Origin Energy Limited · ASX:ORG
Origin Energy — FY2009 Earnings Presentation
47 slides from Origin Energy's earnings presentation, Aug 19, 2009
Slide 1: 2009 Full Year Results Announcement
Financial Year Ending 30 June 2009 19 August 2009 2009 Full Year Results Announcement Media
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: Outline
Outline 1. Performance Highlights 2. Financial Review 3. Operational Review 4. Outlook 3
Slide 4: 1. Performance Highlights
1. Performance Highlights Grant King, Managing Director 4
Slide 5: Statutory Profit of $6.9 billion driven by ConocoPhillips' investment in CSG assets
Origin’s Statutory Profit for the full year of $6.9 billion was driven by ConocoPhillips’ investment for a 50% interest in Origin’s CSG assets… Statutory Profit $6,941 million up 1243% Statutory Earnings per Share 791 cps up 1241% Underlying Profit $530 million up 20% Underlying Earnings per Share 6
Slide 6: Strong position with $5.3 billion cash and undrawn facilities
Origin is now in a strong position to continue to grow and develop its business with access to cash and undrawn committed debt facilities of $5.3 billion and substantial additional balance sheet capacity As at 30 June 2009 Undrawn Available Adjusted Adjusted Committed Cash Funding Net Cash(1) Gross
Slide 7: EBITDAF declined 8% to $1,219 million
Origin’s EBITDAF declined 8% to $1,219 million, primarily due to reduced contribution from Contact, down $125 million on the prior year • Safety performance deteriorated as the Total Reportable Incident Frequency Rate increased by 7% to 9.1 In the balance of Origin’s business EBITDAF increased with
Slide 8: Consistent track record of earnings growth
Origin’s ongoing target has been average underlying earnings growth of 10% to 15% • Compound annual growth rates to date of: – EBITDAF: 19% – Underlying Profit: 23% – Underlying Earnings Per Share: 17% Source: Origin 8 This result continues Origin’s consistent track record of growth
Slide 9: Capital expenditure up 39% to $2.3 billion
With total capital expenditure up 39% to $2.3 billion(1) for the year… • $1,207 million in generation including Darling Downs, Mortlake and Uranquinty Power Stations and Cullerin Range Wind Farm • $597 million in Exploration and Production assets including CSG, Kupe and Darling Downs Pipeline • $415
Slide 10: 2. Financial Review
2. Financial Review Karen Moses, Executive Director Finance & Strategy 10
Slide 11: Financial Highlights
Financial Highlights Revenue $8,042 million down 3% EBITDAF $1,219 million down 8% Statutory Profit $6,941 million up 1243% Underlying Profit $530 million up 20% EPS – Statutory 791 cps up 1241% EPS – Underlying 60 cps up 19% Group OCAT $797 million down 9% Free cash flow per share 76 cps up 7% Capi
Slide 12: Profit & Loss – Reconciliation of Statutory and Underlying
Profit & Loss – Reconciliation of Statutory and Underlying ($ million) Jun 09 Jun 08 Change Statutory NPAT 6,941 517 1243% Significant items after tax Net Impact of APLNG Transaction 6,724 - Impairment of assets (218) - Changes in fair value of financial instruments (114) (63) Asset sales - 154 Othe
Slide 13: EBITDAF by segment
Origin’s EBITDAF declined 8% to $1,219 million, primarily due to reduced contribution from Contact, down $125 million on the prior year Segments ($ million) Jun 09 Jun 08 Change Exploration & Production 264 266 (2) Generation 107 65 42 Retail 479 499 (20) Contact Energy 369 494 (125) Total 1,219 1,3
Slide 14: Underlying Financing Costs reduced by $188 million
Underlying Financing Costs for the year reduced by $188 million to $32 million as a result of the reduction in debt and significant cash balance following the APLNG transaction ($ million) Jun 09 Jun 08 Interest Revenue 137 9 Interest Expense (169) (229) Underlying Financing Costs (32) (220) Unwindi
Slide 15: Capital Expenditure
Capital Expenditure ($ million) Jun 09 Jun 08 Stay-in-business 209 178 Growth Exploration & Production 541 714 Generation 1,029 484 Retail 84 72 Contact Energy 318 128 Total capital expenditure 2,181 1,576 Acquisitions (net of cash) 165 109 Capex including acquisitions 2,345 1,685 • Growth capex has
Slide 16: Operating Cash Flow
Operating Cash Flow ($ million) Jun 09 Jun 08 EBITDAF 1,219 1,324 Change in working capital (103) (176) Stay-in-business capex (209) (178) Book value of assets sold - 26 Other 10 22 Tax paid (120) (143) Group OCAT 797 875 Net interest paid (136) (253) Free cash flow 661 622 Productive Capital(1) 7,2
Slide 17: Net cash movement and funding capacity
Origin is now in a strong position to continue to grow and develop its business with access to cash and undrawn committed debt facilities of $5.3 billion and substantial additional balance sheet capacity As at 30 June 2009 Issue/Buyback Adjusted Adjusted Acquisition(2) Interest Paid Non-Cash FX Acqu
Slide 18: Debt Maturity Profile
Debt Maturity Profile • Origin’s gross cash position is $3.7 billion • Future capital expenditure commitments, including APLNG and maturing debt obligations, are covered for the next 3 years by future cash flow and the current cash position • Beyond the next 3 years, APLNG capital expenditure can be
Slide 19: Fully franked final dividend up 92%
A fully franked final dividend of 25 cps, up 92% on the prior year, has been declared taking the full year dividend to 50 cps… Origin Dividends History • Ex-dividend date 25 August 2009 50 • Date of record 31 August 2009 • Payable 23 September 2009 • Dividend payout ratio of 83% of 40 25 25 Underlyi
Slide 20: 3. Operational Review
3. Operational Review Grant King, Managing Director 20
Slide 21: Exploration & Production
Exploration & Production origin
Slide 22: Exploration & Production: Record production and increased CSG reserves
