Q2 2021 Presentation
Disclaimer
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Today's presenters
CEO Erik Sneve
Executive Chairman Torstein Sanness
A portfolio approach in developing solar and wind projects – supported by legacy royalty revenues
Growing an asset-light development portfolio of wind- and solar energy projects, and technology development
Highly experienced renewable energy investment and project team leading Magnora's transition
Ambition to develop solar and wind projects with a total equity share capacity of ~5 GW by 2025
Financing from near-term cash flow of USD ~20 million from legacy FPSO assets
Listed on Oslo Stock Exchange with approx. 8,300 shareholders
Growing asset-light wind and solar project portfolio with low capital requirements
Project and company search and deal flow monitoring Focus on early-stage evaluations and developments of wind and solar PV Invest jointly with partners and/or consider developing own projects Maturing and derisking with key developments farm-down/sale in the portfolio companies Invite project partners for ownership optimisation at construction start Magnora team with extensive renewable project track record
Strong cash flow from legacy FPSO assets and company/project monetisation
Slide 5
Focus on shareholder value, portfolio development, cost and capital discipline
Increasing ownership in Evolar AB based on milestone beat and excellent execution
Magnora Offshore Wind participating in application round for ScotWind licences
- Magnora Offshore Wind is addressing window of opportunity in large and growing offshore wind market in collaboration with Technip FMC
- ScotWind aims to enable up to 10GW of new offshore wind farms to be constructed in Scottish waters
- Submitted applications to ScotWind for two areas in Scotland on July 16th 2021
- Further potential identified including Norway for offshore renewables including offshore wind power
- TechnipFMC has over 3,000 employees in Norway and Scotland combined. Well established supply chain and vast experience from floating offshore wind and marine installations and operations
- Ongoing discussions with potential partners
Large value creation potential in current development portfolio
Current solar and wind development portfolio1) Return potential
- Joint ventures with small and medium sized industrial developers in Norway, Sweden, and South Africa
- Targeting a 50% hit ratio in project selection phase based on team track record
- Project selection based on unit economics, local acceptance and environmental impact assessments
- Possible expansion of development portfolio into Poland, Baltics and UK
Record high energy prices lead to increased pricing power for developers - Favorable price development and market outlook
One year Nordic system price development1)
Nordic price development forecast2)
August 1, 2020
August 12, 2021
Key financials
- Decrease in operating revenues due to lower production and off-loading by our FPSO contract
- Higher operating costs from business development activities, development of Magnora Offshore Wind, and the SPV in South Africa
- Cash flow in the quarter was mainly affected by
- ‐ Increased ownership in Evolar AB and KustVind AB
- ‐ Payment for the increased ownership in Vindr
- ‐ Divestments
Projected license and royalty income from FPSO 2021-2023 of USD ~20 million
- Future income of USD ~16 million from the Penguins project* in est. in 2022:
- ‐ Sail away from yard
- ‐ First production
- ‐ Production of 4 Mmboe equivalent of approximately three months production
Projected licence income Estimated royalty income
- USD 0.5 per barrel produced and offloaded from Western Isles FPSO owned and operated by Dana Petroleum
- New drilling, tie-ins or re-deployment could increase revenues
Financial strategy and capital priorities
- Financing plan for development phase of planned activities towards 2025
- ‐ Existing balance sheet cash
- ‐ Cash flow from FPSO contracts
- ‐ Organic cash flow from realization of projects
- ‐ Farm downs
- Dividend from potential IPOs and extra ordinary sales, if no new attractive reinvestment possibilities
- Magnora has track record of returning NOK 517 million to shareholders over last three years, reduced after implementation of renewable strategy
- Shareholder friendly
"Developing the right projects and companies in order to generate long term shareholder value "
Magnora's key value drivers
