to be around 850 GWh-900 GWh as a full year 2025 performance in terms of production. If you look quarter by quarter, looking back through the years, we are not a long way away from where we have been last year. Q3 is lower than where we expect, and the two elements driving are weather and price curtailment. If I look at our forecast for this year, around that 900 level, we have curtailed around 100 GWh this year based on low pricing. That would have put us up into a record year had we not curtailed.
That is a factor driven by the lower pricing. As we move into Q4, we expect volumes to increase. We expect prices to increase. As prices increase, we are going to see less of the price curtailment. Not only do we see seasonal volumes improving, but with price, we also see additional volumes coming to fruition. I am really pleased by what our team have been able to achieve in terms of making our assets more and more flexible. MOK is really leading on this through ancillary services and price-dependent bidding with some management around the balancing costs. We have seen between EUR 1 million-EUR 1.5 million of additional revenues coming across our portfolio, either additional revenues or decreased costs, just by adding this flexibility to our portfolio. That really gives us some levers to play with as prices either move low or high on the balancing markets.
As the volatility improves, we now have many more tools to play with. As we go forward, we expect Karskruv to receive the validation from SVK to allow us to participate more fully into those markets. We are continuing that rollout across the rest of the fleet. As of today, we have 80% of our portfolio active in the price-dependent bidding. We have 20% of our portfolio, which is MOK today, active on ancillary services. Karskruv is just awaiting final approval from SVK to then provide those services as well. That gives us a good platform into next year. As prices pick up through the next year, we expect to see higher revenues, higher volumes, and returning back to a normal production year for Orrön Energy. Adding into that normal production year is hopefully some more recurring revenues from the greenfield platform.
This platform really is delivering as expected. We have a multi-gigawatt pipeline of opportunities across five countries. I'd say the most important are the U.K. and Germany at this stage that are close to recurring revenues and material recurring revenues, with the Nordic pipeline being a little bit longer dated and some projects that we'll likely invest in ourselves. France is still growing as a region, but the U.K. and Germany are really driving that greenfield pipeline forwards. We see governments in both of these countries very supportive with high ambitions. We see high investor appetite for projects. We still see electricity pricing and support schemes that really drive us to deliver a good developer premium out of these projects. Those two countries definitely are where a bulk of our focus is. Short term, we should see those recurring revenues coming.
Our projects are developing as per plan. As we touched on, we've seen the first project sale in Germany. We have a second project ready to permit and a range of projects that are coming later this year and early into next year. We are looking at multiple ways to monetize this platform. I'd say the market is moving more and more towards portfolio sales and a broader discussion around multiple opportunities rather than individual project sales. We will investigate both of those options as we move forward and share with the market more information as we see the results from that. In the U.K., we have been waiting for a while on the NESO grid reform.
We now have a secure timeline where NESO have committed to confirm both the outcome of the reform, what that means for every single project, and to offer up the new grid connection agreement. That process is going to start, communicating back with project developers as of the end of this year. Through the early part of next year, we expect to hear more of the results from that, and we will be able to move the U.K. into that sales process. As it stands today, we have eight projects, which is between seven and eight gigawatts worth of opportunities across solar, colocated batteries, and colocated data centers within that group. We need to see the outcome from NESO. We need to see the detailed results, and then we will be able to communicate more with the market as we move into the new year.
With that, I'll pass over to Espen to focus on the financials and the Q3 numbers.
Thank you, Daniel. Good afternoon, everyone. Kicking off with some of the financial highlights for the quarter. Reported power generation came in at 135 GWh. This was, as Dan mentioned, negatively impacted by low wind speeds during the quarter, in addition also to our voluntary curtailment as a response to periods of low prices, which also, as Dan said, has saved us material amounts of costs without losing any significant revenue. That is very valuable flexibility to have. In addition to the reported figures, we also have 10 GWh of compensated volumes. These are volumes which we receive compensation related to either ancillary services or related to operational downtime, which is covered under our availability warranties. The achieved price for the quarter was EUR 31 per megawatt-hour.
