L1 Energy: helping to power a just and orderly transition to renewable energy
Wintershall Dea
2021 was a year of sharp recovery in commodity markets and of successful execution of WD’s strategy. As a result, the company reported record financial results (EBITDAX of €3.8bn and free cash flow of €2.1bn) on a record level of oil and gas production (638 kboed). Having resumed regular dividend payments, the company still managed to cut its leverage to 0.7x, creating strong capacity for new investment.
Through a focused and highly successful exploration programme, the company added 78 mmboe of discoveries, including Dvalin North discovery, the largest discovery in Norway in 2021.
WD continued to streamline its portfolio, having exited Brazil, oil production activities in Gulf of Suez and the unconventional acreage in Argentina. During the year, WD fully completed its integration process, having successfully achieved merger synergies of over €300mn per annum.
In 2021, Sustainalytics upgraded its ESG rating of WD, placing the company in the 4th percentile of oil and gas producers due to its 25% cut in carbon intensity as well as its market-leading Net Zero 2030 target for Scope 1 and 2 emissions.
New Energy
On the New Energy side, 2021 was the first year of operation, as the New Energy investment strategy was approved by the L1 Board at the end of March. Subsequently, the team was populated, investment processes created, and the first two investments for the New Energy fund have been made.
Plastic Energy
This is L1’s first investment in the circular economy; a practical focus on recycling what L1, as customers, use, reducing virgin plastic feedstock demand. Plastic Energy is a world leader in chemical recycling, in what is a complex and still emerging market.
The company successfully raised capital during the summer to fund further expansion and growth, with L1 as the lead investor.
Worldwide, only around 15% of plastics are currently recycled, and the pollution problems associated with this are well documented. Plastic Energy has developed and patented technology to enable the chemical (rather than mechanical) recycling of plastics, which can then be reused in, amongst other things, the food packaging supply chain. L1’s capital is helping to fund growth, to build a worldwide and material presence, helping to increase the percentage of recycled plastic.
2021 was a crucial year for the company, with operational progress on the initial world scale plant at Geleen, in the Netherlands, with SABIC as partner. Due to come online at the end of 2022, the plant will process around 20 kt of mixed plastic waste, with SABIC as both equity partner and off-taker for the product.
A Final Investment Decision was also made on two further plants, both located in France: one with Total as a partner and the other with ExxonMobil. Both plants will come on-stream in 2023.
Further business development was secured with other parties in Europe, Asia and the US, forming the basis for a genuinely global footprint.
In governance progress, both the Audit Committee and Remuneration Committee of the Board were formally constituted.
H2Scan
US-based company H2scan is a world leader in providing hydrogen sensors for electricity utilities and industrial markets. L1 was the lead investor in the successful capital raise, underpinning the company’s rapid expansion.
H2scan’s innovative hydrogen sensing products are used to improve electrical distribution reliability and are ideal for monitoring and measuring hydrogen concentration in fuel cells, hydrolyzers, and hydrogen distribution pipelines to reduce carbon emissions. The sensors also serve in a wide variety of hydrogen economy applications.
H2scan will use the funds raised to expand manufacturing, expand its auto calibration capabilities, add additional sales offices around the world, and enhance H2scan’s marketing capability as well as funding further R&D for the next generation of disruptive and breakthrough products.
H2scan recently launched its revolutionary “Gen 5” technology. The Gen 5 is the first of its kind: a hydrogen sensor package based on H2scan’s application specific integrated circuit (ASIC) technology that makes it small enough and cost effective for utility transformer and safety and process applications.
H2scan holds 27 patents on its core technology, software and electronics, and its products are sold in over 50 countries worldwide.
Pipeline
The deal pipeline has remained consistently strong, with the focus always on long-term value and growth potential through deployment of protectable IP by a high-quality management team.