Origin Energy Limited · ASX:ORG
Origin Energy — H1 FY2008 Earnings Presentation
35 slides from Origin Energy's earnings presentation, Feb 28, 2008
Slide 1: Interim Results Announcement Half year ended 31 December 2007
Interim Results Announcement Half year ended 31 December 2007 Media Presentation 28 February 2008 1
Slide 2: Outline
Outline • Performance Highlights • Financial Review • Operating Review • Outlook - All references to $ are references to Australian dollars unless otherwise specifically marked - All comparative data are in relation to the prior corresponding period, 1 July 2006 to 31 December 2006, unless otherwise
Slide 3: Performance Highlights
origin energy Performance Highlights
Slide 4: Origin achieved an Underlying Profit of $200 million
Origin achieved an Underlying Profit of $200 million… • Steady earnings in line with expectations Profit, EBITDAF and cash flow consistent with prior corresponding period increasing CSG production and BassGas offsetting maturing assets and delays in Otway high revenues from Sun Retail partiall
Slide 5: Origin continues to build its business
Origin continues to build its business … Exploration and Production Retail Increased CSG production Tariff increases in electricity and gas Otway commissioning commenced On track with Sun Retail integration Halladale / Blackwatch and Swift Maintained customers numbers assets acquired M
Slide 6: Origin has delivered steady underlying earnings
Origin has delivered steady underlying earnings … • Revenue $3,817 million 33% • EBITDAF $608 million 3% • EBIT $634 million 31% • Statutory Profit $335 million 44% • Underlying Profit $200 million 3% • OCAT $385 million 5% • EPS – Statutory 38.3 cps 32% • EPS – Underlying 22.9 cps 11% • Interim div
Slide 7: Financial Review
origin energy Financial Review
Slide 8: Profit & Loss - Statutory
Profit & Loss - Statutory ($ million) Dec 07 Dec 06 % change Revenue 3,817 2,865 33 EBITDAF(1) 608 590 3 EBIT 634 482 31 Net financing costs (104) (96) (9) Tax expense (146) (108) (35) Minority Interests (49) (53) 6 Statutory Profit 335 233 44 Statutory EPS 38.3 cps 29.0 cps 32 Free cash flow per sh
Slide 9: Underlying Profit $200 million, 3% lower than the prior half year
Underlying Profit $200 million, 3% lower than the prior half year ($ million) Dec 07 Dec 06 Impact Impact % after tax & NPAT after tax NPAT change OEI & OEI Statutory Profit 335 233 44 Significant items Asset sales - Networks 147 – Mokai geothermal assets 9 Change in FV of fin. Instruments - Commodi
Slide 10: EBITDAF $608 million, up 3%
EBITDAF $608 million, up 3% Divisions ($ million) Dec 07 Dec 06 % change Exploration & Production 133 140 (5) Generation 28 46 (38) Retail 201 166 21 Contact 246 238 4 Networks 16 Adjustment for discontinued business (16) EBITDAF 608 590 3 • E&P: Growth in BassGas and CSG offset decline in more matu
Slide 11: Capital Expenditure
Capital Expenditure ($ million) Dec 07 Dec 06 Stay-in-business 70 79 Growth Exploration & Production 305 172 Generation 240 13 Retail 38 16 Contact 56 23 Total capital expenditure 708 303 Acquisitions (net of cash) 6 16 Capex including acquisitions 714 320 • E&P: Predominantly Kupe ($122 million), C
Slide 12: Operating Cash Flow After Tax increased by 5%
Operating Cash Flow After Tax increased by 5% while funds employed increased by 20% as a result of the Sun Retail acquisition and continuing E&P capital expenditure ($ million) Dec 07 Dec 06 EBITDAF 608 590 Discontinued Networks Operations - 16 Change in working capital (48) (76) Stay-in-business ca
Slide 13: Less than 5% of debt portfolio maturing in next 12 months
Origin has less than 5% of its debt portfolio maturing in the next 12 months and… Origin Debt & Bank Guarantee Maturity Profile (Financial years, $ million) 2,000 MTN & PP Loans Contact 1,800 • Diversified funding base comprising domestic and US 1,600 bonds, syndicated bank 1,400 facilities and bila
Slide 14: Fully franked interim dividend of 12 cps declared
A fully franked interim dividend of 12 cps has been declared (prior period 10 cps fully franked)… Dividends - cents per share 25 Franking 100% 100% 40% 100% 100% 100% 100% 100% Payment and DRP 20 • Ex-dividend date 5 March 2008 • Date of record 11 March 2008 11 15 • Payable 4 April 2008 9 • DRP to a
Slide 15: Operating Review
origin energy Operating Review 15
Slide 16: Exploration & Production
Exploration & Production: Major capital program now delivering record production as new producing areas… • EBITDAF of $133m, down 5%, reflecting higher 350 350 exploration expenses (up $9m) Dec-07 • CSG and BassGas gas sales more than offset 300 Dec-06 300 decline from maturing areas such as Cooper
Slide 17: Series of investments in new production areas
Over the last decade Origin has made a series of investments in new production areas to offset the anticipated decline of the Cooper Basin and other traditional gas producing areas… 45 • The Cooper Basin is in decline as contract Origin Gas Production by Half Year volumes begin to ramp down 40 • Ori
Slide 18: Oil production from the Perth Basin continues to decline
Oil production from the Perth Basin continues to decline, as is oil, condensate and LPG production from the Cooper Basin although at a more modest rate • Oil production from the mature Perth Basin oil fields 10 Origin Liquids Production by Half Year has followed a steep decline curve from its peak 9
