Aker Carbon Capture ASA
OSE:ACC
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
5.38
13.58
|
Price Target |
|
We'll email you a reminder when the closing price reaches NOK.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Earnings Call Analysis
Q4-2023 Analysis
Aker Carbon Capture ASA
Revenue for the fourth quarter reached NOK 573 million, marking a substantial increase of 139% compared to the same period last year. This surge is primarily attributed to the progressive performance of Big Catch and Just Catch projects—largely noting the Orsted Kalundborg CCS project's advance within the quarter. Despite an EBITDA reported at negative NOK 43 million, an improvement from the previous year was noted, and expectations of positive impacts on gross profit margins are set for the latter half of 2024, specifically when profit recognition commences on the Orsted Kalundborg CCS project.
Operational efficiency remained a focal point, with a slight increase in EBIDTA driven by heightened commercial activities and rigorous research and development, as well as strategic geographic expansion into North America. Operating expenses and capital expenditures are expected to hover around current levels for the next 6 to 12 months, reflecting a judicious approach to resource allocation while on a growth trajectory.
The company maintains a robust cash position at NOK 1.1 billion, complemented by strong equity at NOK 0.7 billion. The cash outflow of NOK 211 million, related to procurement and project installations, resonates with the company's proactive investment stance in product development and future capabilities like the construction of a second mobile test unit. The company prepares for a slight cash trend down in the forthcoming quarter as it pushes forward with significant projects.
The company is unwavering in its ambition to spearhead carbon reduction and removal, banking on its foothold in the European market and its pioneering technology. Efforts are being channeled into standardization, modularization, and digitalization to further develop a cost-efficient product portfolio. This includes leveraging serial production and nurturing strategic supplier relationships. By delivering carbon capture solutions and targeting an audacious CO2 capture goal, the company is equipped to support clients in the sustainability shift and institute a significant positive environmental impact.
Aker Carbon Capture's total project pipeline displays increasing demand across a diversifying array of industry sectors, with a strong focus on power generation and waste to energy in Europe. The company's backlog closed the fourth quarter at around NOK 2.6 billion, with activity distribution estimated at approximately NOK 1.7 billion for 2024 and NOK 0.9 billion for 2025 and onwards. Tender conversions to concrete Just Catch and Big Catch contracts are anticipated to rise, bringing forth an era of enhanced profit margins and sustained business momentum.
Good afternoon, and welcome to the presentation for Aker Carbon Capture's results for the fourth quarter of 2023. My name is David Phillips, Head of Capital Markets, and I'm joined today by my colleague, Egil Fargeland, our CEO; and Julie Berg, our CFO. As usual, we will start with our main presentation, then this will be followed by Q&A with the audience. So firstly, Egil will take us through our main progress and achievements from the fourth quarter of last year. I will also run through a number of topics that are important for our wider strategy. Then Julie will take us through the key Q4 financials, including some outlook commentary for the rest of this year. And finally, we will take your Q&A via the online system. Just as a reminder, you can post your questions into the system at any time. And at the end of the presentation, we will then try to work through as many of these as time allows. So Egil, over to you.
Thank you, David. This is the agenda for our presentation today following a highly active and fourth quarter. We will address the highlights of the quarter, our operations and business development, our delivery models, the financial highlights and finally, the way forward. And then we will move on to Q&A. But first, before we start with the highlights for the Q4, we have a short introduction to the company. Aker Carbon Capture is a pure-play carbon capture company, offering modular and configurable carbon capture plans with the strength of the Aker Group behind it. Today, we're already delivering 7 carbon capture plants. We're making carbon capture happen. Our proprietary patented technology has been developed over 20 years and is validated through more than 60,000 operating hours and verified across a range of industries. Our technology uses a biodegradable mixture of water and organic amine solvents to absorb the CO2. It's modular cost and energy efficient and it has a market-leading HTC profile. Since 2020, Aker Carbon Capture is focused on the European market with Scandinavia, Benelux and the U.K. leading the way. Now we are entering the North America market on the back of increased policy support for CCUS, and we are already working on several engineering studies. Also, we're exploring our potential positions across the rest of Europe and Middle East. We continue to prioritize 4 market segments with high market activity, cement, bio and waste to energy, gas to power and blue hydrogen. And we're also seeing good engagement with a number of additional segments where our technology is well suited to capture CO2 such as refining and process industries. Our technology has been tested and verified across these segments. Now to the highlights of this quarter. In December, we signed a FEED contract with Hafslund Oslo Celsio to develop together with Aker Solutions carbon capture at the waste-to-energy facility at