Origin Energy Limited · ASX:ORG
Origin Energy — Non-Deal Roadshow (March 2013)
48 slides from Origin Energy's roadshow presentation, March 2013
Slide 1: Origin Energy United States Roadshow
Origin Energy United States Roadshow Karen Moses, Executive Director, Finance and Strategy March 2013
Slide 2: Important Notice
Important Notice Each institution that reviews this presentation will be deemed to represent that it is a “qualified institutional buyer” within the meaning of Rule 144A under the U.S. Securities Act of 1933. This presentation does not constitute investment advice, or an inducement or recommendation
Slide 3: Origin is Australia's leading integrated energy company
Origin is Australia’s leading integrated energy company The largest integrated energy business in Australia and NZ At a glance: • Large and diverse fuel portfolio Listed in the S&P/ASX 20 • Largest and most flexible generation portfolio index with a market capitalisation of • Largest retail energy
Slide 4: Energy Markets is currently the largest contributor to earnings
The Energy Markets business is currently the largest contributor to Origin’s earnings … Underlying EBITDA by Segment, FY2012 Assets less Segment Liabilities by Segment, FY2012 Contact Contact APLNG 400 4,697 47 Energy Markets E&P 10,520 Energy 329 Markets APLNG 1,562 5,769 E&P 2,929 … however once c
Slide 5: Focus on maximising cash flow, progressing APLNG and strengthening funding
Origin is focused on maximising cash flow from the existing business, progressing the APLNG project and strengthening its funding position Existing Business APLNG Funding Responding to Challenges Confidence in Schedule & Cost Strengthened • Reduced sales volumes and • Upstream 29% complete, • $5.4 b
Slide 6: Positioned for growth over the next five years
Origin is positioned for growth over the next five years with an uplift in Energy Markets earnings … New development options • Continued • Improved improvement in Energy Markets Full production regulatory from APLNG conditions • Revenue from QCLNG gas sales • International gas, • Operational Challen
Slide 7: Restructuring initiatives to lower costs
Origin is undertaking restructuring initiatives to lower costs … OPERATIONAL EFFECTIVENESS ASSET CONSOLIDATION A review of investment activities and 600 assets has resulted in: • Discontinued investment in Transform 500 Solar and Geodynamics Number of Employees • Suspension of operations at Kincora
Slide 8: Legacy gas contracts provide opportunity to deliver earnings growth
Legacy gas contracts set at previously low domestic prices provide opportunity to deliver growth in earnings … PJ OE Gas Supply Position 3,000 Third Party Contracts APLNG will see the benefit of a contract to 3rd party contracts Origin JV supply gas to QCLNG over 20 years from Origin JV Partners FY2
Slide 9: Confidence in delivery of the APLNG project
Confidence in the delivery of the APLNG project was confirmed through a project review, resulting in acceleration of the schedule for Train 2 … SCOPE • Project capital costs were reviewed based on actual costs incurred through to late 2012 and revised forecasts SCHEDULE • Train 1 on track to be comp
Slide 10: Undrawn facilities and cash provide liquidity to fund APLNG
Committed undrawn debt facilities and cash, combined with cash flows from operations, provide sufficient liquidity for Origin to fund its investment in APLNG … 3,500 3,000 2,500 Free cash flow $4.4 billion1 from existing funding 2,000 business requirement for Origin’s 1,500 share of $5.4 billion2 in
Slide 11: Funding initiatives increased undrawn facilities and cash to $5.4 billion
Origin’s funding initiatives have increased undrawn committed debt facilities and cash to $5.4 billion1, supporting Origin’s investment in APLNG Origin Debt (excluding Contact) & Bank Guarantee Maturity Profile as at 30 June 2012 2,500 2,500 Loan & Bank Guarantees - Undrawn Loans & Bank Guarantees -
Slide 12: Energy Markets
O origin Energy Markets 12 |
Slide 13: Energy Markets is Australia's leading integrated provider of energy products
Origin’s Energy Markets business is Australia’s leading integrated provider of energy products Fuel Generator Retailer Large and diverse fuel Australia’s largest Australia’s leading energy portfolio generation portfolio retailer • Strong domestic gas supply • 5,900 MW • 2,952,000 electricity custome
Slide 14: Large, diverse integrated portfolio manages energy purchase costs
Origin’s large, diverse and integrated portfolio enables effective management of gas and electricity purchase costs … PJ/a 700 Fuel/Generation - Gas Fuel/Generation - Coal 10,000 600 Retail - Gas Retail - Electricity 10,000 10,000 9,000 9,000 9,000 500 8,000 Contract Contract or or Contract or 8,000
Slide 15: Decrease in Energy Markets Underlying EBITDA in HY2013
A decrease in Energy Markets Underlying EBITDA in HY2013 was largely due to a decline in Electricity Gross Profit … Underlying EBITDA Bridge 900 (28) 800 (58)1 • Lower electricity volumes (53) (30) 20 (32) • Unfavourable tariff determination 700 19 in Queensland, reducing revenue 600 Lower • Higher