I'll go through that in a bit more detail on one of the later slides. We had revenues of EUR 2 million from our initial project sale in Germany, which was announced in July. When we add that to our revenues from power generation, total revenues for the quarter came to EUR 6 million. EBITDA, excluding non-cash and G&A items for the quarter, came in at -EUR 2 million. We ended the quarter with a net debt position of EUR 83 million, which leaves the company in a very strong financial position, supported by significant liquidity headroom under our EUR 170 million facility. Taking a look at our full year guidance, we are delivering in line with our plans and are therefore also reiterating our outlook for the expenditure items shown on this slide. We have seen lower balancing costs compared to the previous quarter.
Partly driven by the measures that we have taken to mitigate this. This is, of course, very positive and encouraging, but it's also important to remember that these costs still remain at elevated levels compared to recent history. There is still potential for some cost reductions going into next year or beyond if we start to see a trend back toward more normalized levels for this item. Next, let's look at some key financial metrics for the third quarter. Comparing to the previous quarters, going back to the same quarter last year. Revenues from power generation were down compared with the preceding quarter. This is due to lower volumes. However, they are significantly stronger than the corresponding quarter last year, driven by a significantly stronger achieved price compared to Q3 in 2024.
On top of the revenues from power generation, as mentioned earlier, we also had EUR 2 million from our first greenfield project sale, which is then the upfront payment of the project sale with a potential EUR 2 million contingent payment at a later stage, which we expect the conclusion on that contingent payment during 2026. That brings total revenues to EUR 6.1 million, 400,000 higher than in the previous quarter. We can also see an improvement in EBITDA and CFFO compared with both the previous quarter and the same quarter last year. The quarter-on-quarter variance is mainly explained by lower OpEx, driven by the lower balancing costs that we've seen this quarter compared to the very elevated and high levels in Q2. Let's now look at some of the details on our achieved price for the third quarter and also the year-to-date period.
The Nordic system price averaged EUR 36 per megawatt-hour in the third quarter, while the average production-weighted spot price for our portfolio was EUR 45. Ancillary service income and sale of GOOs added EUR 1 per megawatt-hour to our achieved price, while hedging reduced it by EUR 5. The fact that our hedges ended up out of the money means that prices turned out quite a lot higher than expected, which, of course, is very beneficial for the company. To our revenues and cash flow. The capture price discount was just over 20% in the quarter, leading to a quarterly achieved price of EUR 31 per megawatt-hour for Q3. For the year to date, the average Nordic system price has been similar to Q3 at EUR 36, while the average production-weighted spot price for our portfolio has been EUR 43. A fairly significant premium, which is explained by the favorable geographic location of our power-producing assets.
Ancillary service income and the sale of GOOs contributed positively by EUR 2 per megawatt-hour, and hedges had a negative impact of EUR 1 before deducting the capture price discount, which has been 21% year to date. This results in an average achieved price for a nine-month period of EUR 35 per megawatt-hour, which is very much in line with the system price for the same period. Moving then on to the quarterly reported cash flow and our liquidity position. CFFO, excluding working capital, was -EUR 3.6 million. With a negative working capital impact of EUR 0.8 million during the quarter. Cash flow from investing activities totaled -EUR 0.2 million, and this consisted of EUR 2.3 million in capital expenditures, which is mainly investments into our greenfield projects. This was almost fully offset by proceeds of EUR 1.7 million from the announced project sale. Please keep in mind we have EUR 1.1 million.
Reflected in our P&L, but on a cash basis, the proceeds were EUR 1.7 million, with the difference then being book values. Then, along with other minor invested-related cash flows. We had a total cash flow leading to an ending proportionate net debt position of EUR 83 million at the end of Q3. This translates to just under EUR 90 million of liquidity headroom, combining our cash balance with the EUR 70 million of undrawn capacity under our revolving credit facility. Summing up then with an updated cash flow outlook for 2025. This reflects the actuals for the first nine months of the year, and we are applying achieved prices in the range of EUR 35- EUR 45 per megawatt-hour for the fourth quarter.
This represents the likely range of outcomes based on current future prices and also takes into account the baseload power price hedges we have entered into with the details shown on the slide. Starting with revenues, we expect these to end up between EUR 32 million and EUR 35 million. With a corresponding EBITDA, excluding Sudan legal costs, in the range of EUR 4 million-EUR 7 million. The EBITDA break-even price is expected to be around EUR 33 per megawatt-hour for the year. Including the Sudan legal costs, which we do expect to be significantly lower next year, EBITDA is projected to end up between -EUR 3 million and break-even. Looking at free cash flow before CapEx, we expect to end up between break-even and +EUR 2 million, excluding the legal costs, which we believe demonstrates resilience given the weak wind conditions and soft pricing that we have experienced throughout the year.