Klemetsrud in Oslo, Norway. In the same month, Uniper awarded us a process design package to deliver design studies for the proposed post-combustion carbon capture plant at their grain power station with a potential to capture over 10 million -- 2 million tonnes of CO2 per year. Earlier in the quarter, we signed a pre-FEED contract for a major European power company to implement carbon capture at the portfolio of power plants in Mainland Europe. The planned capture capacity could reach up to 14 million tons of CO2 per year for the applicable sites combined. On the other side of the Atlantic, we signed an MoU with MAN Energy Solutions to accelerate CCUS in the United States, strengthening our presence in this highly promising market. Also throughout this quarter, we saw high study activity. Looking at our major projects, we've seen good progress. At went, the commissioning is ongoing. At Brevik, preparation for the second heavy lift campaign is ongoing. And for Ørsted’s Kalundborg Hub, the groundbreaking ceremony took place. In addition, our growing franchise of FEEDs, pre-FEEDs and process design package work in the U.K. is supporting a number of mega-scale projects that is positioned for government's track 1 and track 2 processes. Our backlog remains strong at NOK 2.6 billion, and I'm also happy to share we've continued our revenue growth in Q4, more than doubling our top line compared to the same period last year, all while maintaining a solid cash position at NOK 1.1 billion. Now on to some of our recent highlights in more detail. Aker Carbon Capture and Aker Solutions signed a FEED contract with Celsio to develop carbon capture at this waste-to-energy facility at Clemente in Oslo, Norway. The planned FEED delivery will be this summer, with Celsio targeting FID also this summer. The FEED contract follows Celsio's cost reduction initiative and will be delivered based on Aker Carbon Captures modularized just Catch 400 units with a design capacity up to 400,000 tonnes of CO2 per year. As a part of the project's cost reduction phase, new vendors were brought in to present alternative solutions that could lower costs. And Aker Carbon Capture and Aker Solutions were selected to perform a FEED. The FEED includes a framework for a possible EPCIC contract. The waste incineration plant that Clemente is the largest carbon limiter in Oslo and is responsible for 17% of the capital's fossil carbon emissions. Funding has been secured as a part of the long ship CCS value chain development, the Norwegian government's carbon capture and storage project. Longship also includes the CO2 capture at Heidelberg materials, cement plant in Brevik, where carbon capture plant is delivered by Aker Carbon Capture and Aker Solutions. In December, we were awarded a process design package for Uniper's grain power station in the U.K. to potentially capture over 2 million tonnes of CO2 per year. The project is a proposal to retrofit post-combustion carbon capture technology and up to 3 of the existing combined cycle gas turbines or CCGT units at this plant. In the first phase, Aker Carbon Capture will use its proprietary technology to establish the process design for CO2 capture, conditioning, liquefaction and temporary storage, including potential heat integration solutions. The PDP has the necessary design information required by an engineering, procurement and construction company to perform a final engineering of the plant. The PDP will also allow Uniper to evaluate Aker Carbon Captures technology for 1 of the 3 gas turbines, helping to inform planning and permitting applications for the future construction and operation of the carbon capture plant at the existing power station. If Uniper select Aker Carbon Capture as the technology licensor at the end of the PDP process, the next step will be to move the front-end engineering and the sign phase ahead with the final investment decision which is expected to be taken by Uniper in the mid-2020s. This award is an important stepping stone towards turning our existing Big Catch EPC offering into a license and key equipment model. If this project reaches final investment decision, we may have the opportunity to provide the full technology license and deliver key equipment. Uniper has the option to commission a license to install our technology on all the 3 CCGT units. Moving over to the other side of the Atlantic. We are joining forces with MAN Energy Solutions to accelerate CCUS. We've signed a memorandum of understanding an MoU to jointly pursue opportunities related to CCUS and CO2 compression in North America. This leverages MAN's expertise in compressor technology and system integration as well as our proven carbon capture technology and products. The adaptation of standardized and modularized solutions will help cost efficiency and optimize energy consumption and delivery time. As an example, a compressor design jointly developed by MAN and Aker Carbon Capture can reduce overall steam demand for our big catch facility by around 30%. Currently, we're collaborating with MAN on the delivery of the world's first carbon capture plant for the cement industry at Heidelberg material cement facility in Brevik, Norway. In the quarter, apart from the work we've won at Celsio and Uniper, we strengthened our foothold across Europe with studies in Germany, Finland and also in the Swiss market for waste-to-energy, biomass and power plants, all based on our standardized and modular just catch and with the capacity between 100,000 and 400,000 tonnes of CO2 per year, a clear sign that there is strong interest for the modular just Catch product in the market, further supporting the momentum that we are witnessing for CCUS. Finally, not to mention -- not mentioned on the slide, R&D is important to further the development of our technology. At Elkem