Origin Energy Limited · ASX:ORG
Origin Energy — FY2012 Earnings Presentation
50 slides from Origin Energy's earnings presentation, Aug 23, 2012
Slide 1: 2012 Full Year Results Announcement
2012 Full Year Results Announcement Financial Year Ended 30 June 2012 Media Presentation Grant King, Managing Director 23 August 2012
Slide 2: Important Notice
Important Notice This presentation does not constitute investment advice, or an inducement or recommendation to acquire or dispose of any securities in Origin, in any jurisdiction (including the USA). This presentation is for information purposes only, is in a summary form, and does not purport to b
Slide 3: Important Notice
Important Notice Origin’s Full Year Financial Statements for the year ended 30 June 2012 are presented in accordance with Australian Accounting Standards. Segment results, which are used to measure segment performance are disclosed in Note 2 of the 2012 Full Year Financial Statements and are disclos
Slide 4: 1. Performance Highlights
1. Performance Highlights Grant King, Managing Director
Slide 5: A strong increase in earnings reflecting a full year contribution from the NSW acquisition
A strong increase in earnings reflecting a full year contribution from the NSW acquisition … Statutory Profit* $980 m up from $186 m Statutory EPS* 90.6 cps up from 19.6 cps Net items excluded from Underlying Profit1 $87 m up from ($487) m Underlying Profit* $893 m up 33% from $673 m Underlying EPS*
Slide 6: Origin made significant progress in its Energy Markets business
Origin made significant progress in its Energy Markets business which will deliver ongoing cash flows … • A full year contribution from the NSW acquisition has delivered benefits of scale and incumbency • The migration of 2.6 million customers to the new SAP system will increase operational efficien
Slide 7: Origin has reviewed current activities and reduced future capital expenditure
Origin has reviewed current activities and reduced future capital expenditure … Growth Capital and APLNG Expenditure by Segment $m $m 3,000 Lower future capital expenditure 2,500 due to: • Review of investment activities, 2,000 with some determined as not warranted in the near term given 1,500 the r
Slide 8: Origin has $4.2 billion in existing undrawn committed debt facilities and cash
Origin has $4.2 billion1 in existing undrawn committed debt facilities and cash, providing sufficient liquidity to fund its $3.6 billion share of APLNG cash contributions 2,500 • Unsecured Notes issuance in US 144A market – US$500m ($492m) Loans & Bank Guarantees - Undrawn Loans & Bank Guarantees -
Slide 9: Origin expects substantial increase in free cash flows following completion of APLNG
Origin expects to have a substantial increase in free cash flows following the completion of APLNG … Exploration and Appraisal Activity • Ironbark – evaluation activities continued, with surface facilities and gathering networks being installed to support the pilot well project • Kenya - drilling of
Slide 10: Underlying EBITDA up 27% to $2,257 million
Underlying EBITDA up 27% to $2,257 million Underlying EBIT up 34% to $1,598 million Underlying EBITDA Underlying EBIT ($ million) Jun 12 Jun 11 % change Jun 12 Jun 11 % change Energy Markets 1,562 1,174 33% 1,317 978 35% Exploration & Production 329 268 23% 105 47 123% Australia Pacific LNG 47 63 (2
Slide 11: 2. Operational Review
O origin 2. Operational Review
Slide 12: Energy Markets
Energy Markets Underlying EBITDA up 33% to $1,562 million Electricity volumes up 26% to 42.7 TWh following the NSW acquisition Underlying EBIT margin* expansion from 12.7% to 13.6% Migrated 2.6 million customers to the new billing and customer relationship management system Improved custom
Slide 13: Origin's integrated business is well positioned to benefit from changing market conditions
Origin’s integrated business is well positioned to benefit from changing market conditions … Fuel Generator Retailer Large and diverse fuel Australia’s largest Australia’s leading portfolio generation portfolio energy retailer • Strong domestic gas supply • 5,900 MW • 3,014,000 electricity customer
Slide 14: Origin's large, diverse and integrated portfolio enables effective management of purchase costs