Select projects with low development cost, high success probability and favorable economics
- Portfolio size increases available capital for project development
- Focus on development cost per MW and risk enables access to larger portfolio. Achieved through:
- ‐ Project selection
- ‐ Effective developments
-
‐ Milestone-based payment structures
-
Thorough project search and monitoring of potential deal flow is essential for creating value in the project development phase for both wind and solar PV
-
The Magnora team aims to achieve above 50% hit ratio for its project portfolio
-
Obtain a high realization price per MW
- Key parameters:
- ‐ Wind / sun conditions
- ‐ Project scale
- ‐ Grid connection
- ‐ Access to roads
- ‐ Land lease agreements
- ‐ Other project attributes
1 Portfolio size 2 Project selection 3 Realisation value
Bold strategic ambitions in development of renewable energy projects Ambition to develop wind and solar PV projects with a total capacity of 5 GW* by 2025
- Ambition to develop and realize a combined ~5 GW equity share Solar and Wind portfolio by 2025 ‐ Targeting initial phase ownership of 40% - 70%
- Expected development cost per MW solar PV of NOK ~50.000 and onshore wind of NOK ~100.000 dependent on geography and technology
- Monetization/Farm down up until construction start to finance developments and dividends
- Magnora Offshore Wind developed through equity partnerships, farm-downs and asset light model
Solar and wind project development ambition by 2025
Accumulated equity share 2021-2025, GW
From two license contracts to broad renewable project portfolio, a leading team and optimized ownership strategy
| 2020 |
2021/2022 |
| New strategy: "The future is |
Currently a portfolio of six renewables companies |
| • |
• |
Appendix
- Magnora (or "the Company") is exposed to market risk, project risk, reservoir risk, credit risk, currency risk and liquidity risk. The Company's overall risk management programme focuses on identified uncertainties and seeks to minimise potential adverse effects on its financial performance.
- Magnora's legacy royalty contracts are with two major companies with a strong financial basis, but, as with suppliers and customers in general, there is a risk that unforeseen financial difficulties on the counterparty's side may arise which could have material adverse effects on the financial condition, the cash flows and/or the prospects of Magnora.
- The Company is also subject to currency, field development and reservoir risk in situations where the license fee is tied to the field development and production such as the Dana income and Shell Penguins license fee income paid in USD. The company also relies heavily on two customers, Dana Petroleum and Shell for most of its revenues over the next three to four years
- The project development process for wind and solar parks is also exposed to risks. The process for obtaining concession from relevant authorities can vary in different countries, but most countries require local acceptance, and in some countries the local municipality has veto rights. The public opinion has in some countries caused changes to the political process determining the regulatory framework for obtaining concession for building and operating wind parks. These uncertainties can cause delays and rejection of the concession applications, and it can cause the economics of the projects to be worsened as the approved size of turbines may not be sufficient for an optimised windpark.
- The price of electricity and electricity certificates can be affected by a number of factors ranging from economic climate, price of raw materials and CO2 prices to the structural supply and demand scenario. These factors could also influence opportunities for a potential investor, in one of our projects, to access equity and raising debt.
- The recent Covid-19 virus could potentially affect revenues for a short period if the FPSO crew is dismissed due to infection risk or similar. Magnora could experience a period without revenues because of the Dana FPSO halting production due to the Covid-19 virus. Furthermore, the virus could also delay the construction and commissioning of the Shell Penguins vessel currently being built in China, which would then delay the milestone payments from Shell.
- Other potential risk factors include, developments in the market deregulation process in South Africa, postponements of governmental licenses rounds and other external factors.