smelter facility in Rana Norway, we successfully qualified our technology for the smelter industry. And now that we've analyzed all the test results, the pilot recorded high capture rates of CO2 and up to 95% capture rate, combined with low amine degradation. Our technology has now been tested on 11 industrial fluid gases, accumulating more than 60,000 hours of operational experience. As mentioned, we've seen clear signs that the CCUS commercial activity has accelerated the market not only throughout the past quarter but throughout the whole financial year of 2023. Since we started as a separate company in the mid-2020, we've accumulated across all types of contracted work, a pipeline covering more than 40 million tons of CO2 capture, a strong sign that the accelerating market momentum is that over 20 million of these tonnes came in last year in 2023. Our intake of work in 2023 covered a total of more than 30 capture units. There has been a growing interest from emitters in Europe and the U.S. for our whole product portfolio, ranging from the modular Just Catch 100 to our recently launched Just Catch 400. Our Just Catch offshore and our bespoke Big Catch megascale offering is also increasing in demand for studies. Now to our overall pipeline. When we launched in 2020, we set an ambitious target to secure contracts to capture 10 million tonnes of CO2 by the end of 2025. As before, we visualize the progress towards this target in 4 categories: secure development contracts covering supply agreements, license and key equipment agreements and carbon capture as a service agreements, secured FEED contracts and tenders for the development contracts, pre-FEEDs studies, mobile test udon campaigns and finally, our prospects. Here, the 1 million tonnes represent our already contracted work with Heidelberg Materials, Tensa and Orsted. This is important progress that shows that we're able to successfully convert our pipeline of work into a pipeline of opportunities into secured work. The timing, of course, is strongly influenced by the pace of the market itself. Then our tenders FEEDs and PDPs, which now stands at 6.5 million tonnes, reflects net series Power, KB3 and Celsio at Clemente, among others, and also includes a sound level of ongoing tender activity. The decrease from last quarter reflects one project where the time line has moved out. So we've moved it back into the earlier phase in our pipeline. And we've seen a strong growth in pre-FEED studies and mobile test unit campaigns, growing to a total of 32.6 million tonnes, up from 18.5 million tonnes last quarter. This step-up in activity reflects a broad pickup across a number of industry sectors, but in particular, we saw a major contribution from power generation and waste to energy in Europe. Now we move on to look more into the details of our operations. In the Netherlands, a Twence waste-to-energy facility in Hengelo, the carbon capture plant is now mechanically complete. Commissioning is ongoing, and this is the final step before sellable CO2 can be produced by the Just Catch 100 unit. Delivery of the modular Just Catch for Twence waste-to-energy facility will pave the way for other companies in Europe planning to decarbonize their operations through CCUS. At Brevik CCS, we're making solid progress by having successfully completed the first heavy lift campaign, the absorber all the CO2 storage tanks and key modules have been installed on site, and preparations for the second heavy lift campaign is ongoing. When complete, the plant will be ready to capture 400,000 tonnes of CO2 per year. At Orsted Kalundborg CCS, we will deliver 5 modular and configurable third-generation Just Catch 100 units and additional equipment such as liquefaction systems, temporary storage and on and offloading facilities. We see this project as a milestone for serial production of Just Catch units, which will enable us to deliver cost efficient and fast deployment of carbon capture. All critical purchase orders have been placed, and we started the container fabrication. In December, the groundbreaking event took place, marking the start-up of the construction of this important climate project. The total contract value of this project is above EUR 200 million, and the total capacity is 0.5 million tonnes of CO2 per year. Then the U.K. remains a very important market for CCS with significant policy progress in late 2023 and now into 2024. At the end of March last year, the U.K. government confirmed which projects will produce -- proceed into the final negotiations for track full government funding. At the end of July, the U.K. highlighted that the Track 2 process will include the Akorn and Viking clusters with our anchor project selection phase starting early 2024. Also in the last few months, the U.K. announced a track 1 expansion process has started for the high net cluster and the Northwest with the ambition to move to the final negotiations this autumn. The expansion process for the East Coast cluster will follow in due course. The U.K. is set out its CCUS vision for longer-term growth into the 2030s, targeting the development of over 50 million tonnes per year of storage by 2035. Aker Carbon Capture has built a strong position in the U.K. around engineering design for decarbonized power, both ways to energy and gas to power. We are the carbon capture provider for a FEED for BPs [indiscernible] side power, VFD for SSCI, the pre-FEED for Viridor's Rancor and CCS and also the PDP process design package provider for Uniper's grain power project, all potential mega-scale carbon capture projects in the U.K. These are important first steps for us to deliver our Big Catch license and key equipment business model. And now I'll hand over to Julie, our CFO, to run through the delivery models and financials for this quarter.