Origin’s large, diverse and integrated portfolio enables effective management of gas and electricity purchase costs … 400 Fuel/Generation - Gas 10,000 Fuel/Generation - Coal Retail - Gas 10,000 10,000 9,000 Retail - Electricity 9,000 9,000 300 8,000 Contract Contract or or Contract or 8,000 8,000 Sp
Slide 15: The NSW acquisition led to a substantial increase in earnings
The NSW acquisition led to a substantial increase in earnings Performance metrics, $m Non- Natural Gas Electricity LPG (% change from June 11) commodity Revenue ($m)1 1,203 (+2%) 7,566 (+40%) 213 (-50%) 706 (+5%) Gross Profit* ($m) 233 (+14%) 1,797 (+41%) 35 (-45%) 178 (+3%) Full year Underlying EBI
Slide 16: Strong growth in gas customers was offset by mild weather
Strong growth in gas customers was offset by mild weather in Victoria and South Australia … Degree Days PJ Days 1,600 160 142 1,400 130 1,200 120 1,000 C&I volumes declined 7 PJ due 800 80 to a reduction in wholesale trading 600 volumes of 13 PJ, with core C&I 400 40 customer volumes increasing duri
Slide 17: Natural Gas Gross Profit up 14% to $233 million
Despite reduced volumes, Natural Gas Gross Profit was up 14%, to $233 million, delivering a $0.40/GJ increase in unit gross profit … Gas Performance ($/GJ) Jun 12 Jun 11 Change Revenue Combined Revenue 9.3 8.3 1.0 C&I 5.5 5.0 0.5 Tariff increases in line with market prices, including Mass Market 17.
Slide 18: Energy demand in the NEM is softening
Energy demand in the NEM is softening, impacting energy usage per customer … TWh 50 40 42.7 30 34.0 SA Qld Vic 20 NSW C&I 10 0 FY2011 FY2012 4 months’ 12 months’ contribution contribution Source: AEMO 2012 Electricity Statement of Opportunities from NSW from NSW acquisition acquisition … notwithstan
Slide 19: Electricity Gross Profit up 41% to $1,797 million
Electricity Gross Profit up 41% to $1,797 million, delivering a $5/MWh increase in unit gross profit … Electricity Performance ($/MWh) Jun 12 Jun 11 Change Revenue Combined Revenue 177 159 18 C&I 116 110 6 Tariff increases include Mass Market 231 204 27 network cost increases and FY2011 SRES under r
Slide 20: Systems and processes for Clean Energy Future Package successfully implemented
Systems and processes required to comply with the Clean Energy Future Package have been successfully implemented … Carbon $/MWh • Systems and processes successfully implemented to comply with obligations 80 under the Clean Energy Future package 70 Average Energy Price (rolling 10 day) Higher energy
Slide 21: Origin's churn reduced from 18.5% to 17.1%
Origin’s churn reduced from 18.5% to 17.1%, with market churn stable at 20.4% 40% 5,000 5,000 Customer Accounts ('000) Origin, FY2011 Origin, FY2012 - - 35% 263 (375) % Churn: Monthly Data Annualised 282 (330) Customer Accounts ('000) 4,000 - - Market, FY2011 Market, FY2012 366 263 (375) 282 (330)35
Slide 22: Retail transformation continued with 2.6 million customers migrated
Retail transformation continued with 2.6 million customers migrated to a new billing and customer relationship management system … • Four large scale migrations of 2.6 million customers to the new SAP billing platform • Integral Energy customers expected to be migrated in early 2013, Country Energy
Slide 23: Opportunities to improve business performance in the short and long term
Origin is pursuing a number of opportunities to improve business performance in the short and long term Retail Transformation Customers Legacy Fuel Position • To deliver an improved • Build on improving trend in • Legacy fuel contracts set at customer experience and net customer movements previously
Slide 24: Exploration & Production
Exploration & Production Underlying EBITDA up 23% to $329 million Higher revenues driven by a 12% increase in commodity prices Completion of the Otway gas inlet compression project Increased 2P reserves for the Cooper Basin, Ironbark and Kupe Lower exploration activity, with the exploratio
Slide 25: Production was down, primarily due to the extended BassGas shutdown
Production was down, primarily due to the extended shutdown at BassGas … PJe PJe mmboe mmboe 100 mmboe Origin Gas Production Origin by Half Year Gas Production 17.2 by 1,400 Half Year 8.6 8.6 +7% 7.7 7.7 1,200 1,235 80 13.7 1,154 6.9 6.9 1,000 6.0 6.0 5.1 60 10.3 5.1 800 4.3 4.3 3.4 403.4 6.9 600 2.