Slide 16: Electricity Gross Profit decline from lower volumes and margins
Electricity Gross Profit decline was predominantly due to lower volumes and reduced margins TWh 25.0 15% C&I MM 14.1% (1.2%) 20.0 (3.5%) Underlying EBIT Margin (%) 10% 15.0 9.4% 10.0 5% 5.0 0.0 0% H1 FY2012 H2 FY2012 H1 FY2013 HY2012 0.0% Carbon 0.0% Other HY2013 • Origin’s average electricity • Car
Slide 17: QCA tariff determination reduced wholesale energy cost allowance
The QCA tariff determination 80 reduced the wholesale energy cost allowance … 70 Average NEM Pool Price ($/MWh) 120 120 60 Due to reduced 100 100 generation availability Average NEM Pool Price ($/MWh) 50 Average NEM Pool Price ($/MWh) Average prices less 80 80 than $300/MWh 40 Average Prices Less Av
Slide 18: Lifted acquisition and retention activity and reduced churn
Origin has successfully lifted acquisition and retention activity, and reduced Origin churn relative to market … Combined Electricity and Natural Gas Churn Rates 40% 800 Customer wins and retains ('000) 29% increase in Origin, HY2012 Origin, HY2013 700 wins & retains 35% Market, HY2012 Market, HY201
Slide 19: Stabilisation of new SAP billing system well advanced
Stabilisation of the new SAP billing and customer management system is well advanced … CAL YEAR • Jun – SA customer accounts transferred to SAP Eraring • Oct – VIC customer accounts transferred to SAP Power 2011 • Dec – NSW & QLD customer accounts transferred to SAP Station • Feb – Remaining custome
Slide 20: Exploration & Production
Exploration & Production 20 |
Slide 21: Producing assets in Australia and New Zealand
Origin has producing assets in both Australia and New Zealand boe mmboe PJe Origin Gas Production Origin by Half Year Gas mmboe Production by Half Year .6 1008.6 17.2 .7 7.7 .9 806.9 13.7 Processing plant in Cooper Basin .0 6.0 .1 605.1 10.3 .3 4.3 40 6.9 .4 3.4 Kupe processing plant .6 2.6 20 3.4 .
Slide 22: Investment in offshore assets will increase east coast gas supply
Investment in existing offshore assets will increase supply into a growing east coast gas market … PJ • Phase 1 of BassGas MLE complete with the accommodation 2,500 module East coast installed gas production 2000-2017 (PJ) • Phase 2 of BassGas MLE will involve the drilling of an 2,000 additional two
Slide 23: Exploring in regions with high prospectivity
Origin is also exploring in regions that offer high prospectivity and access to growing markets Kenya Botswana • Mbawa-1 well in the Lamu Basin was • An aero-magnetic survey in Botswana was drilled to a total depth of 3,150m. completed in July 2012 Detailed analysis of the data is ongoing • Drilling
Slide 24: Australia Pacific LNG
O origin Australia Pacific LNG 24 |
Slide 25: APLNG is a strong and aligned joint venture
APLNG is a strong and aligned incorporated joint venture, combining Origin’s Australian CSG experience with ConocoPhillips’ extensive LNG and CSG capabilities … • Australia’s largest integrated • Integrated energy company with • Integrated energy and chemical company energy company global operations
Slide 26: APLNG's industry leading 2P reserves base
APLNG’s industry leading 2P reserves base includes prime acreage in both “sweet spots” … PJ 30,000 120 Jan-Jun 100 25,000 Jul-Dec 80 30,000 30,000 Origin Share 60 20,000 25,000 30,000 25,000 40 20,000 25,000 15,000 20,000 20 15,000 20,000 15,000 0 10,000 10,000 15,000 10,000 5,000 10,000 5,000 5,000
Slide 27: APLNG continues to make significant progress
APLNG continues to make significant progress Coil-tubing drill rig Laying of pipe Curtis Island site, January 2013 LNG Tanks, January 2013 UPSTREAM PROJECT DOWNSTREAM PROJECT 29% Complete 31% Complete Gathering Gas & water Drilling facilities LNG Plant, Tanks and LNG Terminal Electrification Water d
Slide 28: APLNG on track to achieve key project milestones
APLNG is on track to achieve key project milestones Target Key Project Milestones Status Update Date at FID First gas field facility complete Mid 2013 On Track Pipeline complete Early 2014 On Track First LNG from Train 1 Mid 2015 On Track First LNG from Train 2 Early 2016 Ahead of Schedule Key proje
Slide 29: APLNG capital expenditure for the half year
APLNG capital expenditure for the half year was $4.0 billion1, with Origin’s cash contribution $119 million Cumulative Estimate from FID1 to Half year to Dec (A$m) from FID1 1st sales from Train 2 2012 to Dec 2012 (A$b) Project Capex 3,519 8,174 24.7 Non-Project Capex: Annual spend peaks in FY2014 i
Slide 30: Contact Energy
O origin Contact Energy 30 |
Slide 31: Origin owns 53.1% interest in Contact Energy
Origin owns a 53.1% interest in Contact Energy, one of New Zealand’s leading fuel-integrated energy companies … Generation Portfolio • 290 MW geothermal generation • 752 MW hydro generation • 1,176 MW gas generation • Over 2,000 MW in generation development opportunities Energy Retailer • 443,000 el