Thank you, Egil. Now I will take us through our delivery models and financials. Just a quick recap on our range of modular products and services. We deliver the Just Catch modules on an EPC basis or to be more accurate due to a high level of standardization under a Just Catch supply agreement. We also offer our carbon capture as a service concept where our customers simply pay per ton of CO2 captured. This includes our Just Catch offshore units. Our review of the market shows that emitters with between 100,000 and 500,000 tonnes of CO2 per year account for around 3,000 industrial plants across Europe and North America, a great fit for our Just Catch units and a very exciting opportunity. And our Big Catch offering is focused on bespoke megascale capture facilities sold as license and key equipment packages. As a rough guide, you could expect a license and key equipment contract size to be around 1/3 of the size of a full EPC delivery, but with a higher long-term margin potential. And of course, we also offer aftermarket services, solvent management and supply to all our clients across all our products. Aftermarket revenue streams are expected to increase over time in line with the growth in the installed base of Just Catch and Big Catch units. Since the third quarter of 2021, we have shared regular updates of our estimated levelized cost for the full carbon capture value chain based on our modular Just Catch 100 unit and where the CapEx and OpEx figures cover the capture facility, liquefaction and temporary storage. This shows the economics for our carbon capture as a service offering, but it is also equivalent to the levelized cost across the project from an emitters perspective. Overall, our levelized cost ranges have not shifted materially for Europe or North America, but we've seen certain trends developed through '23. For our European delivery model, the full value chain range remains at EUR 0.75 to EUR 175 per tonne, and we note, reflecting what we have seen in study work and customer configurations, we see more projects towards the upper end of our CapEx range of EUR 30 to EUR 45 per ton for ourJust Catch unit. In the long term, we continue to see significant potential to lower this cost through optimized serial delivery of modular units. We've not changed our OpEx range of EUR 15 to EUR 55 per tonne, but we note that while energy costs are now seem to be lower, there is some offset from higher labor costs and with many more projects now looking at longer distance transport and storage solutions from a wider area of Europe, we've seen costs for this segment trend towards the top end of the range of between EUR 30 to EUR 75 per tonne. This cost range, therefore, remains very location-driven. And for the North American view, we continue to see the potential to lower costs across the value chain, mainly through lower transport and storage costs, but also lower operating costs, mainly due to lower power prices. And we also now see promising signs that CapEx is trending more towards the lower end of our indicated range, giving the greater potential for pipeline CO2 transport in this region. And therefore, less need for on-site liquefaction. This gives an overall levelized cost range of USD 55 to USD 120 per tonne for this market. And now I will take you through the key financial highlights of the fourth quarter before we move on to our summary and Q&A. Bear in mind that all numbers mentioned are in Norwegian krone. Let's start with the income statement. Overall revenue for the fourth quarter was NOK 573 million, which is up 139% or NOK 334 million compared to the same period last year. The growth in revenues is mainly driven by Big Catch and Just Catch projects, including the Orsted Kalundborg CCS project, which has progressed well in the quarter. Our reported fourth quarter EBITDA was negative NOK 43 million, which is an improvement of NOK 4 million compared to the same quarter last year. Big Catch and Just Catch projects contributed positively in the quarter. However, you should note that for the Orsted Kalundborg CCS project, while revenue has been recognized in line with progress, no profit has been included. There is a slide later in the appendix, which explains how we account for our projects and our principles for timing of profit recognition. The overall level of EBITDA continues to be driven by high commercial and tender activity, our North America entry as well as R&D activity. Our fourth quarter net current operating assets ended at negative NOK 662 million, which represents a continued positive cash position on our key projects. Overall, operating assets and liabilities on net capital employed, which includes fixed and intangible assets, was negative NOK 413 million, showing that both our short-term and long-term business activities are currently funded by our net working capital position. And we continue to have a healthy cash position at NOK 1.1 billion, which covers our liabilities 1.1x. And finally, our equity remains strong at NOK 0.7 billion. We started the quarter with NOK 1.3 billion in cash, and during the quarter, we saw the overall cash outflow of NOK 211 million. The main drivers were procurement and installation activities on key projects, driving a net cash outflow of NOK 144 million in net current operating assets. CapEx of NOK 37 million, mainly related to product development, new office equipment and the construction of a second mobile test unit and also a loss before tax of NOK 35 million. In total, cash and cash equivalents ended this quarter at NOK 1.12 billion. These are the highlights of our historical financials. Now let's have a look ahead. Our financial outlook remains similar to the outlook we presented in the previous quarter. Our backlog ended the fourth quarter at around NOK 2.6 billion after including the Orsted Kalundborg CCS contract from the second quarter. By year of execution, we see this activity at around NOK 1.7 billion in 2024 and another NOK 0.9 billion in '25 and beyond. As a reminder, order intakes are only included in the backlog once a firm contract award has been announced. We expect a positive impact on gross profit margin when we commenced profit recognition on Orsted Kalundborg CCS later in 2024. And the experience gained through the series of deliveries of Just Catch units on the back of Twence and Orsted Kalundborg is expected to drive further improved profit margins going forward. Also, we expect to see an increased conversion of tenders, FEEDs, pre-FEEDs and studies to firm just catch and big catch contracts through the illustrated backlog execution period and beyond. Salary and personnel costs is expected to increase gradually in line with our growth, whereas other operating expenses and CapEx are expected to remain around current levels through the next 6 to 12 months. And we continue to show a strong liquidity position, ending the quarter with a net cash position of NOK 1.1 billion. This position is expected to trend down below NOK 1 billion in the first quarter as we progress our major projects. And please note, as usual, these comments do not include any assumptions for cash spend on M&A activity or additional investment opportunities that might arise going forward and might be subject to lot -- to short-term working capital fluctuations. And now I'll hand back to Egil.