Slide 26: Major planned shutdowns at BassGas and Otway
Major planned shutdowns have been undertaken at Origin’s key offshore producing assets – BassGas and Otway BassGas Otway Kupe Cooper, Surat and Perth • Lower production (-54%) • Production in line • Production increased • Production up on prior due to the planned with prior year (+6%) reflecting red
Slide 27: Investment in existing offshore assets will increase supply into a growing east coast gas market
Investment in existing offshore assets will increase supply into a growing east coast gas market … PJ • Phase 1 of BassGas MLE underway 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 28: Exploration focussed on resources close to markets, with wells in Kenya and Vietnam
Exploration activity is focussed on resources close to markets, with wells in Kenya and Vietnam expected to be drilled in FY2013 Kenya Botswana • Drilling of the Mbawa-1 well in the • Established Kubu Energy Resources, a 50:50 Lamu Basin commenced in August 2012 JV with Sasol, to explore for CSG in
Slide 29: Australia Pacific LNG
Australia Pacific LNG Underlying EBITDA down 25% to $47 million Agreements signed with Kansai and Sinopec for Train 2 LNG sales, all marketing now complete FID1 taken in July 2011 and FID2 taken in July 2012 Origin’s shareholding in APLNG diluted from 50% to 42.5% as at 30 June 20121 2P re
Slide 30: APLNG sales increased on higher customer demand and gas prices
APLNG sales increased on higher customer demand and gas prices … June 12 June 11 ($ million) Origin’s Origin’s Total Total share1 share2 Higher gas prices Operating Revenue 362 336 & customer sales Increased activity Operating Expenses (251) (210) supporting the expanding LNG export project Underlyi
Slide 31: APLNG's industry leading 2P reserves base continues to expand
APLNG’s industry leading 2P reserves base continues to expand … PJ 30,000 120 Jan-Jun 100 Jul-Dec 25,000 80 Origin Share 60 20,000 40 30,000 20 25,000 • 2P reserves increased over the 15,000 0 year by 1,336 PJ to 13,111 PJ 20,000 • 3P reserves increased over the 10,000 15,000 year by 1,305 PJ to 16,
Slide 32: Upstream on track and work 14% complete
Upstream on track and work 14% complete Coil-tubing drill rig Condabri Gathering Camp Water – brine treatment skid The Narrows Crossing (QCLNG site) Drilling Gathering Facilities Pipeline & Electrification • 68 Phase 1 operated • 595 of 1,100 operated • 7 new gas processing and • First delivery of l
Slide 33: The drilling rate will increase as additional rigs are mobilised
The drilling rate will increase as additional rigs are mobilised … • The 1,100 operated wells to be drilled for Phase 1 are expected to produce 1,200 TJ/d1, with an additional 200 TJ/d1 from non-operated assets • Current operated well production is over 1 TJ per well per day on average across the Ta
Slide 34: Downstream on track and work 17% complete
Downstream on track and work 17% complete Curtis Island site, August 2012 LNG Tank Foundations Mainland – aggregate loading onto barge Curtis Island Mainland / Dredging • Site preparation works well advanced • Roll-On Roll-Off facilities on Fisherman’s Landing and Curtis Island • Early works were im
Slide 35: APLNG is on schedule to meet the below milestones
APLNG is on schedule to meet the below milestones Upstream Milestones Date (CY) 2011 and Downstream Milestones Date (CY) Pipeline Manufacture 2012 Condabri construction camp occupied June 2012 1st concrete LNG Tanks April 2012 Third hybrid coil drill rig introduced mid 2012 1st concrete Tr
Slide 36: Australia Pacific LNG is making a significant economic contribution to Queensland
Australia Pacific LNG is making a significant economic contribution to Queensland and creating thousands of new jobs … • Currently creating employment for around 4,000 Queenslanders and will create 6,000 construction jobs and a further 1,000 jobs for ongoing operations • More than 650 land access ag