Slide 19: Growing gas reserves and monetising through channels to market
As well as growing its gas reserves Origin has been able to monetise these reserves through good channels to market… Origin's CSG Reserves Origin's CSG Production 2,500 120 Half Year ended 31 December 2,250 Half Year ended 30 June 100 2,000 Darling Downs up to 44 PJ/a 1,750 80 2P Reserves (PJ) Produ
Slide 20: Generation: Operational performance steady
Generation: Operational performance steady with Mt Stuart moving from externally to internally contracted plant… • EBITDAF 38% lower – reflecting steady 80 250 operational performance and the transition of Dec-07 Mt Stuart from external to internal Dec-06 contracting Total Revenue & EBITDAF ($m) 200
Slide 21: Committed to build additional 876 MW of gas fired generation
Origin has committed to build an additional 876 MW of gas fired power generation, including Australia’s largest combined cycle gas turbine plant at Darling Downs… Darling Downs Power Station • 120MW expansion of Quarantine peaking power 4,000 station in Adelaide increasing Origin’s peaking Origin Th
Slide 22: Well positioned to capture value from climate change developments
Origin is well positioned to capture value from key climate change developments… Geothermal • Origin acquired a 30% stake in a JV with Geodynamics Ltd. The JV owns permits in South Australia • Geodynamics have drilled 3 wells to-date. Habanero 3 was completed in early 2008 and is currently being eva
Slide 23: Retail: Contribution from Sun Retail
Retail: Contribution from Sun Retail was partially offset by higher energy purchasing costs 3,000 350 • EBITDAF of $201 million up 21% • Higher purchasing costs across all Dec-07 300 commodities 2,500 Dec-06 Higher average prices in the NEM EBITDAF & Capex ($m) 250 Higher gas costs and Otway del
Slide 24: Sun Retail has boosted scale of Retail business
Sun Retail has boosted the scale of the Retail business with commodity revenues up $935 million… Product information and % Natural Gas Electricity LPG change from Dec 06(1) Product Revenue ($m) 481 (+2%) 1,768 (+101%) 289 (-4%) Gross Profit ($m) 61 (-18%) 258 (+48%) 62 (-20%) EBITDAF ($m) 177 (+29%)
Slide 25: Large movements in forward curve and mark-to-market values
Large movements in the forward curve have caused significant movements in mark-to-market values $180 $170 Victorian Spot and Forward Contract Electricity Prices $160 • Forward curve (FC) for Jun 07 high and $150 backwardated in response to drought conditions (large positive changes in $140 the fair
Slide 26: Churn rates have started to ease
Churn rates have started to ease over the 6 months period. Origin acquired over 236k new accounts for a net gain of 4k gas and electricity accounts Mass Market Churn: Completed and Pending# December 2007 Origin Energy Accounts Numbers 45% Vic Elec Vic Gas (‘000) Natural Qld Elec* Qld Gas Electricity
Slide 27: Leadership position in green energy sales
Origin has clearly established its leadership position in green energy sales and carbon responsibility… A leading market position* and leading market products Origin Energy 33% • In December 2007 Origin had signed 361,000 GreenPower customers • Unit sales of grid-connected solar photovoltaic … resul
Slide 28: Contact Energy: Higher retail price and increased generation
Contact Energy: Higher retail price and increased generation offset higher gas costs 1,200 300 Dec-07 • EBITDAF of $246 million, 4% higher Dec-06 1,000 250 • The main operating factors that contributed were: EBITDAF & Capex ($m) Total Revenue ($m) 800 200 an increase in electricity generation; a
Slide 29: Networks (Discontinued Business)
Networks (Discontinued Business): In April 2007, Origin entered into an agreement to sell its Networks business to APA for $556 million 120 20.0 • The Networks business was sold in two Total Revenue, EBITDAF & Capex ($m) Dec-07 18.0 parts: 100 Dec-06 Settlement for the sale of the SEA Gas 16.0 Pip
Slide 30: Outlook
origin energy Outlook 30
Slide 31: Second half expected to deliver stronger performance
Based on prevailing market conditions Origin expects the second half of the financial year to deliver a stronger performance than the first half, due to: • an expected decrease in the wholesale cost of electricity as already observed in the past two months of the second half; • a return to more trad
Slide 32: Major Project Timetable
Origin has a large forward schedule of major projects each of which will add to earnings and cash flow Major Project Timetable Financial Year FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 Calendar Year 2007 2008 2009 2010 2011 BassGas CSG - SG Phase 4 Otway Gas Project Quarantine Expansion Mt Stuart Expansion
Slide 33: Projects and opportunities that will deliver ongoing growth
Origin already has in place projects and opportunities that will deliver ongoing growth… Leading CSG reserves position and increasing production volumes Major liquids-rich offshore gas projects progressively coming on-line: BassGas producing, Otway commissioning, Kupe under construction Over 9
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Slide 35: For more information
For more information For more information on Origin Energy please contact Angus Guthrie Manager, Investor Relations Email: [email protected] Office: +61-2-8345 5558 Mobile: + 61-4-1786 4255 Alternatively visit our website www.originenergy.com.au and follow the prompts to the Investor