Differentiated portfolio with large value creation potential
• Joint offshore wind company
with TechnipFMC
TBD
Offshore Wind
| Project |
Ownership |
Business |
Ambitions |
Next steps |
Capacity (GW) |
|
25 %
(40% opt.) |
•
Large-scale greenfield solar
development projects in the
Nordics |
•
Grow overall portfolio to
more than 2 GW over the
next twelve months |
•
Sale of projects and portfolios
and farm downs
•
Continuously apply for licenses |
1.0 |
Magnora
South
Africa |
100% |
•
Development portfolio in
South Africa with support
from Vindr
Group |
•
Corporate & Govmt. PPAs
•
Complete wind measurement
studies |
•
Permit applications for solar PV
in 2021 and wind in 2022
•
Appointing local CEO & legal |
0.9 |
|
24%
(50% opt.) |
•
Shallow water wind project
located in southern Sweden |
•
Application for license with
Swedish authorities within
2022 |
•
Finalize wild life studies
•
Submit concession application |
0.5 |
|
50% |
•
Greenfield onshore wind
and solar development in
South Africa and the Nordics |
•
Develop and build a project
pipeline of ready-to-build
assets |
•
Sign land lease agreements
•
Early phase site studies
Partnership with MGN SA
• |
0.1
1.2 |
|
|
|
|
|
Landlease signed
Landlease under negotiations |
|
40.7%
(63.5% opt.) |
•
Thin-film perovskite
technology boosting
conventional solar cells |
•
25% efficiency improvement
•
Capture 1/3 of market share
•
Potential IPO |
•
Partnerships
•
Customer pilot factory in '22 |
Company and
technology |
| Magnora |
|
|
•
Develop leading technology |
•
Applied for ScotWind
July '21 |
development |
agnostic project developer
• Norway applications end '21
• Invite partners
• Local partnerships
Evolar: Developing disruptive solar panel add-on technology
Placeholder:
Picture and Logo
Technology
Perovskite: next generation photovoltaics
- Applying a thin-film perovskite layer to conventional solar cells has potential to increase efficiency by 25%
- Offers a low-cost high yield opportunity
- First full-size prototype manufactured
Current 40.7% ownership
- Options to increase share to 63.5% prior to IPO/exit – considering to increase ownership
- Five founders and Magnora as shareholders
- USD 25 million invested in equipment and facilities for prototyping product line
Strong team of 12 experienced employees
- Team was part of Statkraft/Hafslund/Eidsiva in EUR 84 million Solibro exit
- Leading team within thin-film and CIGS Solar technology with several world records
- Lars Stolt, professor at Uppsala University and started research on solar cells in the early 1980s, holds role as Chief Scientific Officer
Potential to transform the solar panel market
Magnora Offshore wind: Jointly pursuing development opportunities in offshore wind
Joint project development company
- Targeting high growth international offshore wind market with ambition to capture a significant market position
- Cooperation with TechnipFMC, a leading technology provider to the traditional and new energies industries
- Building asset light business model
>
TechnipFMC + Magnora
- Brings together decades of combined knowledge on development of profitable offshore energy projects
- TechnipFMC has vast experience in all basins and water depths, and is experienced within hydrogen, E&P and offshore wind market
Application rounds
NewCo with TechnipFMC
- Agreement signed in January 2021 to establish a joint offshore wind company called Magnora Offshore Wind AS
- Discussions for potential participation of additional partners
Participating in upcoming application rounds
Helios Nordic energy AB: Targeting large-scale greenfield solar PV in the Nordics
Nordic solar PV project developer
- Sweden-based Solar PV company focusing on large-scale greenfield projects in the Nordics
- Growing portfolio with proximity to grid connection points
Acquired 25% of Helios in share issue
- Option to increase ownership share to a total of 40% by September 15, 2021
- Erik Sneve and Peter Nygren Board Members
Highly experienced management and board
- Helios manages all steps in the development process including site selection, environmental approvals, grid connection approvals, preliminary design, and procurement
- Financing of projects in collaboration with reputable, long-term investors managed by Helios
1 GW
1 GW land lease agreements secured
• Ambition to grow overall portfolio to more than 2 GW over the next twelve months
- EY engaged to organize project buyer interest for 100-200 MW year-end 2021/early 2022
- Focus areas in southern Sweden (SE3 and SE4)
- Considering growth outside of geographical focus market
Vindr group:
Wind and solar project developer in Norway, Sweden and South Africa
Solar and wind project development group
- Vindr, a developer of small and medium sized onshore wind projects in the Nordics merged with South African solar and wind developer, African Green Ventures (AGV), forming the Vindr Group
- The Vindr group is developing greenfield projects in cooperation with local industries enabling development and growth locally
Experienced technical and commercial team
- Team with 75 years of combined experience from wind project development, merged with experienced team from South Africa
- Magnora's management and board have wide experience from South Africa, Africa and international energy projects. Torstein Sanness, John Hamilton.