Now let me share with you a short summary on our way forward. We've set a clear direction to position for the huge market ahead of us. We're here to accelerate planet positive through carbon reduction and removal. We prioritized the European market and 4 market segments: cement, bio and waste to energy, gas to power and blue hydrogen. Now we also see opportunities emerging in other industry segments such as refining and Process Industries. We have a strategic ambition to successfully grow North America, and we are exploring our position in the rest of Europe and the Middle East. Our proven technology is market leading. We will further improve energy efficiency and increase our focus on new technologies. Through standardization, modularization and digitalization, we're expanding our cost-efficient product portfolio. Cost reduction through serial production and working together with strategic suppliers is an important part of this journey. We'll offer Just Catch on supply agreements, license models with key equipment for Big Catch followed by long-term service and solvent agreements. As a part of our aftermarket services, we will also offer the supply of solvent, performance optimization, digital operations and maintenance. We're also bringing up the full CCUS value chain through the Carbon Capture as a Service business model. To meet the expected high growth in the market will continue to build strong partnerships. And finally, we're building this company through devoted people who are making carbon capture happen now. By delivering our ongoing projects and setting an ambitious carbon capture target, we are in a strong position to make a positive impact on our planet and help our clients move towards a more sustainable future. Thank you. And now we can move on to the Q&A section of our meeting.
Okay. And hope you enjoyed the run through the presentation slides. We now move to Q&A, and Egil, Julie and myself will run through as many as we have, where we're probably finishing around the hour. So it gives us just a little bit over half an hour to run to your questions. And thank you so much for everyone who has already put things in the system. We already have a very good list of questions. Just as a reminder, at any point during this discussion, please do go on the screen and ask a question if you want to join the queue. So let's get things moving. First up, we have Sassy from Morgan Stanley asking about our project pipeline. We've seen the classified piece under tenders feeds and PDPs, decreased to NOK 6.5 million tonnes per year from NOK 7.9 million previously. Can we talk about where this has come from, particularly given we've also announced the Celsio fees and also the PDP for Unifer in Q4. Egil, maybe one for you there.
Yes. I think the main answer there is that we've had some projects in tender phase, where the time line for the project has moved out in time. So we moved that tender over to the less mature bucket of the pipeline in the studies, pre-FEEDs and the bucket. So that's the main driver for the decrease.
Yes, absolutely. I mean that list is very dynamic. If we -- if there's a project that drops out that is frozen or is canceled or is something, we would take it out. And if it's delayed a bit, we move it to the appropriate piece of the pipeline. Next up, Victoria from RBC. Quite a good list of questions. It looks like waste-to-energy projects make quite a large proportion of our pipeline versus other markets. Is this a correct comment? And what's the reason for this?
It's true that waste-to-energy is a big piece of our pipeline. It's an important segment. And we see across Europe, Norway and the U.K. that these waste-to-energy providers and plants have clear decarbonization targets. They are often all on municipalities who have their own net zero targets. And in some instances, they're also covered by separate tax regimes that will be beneficial when they select or look at selecting CCS.
Absolutely. And also the waste to energy sector, not in every country use, is it yet under the umbrella of, let's say, the carbon pricing regime, but it's very always when they are joining that. So there's certainly a push, if you like, to have a decarbonization plan set up. It's also particularly a very good example, of course, being on contract with Listed and Microsoft as a partner with a negative removal angle. If there's an angle to have biogenetic materials in the waste on new process. There's also an angle to potentially generate negative removals, which gives an additional slice of economics. I think also maybe also the modularity side, I mean, by definition, I think a lot of waste to entry plants are on medium-sized versus, let's say, big sectors like blue hydrogen, cement and so on. And therefore, I think for our modular offering, we've seen a very good fit in terms of the size there. Maybe one for you, Julie. Looking at the levelized cost, are we seeing inflationary pressure on that hole on that dynamic?