Slide 37: APLNG capital expenditure for the year was $5.3 billion
100% of APLNG’s capital expenditure for the year was $5.3 billion, with Origin’s cash contribution $1.167 billion APLNG Capital Expenditure for the year ended 30 Operated and non-operated costs associated with June 2012 (A$m)1 the LNG project plus O&M costs associated with the LNG project which have
Slide 38: Contact Energy
Contact Energy Underlying EBITDA up 16% to $400 million Higher wholesale prices due to lower South Island hydro storage levels offset by 25% reduction in hydro generation Increased thermal generation offset by lower gas and carbon unit costs Competitive focus on retaining and gaining custome
Slide 39: Increased portfolio flexibility delivered strong earnings growth
Increased portfolio flexibility delivered strong earnings growth • Higher wholesale prices in response to below mean hydro storage, offset by 25% reduction in hydro generation replaced by thermal capacity • Improved unit generation cost with lower gas and carbon unit costs • Stable sales volumes wit
Slide 40: Portfolio flexibility will increase in the next two years
Portfolio flexibility will increase in the next two years … Lower average cost of generation and increased portfolio flexibility NZ$m Capital Expenditure - Committed • 166 MW Te Mihi geothermal power 700 station, completion in 2013 600 • Peaking power stations, gas storage, and diverse generation fu
Slide 41: Corporate
Corporate Underlying EBITDA down 19% to ($81) million Commenced geothermal exploration in Chile, and acquired additional concessions Acquired 51%1 interest in hydro development joint venture in Chile Feasibility studies of PNG hydroelectric development have begun ($m) Underlying EBITDA 0 -20
Slide 42: Origin continues to develop large-scale renewable energy opportunities internationally
Origin continues to develop large-scale renewable energy opportunities in international markets that offer high prospectivity and access to growing demand … Chile Chile • 40% interest in Chile’s leading geothermal • Acquired 51%1 interest in one of Chile’s exploration company, Energía Andina S.A lea
Slide 43: 3. Outlook
O origin 3. Outlook
Slide 44: Key focus is delivering the APLNG project on schedule and on budget
A key focus for Origin over the next few years is delivering the APLNG project on schedule and on budget, with funding of the investment managed through … … reducing capital … maximising cash … managing maturities expenditure on other & flow from the & of existing debt projects existing business fac
Slide 45: The outlook for the coming year is more challenging than in prior years
The outlook for the coming year is more challenging than in prior years • Less growth from new capital investments • Regulatory uncertainty particularly related to pricing decisions made by the Queensland Competition Authority for which Origin has initiated a judicial review • More uncertainty in fo
Slide 46: The delivery of the APLNG project in the near term
The delivery of the APLNG project in the near term … • The APLNG project provides access to export markets and stands to deliver significant value to Origin shareholders … combined with a number of established opportunities to capture growth in the medium to longer term … • Origin’s diverse and flex
Slide 47: Thank you
Thank you For more information Lina Melero General Manager, External Affairs Email: [email protected] Office: +61 2 8345 5217 Mobile: + 61 427 017 798 www.originenergy.com.au 47 |
Slide 48: 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 49: 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 50: Non-Financial Terms
Non-Financial Terms Term Meaning The sum of Proved plus Probable Reserves. Probable Reserves are those reserves which analysis of geological and engineering data indicate are less likely to be 2P reserves recovered than Proved Reserves but more certain than Possible Reserves. It is equally likely th