1.3 GW
50% ownership agreed in February
- Magnora increased ownership in the Vindr group exercising options as the group merged with south African developer
- Peter Nygren Chairman and Espen Erdal Board members
1.3 GW combined solar and wind projects
• Swedish and South African project developer has 120 MW signed land lease agreements and 1.2 GW under negotiations
- Ambition to grow renewable energy projects to 30 GW in South Africa before 2030
- Aiming for long-term governmental and corporate power purchase agreements (PPA)
- Goal to establish cooperation with municipalities for utility projects
Magnora South Africa:
Single purpose project development company supported by Magnora system
Solar PV and onshore wind portfolio
- Option agreements with local land-owners
- Initial site surveys performed
- Wind measurement campaign commenced
- Vindr South Africa supporting the development of portfolio assets with local expertise
Fully owned
• Acquired 100% of the shares in a South African SPV in connection with Vindr's merger with South African renewables developer
0.9 GW combined solar and wind projects
- 550 MW wind and 300 MW Solar PV, with signed land lease agreements
- Additional potential projects identified
>
Magnora team joins board in SPV
- Torstein Sanness, Peter Nygren and Erik Sneve is on the board in the South African SPV
- Ambition to recruit top-notch local CEO and legal council
0.9 GW
• Ambition to develop similar SPVs in South Africa, with Vindr Group supporting
- Aiming for long-term governmental and corporate PPAs
- Goal to establish cooperation with municipalities for utility projects
Kustvind: Shallow water offshore wind project in southern Sweden
Shallow water wind farm project
- Developing project located eight kilometers off the coast of Southern Sweden (SE4)
- Structural lack of electricity in SE4 due to nuclear phase-out and grid capacity, limiting expansion of industry and residential housing
Current 24% ownership
- With options for up to 50% ownership based on progress in detailed milestone plan
- Haakon Alfstad Chairman, Peter Nygren and Erik Sneve Board members
>
Three experienced project developers
• 25 years of combined experience from onshore and offshore wind projects with competence covering all aspects of wind farm development
0.5 GW
0.5 GW project in early phase
- Potential gross 2 TWh annual electricity production
-
Estimated 25-33 wind turbines to be installed with potential for powering 250,000 households
-
Entering the concession phase with significant ongoing studies for the application submission in 2022
- Secure grid connection and develop local supply chain
- Business development of local hydrogen production and storage
Extensive energy and renewables project track record …
Erik Sneve CEO
- 24 years experience from VC industry/investments markets EY, DnB Markets
- Statkraft, Eidsiva and Hafslund JV, Investment Director
- COO software company mobile and healthcare
- Chairman Evolar, Board member Helios and MGN South Africa, and CEO Magnora Offshore Wind and COO of 3D Mobile & Healthcare Software
- B.Sc. in Finance from Arizona State University w/ Summa Cum Laude Dean's list
Haakon Alfstad EVP Projects
- With Statkraft since 1987 as SVP for Wind Power on-/offshore 2008-17
- Responsible for construction phase of all Statkraft's hydro, onshore wind and solar power projects 2017-19, and responsible for wind power developments of >1 GW installed capacity and large scale M&A projects
- Master's degree Mechanical Engineering from NTH and Business Candidate from BI
Peter Nygren EVP Operations
- CEO and co-founder of Arise
- More than 30 years of experience from renewable energy and companies in related industries, with previous employment at Vattenfall AB, SCA AB, and United Waters AG