Yes. I think it's correct to say that we are seeing inflationary pressure and that is built into the model. But as we said in the presentation, we're keeping at the top end of the range to sort of account for that pressure that we see on that yet.
Yes. Absolutely. I think also, I mean, the comments that you made about some of the costs being towards the upper end of the range, it's also maybe reflecting the inquiries we have, and we have a lot more inquiries now than we had a year ago, 2 years ago. And it's almost like the option has been chosen on more at that end. So plus also, we're seeing a much more diverse geographical location mix and people looking to join up with storage projects from further away. So by definition, higher shipping costs are towards the top end. Moving to the U.S., and maybe Egil. What stage are we at in terms of the more advanced U.S. projects? And do we think we can see any U.S. FIDs in 2024?
So if you look at our pipeline chart and also the overview of the projects that we've been involved in both in the study phase and the pre-FEED and feed phase, we have quite a few studies now ongoing in the U.S. I would say that some of those customers are pretty mature. They are part of consortiums or groups that are tying up with transport and storage and could take their FIDs within the next 1 to 2 years. I think within 2024, it's probably unlikely to see FID for our construction project, but you could see a feed or a mobile testing campaign come.
Yes. Okay. And one more from Victoria around Carbon Catch as a Service. Are we seeing demand for this offering? And are these more for early-stage inquiries or more advanced projects?
I would say for many of the studies that we do, we look at the carbon capture as a service offering option for the client. Many of them are extremely interested in this. However, given the availability of transport and storage right now in the market, which is quite limited, it's not very easy to set up the full value chain for those customers. But I do think once we see more transportation and storage projects being sanctioned, we will be able to deliver on that business model as well.
Yes. Excellent. Okay. So moving on, next up are James Carmichael from Berenberg. And thank you for such a comprehensive list of questions. You've literally on off the screen. So thanks for the very good interest. Asking about Celsio, am I right, so James ask. I'm I rightly thinking also Celsio was previously going to be using someone else's aiming technology? And can we conclude from that, that Just Catch 100 is a lower cost solution than the competition?
I think just to reiterate what we've said before. Celsio has been through a cost-cutting phase. They've looked at other options to see whether or not they can make the overall project profitable. The project, of course, consists of the capture plant and the liquefaction and the temporary storage, all the surrounding civil activities that will have to be done and the Kesig facility. So they are looking at the totality of their project. And in that work, they've done a study with us, looking at the Just Catch 400. And in our view, that's a competitive solution, it's standardized and modularized so it's quicker to build and also cheaper to build in our view.
Absolutely. Jumping back to North America. Our recent MoU with MAN. Is that -- can we talk a little bit about what's driving that? Is it driven by increasing interest? How is this market developing versus Europe and so on?
We see an extremely high activity level in North America. And our collaboration with MAN has been going on for several years. I will now reinforce it by also including North America into the mix together with them. We think the joint efforts that we can provide to carbon capture projects and storage projects where we bring in the BCA solution, in particular, with MAN's technology, we can decrease the energy needs quite a bit, and that will be a competitive offering in North America as well.
Absolutely. And the last question from James also about the size. And I think we talked about 200 million tonnes per year by 2030. That's my research study. [Indiscernible] that came from...
Yes, the reference to those numbers are from external study with the research.
Absolutely. The other one again, about the FEEDs and tenders, we think we covered that one already. Also asking about Twence, what's slowly handover versus the previous guidance or previous comments about the end of 2023?
So we've said for a long while, planned delivery end of 2023. We've done the mechanical completion by end of 2023 as planned. And now we're in the -- really the heart of the start-up, which is the commissioning phase. So within the next month or quarter, you will see start-up activities going on in Twence, and we're expecting that to be online when the customer is ready to sell their CO2. But of course, this is the final stage now before sellable CO2 is available from the plant.
Yes. Absolutely. And how long do you think it will be in terms of from it starting out to a MAN's working as well. It's come even there?
I think you'll know pretty soon once the CO2 starts to be sold, then we know it's working.
Yes, absolutely. CapEx, this sounds definitely like a Julie question. Where is -- where are we talking about for where do we see CapEx going in 2024? And is the second MTU almost complete?
Yes. So we definitely see our CapEx spend continuing along similar levels as we've had in '23. Our focus in '24 is on technology and product development and finalizing the MTU 2, which we expect to be finalized during Q1.