When including legal costs, the same range moves to between -EUR 7 million and -EUR 5 million. Finally, here we are also showing the baseload power price hedges that we have entered into for next year. The approach, as also Dan commented on, is very much the same as for our 2025 hedges. We lock in prices for a modest share of our power generation volumes when we consider the market conditions sufficiently attractive. This provides strong downside protection against lower power prices, but it also allows us to benefit if market conditions improve since the majority of our volumes will remain merchant. With that, I'll hand it back to Dan.
Thank you, Espen. Before we go into Q&A, a few concluding remarks as we normally do. I think our assets generate long-term cash flows.
We have to look at this business with a 20 and 30 year lens and note that the market conditions will be different during those periods. We're going to see highs like we've seen in 2022 and lows like we've seen in the last one or two years, but our asset base will continue to produce for a very long period of time. With the organic growth and opportunities to extend lifespans and to improve production and add other technologies, it gives us a really good platform that we can use over the longer time horizon to really generate strong revenues. We're financially resilient with significant headroom under our finance facility that allows us to move in terms of growth, investing into greenfield projects, new business, and new opportunities.
I'm really pleased to see that our greenfield pipeline is starting to deliver revenues as of this quarter, and we expect that to continue as we move into the coming year. As we see markets improve, we've taken opportunities on hedging. We're starting to see some more M&A that's coming to market now as we're seeing the pricing improve. With the firepower that we have on the balance sheet, we can move in that sector as well. I remain optimistic as I look forward. We're positioned in some really good markets with pricing coming back, volumes coming back, and look forward to certainly Q4, Q1, and into 2026 as we see stronger performance. With that, I think we move over to Q&A, and I'll invite Espen to come and join me back up here again.
Yes, thank you very much.
We already have a lot of good questions. If you have a question and you have not submitted yet, I suggest strongly that you do so as soon as possible. Let's start with the market. It is currently a quite challenging market environment. Will you keep investing in new wind farms in Sweden given this, or do you have any other plans?
Yeah, I think it is an interesting time in the market. When we have troughs like this, it is a good time to build a business. In the Nordics, if I look at greenfield projects, it is quite difficult to sanction greenfield projects today given where the pricing sits. We have not seen much of that supply coming on. Over a longer period of time, we will see the impact of that supply. Sweden has turned off some of the offshore wind.
They've rejected the permits for a whole range of offshore wind, and we're not seeing that growth in the onshore domain. I think it's challenging to sanction, but that'll come back in the future. We continue to have that exposure through greenfield projects. On the flip side, we're seeing at this point in the market some really interesting opportunities on the producing asset side that gives us the ability to scale up our production. I think it's an interesting time in the market, but it is challenging for new projects for sure.
Speaking of M&A, what kind of opportunities are you seeing in the market right now?
I think players in the market are really being rewarded for flexibility.
What we're seeing in terms of the really high premiums in the market, those with flexible power generation or the ability to move their volumes and managing balancing costs, some of the frequency services, there's a strong return on that. For batteries, ancillary services, etc., we see good returns. Data centers are the hot topic in the market today for any players with a data center opportunity, and we're looking at a range of those broadly across our portfolio. I'd say more on the traditional front, I think producing assets in today's market where we do see the low pricing now is a good time where we're seeing sellers' ambitions are coming down to match where the market is at the moment. That's a bit more interesting for us.
Unfortunately, nothing to share until we've got there on an investment or a transaction, and we'll come back to the market when the time is right.
When it comes to strategic partnerships or mergers with other energy companies, is this something that you're considering or looking into?
I think we're always open to the discussions. I think with the share price where it is, we're not willing to dilute significantly for a non-accretive transaction on a per-share basis. We have to be mindful of that. We also have the Sudan case, which both Espen and I touched on. The Sudan case comes to an end at the end of next year with the judgment. We see costs coming down significantly.
We will hopefully see the full resolution of the Sudan case at the end of next year, and that opens the door for more material M&A, I think.
Speaking of share price, given the current share price level, are you considering buybacks?