- MBA from Uppsala University
Bård Olsen
CFO
- Previous Vice President of Global Compliance in MHWirth
- 9 years in total with Aker Group companies, incl. Head of Internal Audit at Aker Solutions, prev. with EY
- Experience from auto Industry in the US
- M.Sc.: Finance and MBA from Arizona State University
Torstein Sanness
Executive Chairman
- Experience as MD of Lundin Petroleum Norway and DNO, and from several executive positions during his 25 years at Saga Petroleum
- Board member Lundin Energy, IPC, Panoro Energy, Dr. Techn. Olav Olsen, TGS, previously Chairman of Lundin Petroleum Norway
- Master's degree in Engineering (geology, geophysics & mining engineering) from NTH
Espen Erdal
Asset Manager
- 10 years renewable energy and structural engineering experience
- Previous employment at DNV GL and Dr.Ing A.Aas Jakobsen
- Extensive experience in supporting project transactions (due diligence), development and construction of utility scale onshore wind projects in the Nordics
- Master's degree in Engineering (renewables and structural engineering) from NTNU, Norway and University of Berkeley, California
… leading Magnora's green transition
Gisle Grønlie EVP Legal and M&A
- Previous Legal Director at TechnipFMC UK, Norway, and Russia
- Previous Legal head of internal fleet and Statoil Projects
- Legal Support New Energy Ventures (wave tech, hydrogen, and fish farming)
- Supported R&D and Joint Intellectual Program initiatives like 'All Electric Subsea XT'
- Cand Jur from Oslo
Bjørn Drangsholt
External advisor, offshore wind projects
- Extensive experience from various management positions, both in projects and in line organisations at Norsk Hydro, Naturkraft, Statoil and Statkraft Board positions in Alltwallis Windfarm, Berry Burn Windfarm and Baillie Windfarm Ltd
- Master's degree in electrical & power engineering from the Norwegian Institute of Technology (NTNU)
Kristin Gjertsen
External advisor, Executive Project Manager ScotWind
- Previous AkerBP, Exxon, Accenture, Norsk Hydro/Equinor and Microsoft
- Over 25 years of experience from the energy sector
- Experience from aluminum, agri, shipping and retail market
- Field development, strategy, licensing processes and turnarounds
- M.Sc. NTNU and MBA Norwegian School of Economics
• Executive Master in Energy Management (BI/IFP/ESCP) and MSc. Mechanical
Emilie Schjøtt Brackman Manager Offshore Wind Projects
Trond Gärtner
Engineering (NTNU)
SVP Offshore Wind Projects
- Extensive renewable project experience with combined 1.3 GW onshore and offshore wind and solar PV
- Previous manager for DNV GL, with experience from project management and technical due diligence in offshore projects Europe, Taiwan and WindFloat Atlantic
- B.Sc. Mech Engineering Toulouse, and MSc Naval Architect Newcastle, UK.
Bjørn Sund
External advisor, offshore wind and hydrogen plants
• Over 20 years of experience from the renewable energy sector
• Several leading development project positions including Development Strategy Manager (Sørlige Nordsjø II offshore wind), VP Project Development Onshore Wind (Statkraft), Programme Manager (Forewind Ltd), Project Manager (Fosen Wind)
- Decades of experience from field development and Norwegian offshore licensing processes
- Johan Sverdrup and Troll Head of Field Development
- Has worked across areas such as field development, Head of R&D for Norsk Hydro working with electrolysers (NEL), hydrogen and ammonia
- Master Degree in Chemical Engineering from The Norwegian Institute of Technology (NTNU)
CONTACT US
Visiting address: Karenslyst Allé 2 0277 Oslo Norway
Postal address C/O Advokatfirmaet Schjødt AS P.O. Box 2444 Solli, 0201 Oslo Norway
www.magnoraasa.com