Yes, absolutely. And also back to the levelized cost question, the numbers we talked about, does that include some estimates around, for instance, the 30% reduction in steam demand that we've achieved?
Yes.
Yes. Absolutely. Good clarification. Egil, BP Feed, when would we expect to see the results of this?
Yes. This is a question we often refer to you, David. We're a little bit subject to the negotiations that BP has with the government in the U.K., and we typically also refer to the client in terms of when they will announce. However, what we do know is that the Track 1, which BP is part of, is now in its very final stages of negotiating support. We also know that there will be a Track 1 expansion phase coming this fall and then attract to next year. I don't know if you have anything you want to add.
No, I think it's fine. I mean for BP is one of the if you like, the fortune of products is in that first slice in that chosen 8 projects that moved ahead with Track 1. It is a little bit late versus, let's say, the view we had 2 years ago, but then I think we've seen many policy processes been slower than expected. But very much looking towards this autumn, I think, is the idea as for one for an FID, but let's see. Also, a last question from James, about carbon pricing. Your costs are towards the top end of our range on CapEx and OpEx, how are companies taking FID with a carbon price at just over EUR 60 a tonne. Maybe if I can kick off with that one. Yes, you're correct. I mean, the carbon price has been weak also in the U.K. with quite a big spread down from the European price as well. So it's a big question to ask in this environment, why would you want to decarbonize. Well, obviously, you're not -- if you're investing in something now to arrive in 2 or 3 years' time to impact yourself late 2020s towards 2030 and beyond, it's not about today's carbon price, it's about where it will be when your system starts up. So if you look at the most recent -- I mean, there are a number of angles on this, you can go a carbon Paesley, for instance, or look on the other services that provide average forecast over the market. But carbon Parsley had a recent survey out, and I think maybe for the next couple of years, they see the ETS or the average number for the ETS forecast is between sort of 70, 80 and moving up towards 100. But certainly, by the time you get to '29 and 2030 is EUR 130, EUR 140 a tonne. And actually, versus maybe when we looked to this 6 months ago, I think the long end actually gone up by maybe EUR 10 a tonne. And behind that, you have additional demand for the allowances that coming from industries like shipping, joining the market in Europe. And also you have the continuous linear reduction factor. I mean what's hitting it now apart from various aspects of global uncertainty in demand and so on, it's also the front loading from the 455, where there's a B20 billion target that's going to be used to fund decarbonization. So that's really what's also maybe keeping the price a little bit impressive right now. But certainly, the long end looks to be a little bit safer.
It's probably also worth mentioning that in Europe, many of the projects that move forward are also part of government support schemes. So you can look at Norway and Longship and the 2 projects there. You can look at Denmark and the project with Orsted. You can look to Sweden, where they're thinking about doing some programs. You can look to Netherlands and the U.K. All of these projects get additional support typically in the form of contracts for difference to cover that spread until the ETS increases to the right level.
Absolutely. And last one from James, can we talk about anything to do with phasing of backlog recognition through 2024? Short answer is no. I mean we have given some things for a while now we've given that backlog over an annual basis, but we're not going to be going into a more quarterly breakdown of that just yet. A general question from Christopher Standen asking about our made income streams, what are our made income streams in the coming years? Very general question. Maybe if I could kick off just for that one. Yes, we had this I think on Julie in your part of the presentation, there was one slide on our business models and products. That really is what drives us. So we have those modular products. We also have key equipment that goes into much larger contracts, and we have aftermarket. So we supplied the kits, which we will deliver to you, the customer over 2 or 3 years. And then after that, we have auto-market services that over time, accumulate and that's really what drives our model over the medium term.
And if you look at our backlog facing slide, the majority of that work and that revenue is from the Just Catch projects we have with Orsted and also a Big Catch with Harberg materials.
Yes. Okay. Jumping on to the U.S. market, which industrial sector represents the greatest opportunity for us in the U.S. market at the moment?
That's a really good question. We are focusing on the same sectors that we have in our European market, but there are also others that where we are engaged. For example, you've seen that we've been working with minerals production. We are engaged also in the refining industry, and we are focusing on the bioenergy side. So anyone with the bioenergy facility, similar to what we're doing with Orsted is quite interesting and seems to be an area where we -- our standard modules can fit pretty well.
Okay. I mean, I have a question on the financial side around payables. And this is looking just at our balance sheet structure, and there's an increase in payables over recent quarters. And how -- what's driving that? What's behind those movements in the balance sheet?
So the movements in the net current operating assets are very much tied to our project portfolio. So fluctuations in payables and receivables are directly related to customer payments, supplier payments, et cetera, on our major projects.