Yeah, I think buybacks are always a discussion that is in every meeting we have with the board and with most investors as well. I think it's a very attractive point to be buying back our own shares. There's also a very, very important growth element that we need to take into account where we need to deploy capital accretively on a per-share basis. Our company is still too small. We need to be much bigger in size to really diversify the revenue streams and improve the cash flow. There is a range of competing priorities for that capital allocation.
Share buybacks is absolutely one of them. Again, should the conditions be right, we'd come to the market with that announcement.
Going back to the challenging market, how do you plan to make a profit?
Yeah, I think we're burdened today by the costs in the Sudan case, that's for sure. If I were to remove the Sudan case costs from our financials, we'd be back to positive EBITDA. I think it's challenging for a lot of operators to make a good return at current market conditions. I think we need to be a little bit patient with the price coming back. With Sudan going away and then with some scale-up of the company, I think there's a fantastic pathway to profitability. When I look at the greenfield platform, that's already profitable on a project-by-project basis based on our first sale.
When we see the recurring revenues coming out of that and the business getting more self-funding, I think we'll see much more return coming out. Espen, I don't know if you had anything.
No, full support, all of that. I think the key thing, like you mentioned, only one project sale. We expect multiple of those going forward. Temporary situation now with high costs and also the fact that power prices are below break-evens for new projects. I think the sum of that means that we can have a quite constructive view on the future, on both market pricing and also earnings potential for the company in the medium to long term.
Great to see a lower capture price discount. Is this the level you expect moving forward? Yeah, I think, I mean, capture price discount obviously can fluctuate widely quarter to quarter, hard to.
Precisely forecast it over a short time frame. I think our expectation is that we will be within the 20%-25% range. We have been 21% year to date, so slightly lower than sort of what we have seen earlier, partly due to also. It also depends on the volume of curtailments, voluntary curtailments, but between the 20%-25%. Within that range is our sort of, I think, is a very prudent estimate and assumption going forward.
We also have a few questions on the development side. Congratulations on the first project sale. Is the price per megawatt what we should expect in future sales? Can you give us some flavor on the current pipeline?
I think in terms of the multiples, what we saw in our first German project sale is largely what we are seeing across the portfolio, whether it is U.K. or Germany.
Today in the Nordics, there's less appetite, so I'd say it's a lower premium or more difficult, but certainly U.K. and Germany are around that level. As we look forward, though, I think the market is changing. People are evaluating more project portfolios, which spread the risk. We're starting to see buyers looking at forward sales of projects with cost coverage or standalone complete exit project sales. It really depends on the structure as to what that looks like going forward, but I'd say it remains very, very attractive for us as a developer premium. When I look at the broader portfolio, we're only just getting started. We have already 3 GW-4 GW in Germany, some of those very early stage, some of them coming towards later stage. We have a range of battery opportunities where we have favorable grid positions for those.
In the U.K., we've submitted our first eight gigawatts into this reform process, and there's another massive pipeline behind that waiting for certainty around the process, and then we'll move through the land acquisition and development process. For me, this is, again, it's a 10-year business, 10, 20-year business where we expect to see the recurring revenues coming now. We'll start to mature that business even further and start to carry some projects longer as we move forward.
Do you think it's realistic that we will have a first sale from the U.K. greenfield portfolio in 2026?
I'm very hopeful that we get there. We were hoping to be there already in 2025. We didn't quite get there because of this grid reform process. I can't control what the energy system operator is going to do going forward, but they have committed to a timeline for.
Giving us the confirmed grid offers. Once we receive those, then we'll be able to move forward on the project sales. The market's still very strong in the U.K. I am very, very optimistic that we'll see something out of the U.K. in 2026. Given the size of the projects, this is very, very material for the company.
Good. I think we covered all of the questions. I do not see any further incoming questions or any concluding remarks from your end.
No, I think a challenging Q3 for us, if we're completely honest. We have seen lower volumes, lower pricing, but very, very enthused about looking forward into 2026. We're seeing stronger market pricing for energy. We're seeing hedging coming in at favorable levels. We're seeing projects hitting key milestones and very optimistic about what the coming 6-12 months looks like.
We look forward to sharing more information early in the new year with our Q4 results.
Great. Thank you very much. Have a lovely afternoon, everyone, and feel free to reach out in case you have any questions. Thank you.
Thank you.
Thank you.