Slide 32: Recent investments improved Contact's portfolio flexibility
Recent investments in Contact’s generation portfolio have delivered improved portfolio flexibility … Benefits of favourable fuel mix realised during the period • Higher rainfall resulted in increased hydro generation • Stratford Peaker and Ahuroa gas storage increased Contact’s ability to respond to
Slide 33: Corporate
O origin Corporate 33 |
Slide 34: Portfolio of renewable energy opportunities in offshore markets
Origin continues to develop a portfolio of high quality renewable energy opportunities in offshore markets … Chile Chile • 40% interest in Chile’s leading geothermal • Energía Austral, one of Chile’s leading exploration company, Energía Andina S.A. hydroelectric development companies, is a • 12 geot
Slide 35: Appendix
35 | Appendix O origin
Slide 36: 2013 Half Year Financial Highlights
2013 Half Year Financial Highlights ($ million) Dec 12 Dec 11 Change Statutory Profit 524 794 (34%) Statutory EPS 48.0 cps 73.8 cps (35%) Revenue 7,379 6,499 14% Underlying EBITDA* 1,055 1,157 (9%) Underlying EBIT* 698 832 (16%) Underlying Profit 362 489 (26%) Underlying EPS 33.2 cps 45.5 cps (27%)
Slide 37: Underlying EBITDA down 9%, EBIT down 16%
Underlying EBITDA down 9% to $1,055 million Underlying EBIT down 16% to $698 million Underlying EBITDA Underlying EBIT ($ million) Dec 12 Dec 11 % change Dec 12 Dec 11 % change Energy Markets 660 820 (20%) 516 697 (26%) Exploration & Production 200 179 12% 79 67 18% Australia Pacific LNG 19 16 19% 1
Slide 38: Group OCAT reduced due to lower EBITDA, working capital and tax
Group OCAT reduced due to lower Underlying EBITDA, higher working capital and tax paid … ($ million) Dec 12 Dec 11 Change Underlying EBITDA 1,055 1,157 (102) Primarily due to billing delays Change in working capital (268) (192) (76) and collections, offset by a carbon benefit Stay-in-business capex
Slide 39: Electricity Gross Profit down on volume and margin
Electricity Gross Profit was down due to a reduction in volume and margin … Performance metrics, $m Non- Natural Gas Electricity LPG (% change from Dec 11) commodity Revenue ($m)1 749 (+20%) 4,284 (+12%) 102 (-25%) 371 (+6%) Decline in Gross Profit* ($m) 145 (+15%) 762 (-18%) 29 (+61%) 103 (+10%) El
Slide 40: Regulatory constraints and wholesale costs drove lower electricity margin
Regulatory constraints and higher wholesale energy costs were the primary drivers of lower Electricity margin Electricity Performance ($/MWh) Dec 12 Dec 11 Change Revenue uplift reflects: • recovery of carbon Revenue • recovery of network costs Combined Revenue 200 175 25 The recovery of wholesale e
Slide 41: Natural Gas Gross Profit up 15%
Natural Gas Gross Profit up 15% due to increased volumes in Victoria and customers in New South Wales … Gas Performance ($/GJ) Dec 12 Dec 11 Change Revenue Combined Revenue 10.7 9.2 1.5 C&I 5.9 5.4 0.5 Tariff increases include Mass Market 20.4 17.4 3.0 recovery of network, wholesale energy, and carb
Slide 42: Higher customer wins and retention increased operating costs
Higher customer wins and retention, combined with business restructuring, increased operating costs … Cost-to-serve Dec 12 Dec 11 Change Total Natural Gas, Electricity & non- Increased operating costs (309) (283) (26) commodity operating costs ($m)1 Maintenance costs ($m) (249) (239) (10) Redundancy
Slide 43: Glossary
O origin Glossary
Slide 44: Important Notice
Important Notice Financial information All figures in this presentation relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its controlled entities, for the half year ended 31 December 2012 (the half year) compared with the half year ended 31 Dec
Slide 45: Statutory Financial Measures
Statutory Financial Measures Term Meaning Total current and non-current interest bearing liabilities only less cash and cash Net Debt equivalents. Economic interest in a controlled entity of the Consolidated Entity that is not Non-controlling interest held by the Parent entity or a controlled entity
Slide 46: Non-IFRS Financial Measures
Non-IFRS Financial Measures Non-IFRS Financial measures are financial measures that are presented other than in accordance with all relevant Accounting Standards. Non-IFRS Financial measures are used internally by management to assess the performance of Origin’s business, and to make decisions on al
Slide 47: Non-Financial Terms
Non-Financial Terms Term Meaning Proved Reserves are those reserves which analysis of geological and engineering data can be estimated with reasonable 1P reserves certainty to be commercially recoverable. There should be at least a 90% probability that the quantities actually recovered will equal or
Slide 48: Thank you
Thank you For more information Kylie Springall Group Manager, Investor Relations Email: [email protected] Office: +61 2 8345 5288 Mobile: + 61 400 477 393 www.originenergy.com.au 48 |