Yes. Absolutely. Because we have so far had a very fortunate structure in our contracts, we don't go cash flow negative during the month. So we have a milestone payments, advanced payments and so on. So we don't go over our skis in terms of cash during the work. A more of a general one, when are we projecting to breakeven? A question we've been asked many of before.
That's a question we've been asked many times before, and we normally refrain from answering exactly when. But you'll also see from the presentation that we are indicating quite strongly that we are not taking profit on the Eurostar project at the moment, and you should expect an improvement when that happens.
Yes, absolutely. Okay. Back to one more from a follow-up from Sassy on actually, it's a very good follow-on from that topic actually. So can you please remind us of the magnitude of the uplift in gross profit margin, EBITDA we might expect wherein projects recognized for Autonet CCS.
Yes. If we remind you of the specific magnitude then we also give away the margin on the projects, which we also refrain from going into detail on, but we're going to see an improvement.
Yes. I think -- and also, as we said before, and it's purely qualitative. It's a different type of project in that it's a serial delivery of a number of modular units rather than 1 large EPC, so a little different shape in that. Also with a with a 1 million secured contracts so far, only 2 years to go, how confident are we in meeting in '25?
So we're holding on to our target. I think it's quite important that we are fighting to achieve those tons. It's important for us, and it's important for the environment. What we've said earlier as well is that we see a higher momentum now than we expected back in 2020 for our modular solutions. And some of the big cap solutions, the license and key equipment offerings have been taking more time, especially if you look at the U.K., the award process has been slower than what we expected. So there is, of course, a higher risk that the 10 million tonnes will come a little bit later. But on the other side, we have the same or higher amount of revenue expectations due to the Just Catch projects being much more popular and faster to implement and get through to the market. So in terms of activity for Aker Carbon Capture, that's looking the same or higher and a higher likelihood for that.
Absolutely. And my general question. A project like Twence or Brevik, what is the typical project lifespan. I mean, this is a very general one. So what we deliver is a big piece of process plant. So typically 25, 30 years.
Absolutely. So that's correct. Yes, absolutely. Okay. Kate, from Citi Group. We've already talked a little bit about Twence, we've covered that one. Celsio FEED what can we say? Now this is, of course, it's a little bit talking about in the past, it wasn't us. So we probably can't talk about this in too much detail. What can we say about what was responsible cost overruns before? And have we seen any risks from that story that we can identify to help us as we work on a project now.
I think in general, when we go into projects, we see that our modular solutions, if they have -- if the site has the possibility to fit them in on the footprint side, we typically see that it's a big derisking factor. In terms of what the customer has experienced in prior processes, I think, you'll have to refer to Celsio themselves, if you want to ask those questions.
Absolutely. Okay. We have 2 questions left. So just as a quick reminder, it's never too late. If you have any more burning questions, please to get them in a system now because once we finish this list, then we will be packing up. But so just jumping on, in studies, there's been quite a jump in our studies around Just Catch Offshore over the recent past, but we haven't announced anything. Can we give a bit more color around this? Is it North Sea or something else or so on?
Yes. We've had -- we've seen good activity in the Just Catch offshore in good interest. And in that segment, it's a very small niche segment. We are a little bit more conservative in sharing the specific details of the projects that we are involved in for competition reasons also. So we're not going to go into the specific details of the regions. But in general, these are new build or greenfield FPSOs with gas turbines or power hub projects that are being contemplated in the market right now.
Yes, absolutely. And so you see, if you look across into the upstream oil and gas sector, there's quite a lot of noise around the level of offshore CapEx, which seems to be on similar growth cycle. So I guess in some respects, we are a bit of a derivative to that as lose. Victoria, one question around from obviously asking about the U.S., would we need to materially increase our head count over there in order to execute a project.
So if I understand the question correctly, it's a little bit about how many people will we need or how much will we need to grow. So we have quite an ambitious growth plan through 2024. Specific headcounts. I'm not going to share with you, but we are ramping up to be able to deliver Just Catch projects over there in 2025 and FEEDs already this year, including mobile to student campaigns.
Yes, absolutely. So that is actually the end of the questions. So if you don't put one in the system, while I say a quick wrap-up comment, then that's it, then we're out of time. But thank you so much for your interest. And it's been really good to talk about our Q4 story, a lot going on. And also very good to have such a good lot of questions to run through as well. You know where we all are. You know on our website, you can find my e-mail directly. So you can direct the e-mail maybe if you have any more follow-up questions. I'm sure we will see many of you over the next 1 or 2 months around various investor events and so on. And yes, and we thank you very, very much for your interest again and look forward to seeing you, if not in the next 1 or 2 months when we report Q1 in a few months' time. right.Thank you.
Thank you.