Exploration & Production: Record production with a substantial increase in APLNG’s CSG reserves… 700 770 • EBITDAF of $264m was similar to the prior year with Jun-09 full year contribution from production assets in the Jun-08 Otway and Taranaki Basins offsetting the dilution of 600 660 Total Revenue
Slide 23: APLNG continues to grow its CSG reserves
APLNG continues to grow its CSG reserves with significant reserves increases that demonstrate the size and quality of APLNG’s CSG resource… 3C 2C 3P 2P APLNG’s Reserves (PJ) 30 Jun 2008 30 Jun 2009(1) Change Increase 2P Reserves 4,793 7,265 + 2,472 + 52% 3P Reserves 10,222 12,627 + 2,405 + 24% Conti
Slide 24: APLNG is Australia's largest producer of CSG
APLNG is Australia’s largest producer of CSG, representing around one third of total CSG production… • Production is 35% higher than last year at almost 60 PJ as new CSG production facilities are brought on line • Production expected to exceed 100 PJ per annum by 2011 to meet domestic contract requi
Slide 25: APLNG CSG to LNG project site at Gladstone
APLNG is progressing well with the development of its CSG to LNG project and has now selected a site at Gladstone for its downstream operations • APLNG has secured the Laird Point site on Curtis Island in the Port of Gladstone for its proposed CSG to LNG plant • 230 hectare site that is well positio
Slide 26: Otway Gas Project and BassGas
Otway Gas Project provided its first full year contribution… Otway Gas Project • 30.75% equity interest • Operating reliably at or around peak capacity during high demand periods • Annual production(1) of 18 PJ of gas and 190,000 barrels of liquids • Origin’s integrated business purchases around 48%
Slide 27: Kupe Gas Project nearing completion
In New Zealand, the Kupe Gas Project is nearing completion… Kupe Gas Project • Construction of the offshore facilities, wells and associated infrastructure is complete • Onshore production station near Hawera is nearing completion • Expecting to open the wells and bring raw gas ashore in the Decembe
Slide 28: Significant offshore exploration programme committed
In the coming year Origin has committed to a significant offshore exploration programme targeting substantial reserves increases near domestic markets in Australia and New Zealand Northland Basin Origin, as Operator of permit PEP 38619, has secured the semi submersible rig “Kan Tan IV” to drill the
Slide 29: Acquisition of CSG exploration permit ATP 788P
Origin has acquired ATP 788P, a highly prospective CSG exploration permit on the southerly extension of the Undulla Nose… PJ Gas Available for Domestic Energy Portfolio 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Origin Equity Contracted Contracted ATP 788P 3P APLNG Gas (1) From APLNG (2) From T
Slide 30: South West Queensland Pipeline expansion
The expansion of the South West Queensland Pipeline will provide Origin with long term gas pipeline capacity to link its Eastern Australian portfolio… • In June 2009 Origin entered into a conditional agreement with Epic Energy to underpin construction of new capacity on the South West Queensland Pip
Slide 31: Generation
Generation origin
Slide 32: Generation: Peaking capacity more than doubled
Generation: Peaking power station capacity has more than doubled in 2009… 210 1050 • EBITDAF was $107 million, up 65% on last year, primarily Jun-09 due to the initial contribution of Uranquinty Power Jun-08 Station and expansion of the Quarantine Power Station 180 900 • Operating capacity more than
Slide 33: Growing the Generation portfolio to meet Retail requirements
Origin continues to grow its Generation portfolio to meet its Retail requirements 33
Slide 34: RET driving investment in renewable generation
With the RET forecast to drive investment in intermittent renewable generation, additional competitively priced generation is needed to meet the balance of the market’s requirements… Forecast Additional NEM Generation by • Significant new wind capacity expected to Fuel Type to Meet Demand Growth be
Slide 35: Retail
Retail origin
Slide 36: Retail: challenging operating conditions
Retail: In a year of challenging operating conditions, higher revenues and increased gas margins have been offset by higher electricity costs not fully reflected in tariff increases 7000 560 Jun-09 • Revenue was up 7% due to tariff increases in all Jun-08 markets but margin was down due to increased
Slide 37: Margin forgone from QCA's initial tariff determination
It had been expected that margin forgone as a result of the QCA’s initial tariff determination would be recovered through other initiatives… Gas & Electricity Customers Jun 09 Jun 08 Change Customer numbers (’000) 2,610 2,609 +1 EBITDAF / Sales 8.8% 9.9% -1.1% Underlying EBIT / Sales 8.1% 9.2% -1.1%
Slide 38: Churn increased and new accounts acquired
Churn increased in Origin’s principal markets and 454,000 new gas and electricity accounts were acquired to maintain customer numbers % Churn: 12 Month Rolling Average Year End Customer Numbers State Fuel June 08 Change June 09 (000’s) Natural Gas Electricity Total Vic Electricity 23% + 4% 27% June
Slide 39: Clear leader in green energy sales
Origin is the clear leader in green energy sales… Market Share of GreenPower® Customers(1) • Accredited green power customer base grew by 21% to 514,000 customers(2) (up from 423,000 at 30 June 2008) • Origin’s residential products ranked 1, 2 and 3 by Total Environment Centre Green Energy Watch Rev
Slide 40: Contact Energy
Contact Energy origin
Slide 41: Contact Energy: earnings reduced by weather and transmission constraints
Contact Energy: While earnings were significantly reduced due to a combination of extreme weather events and transmission constraints… 2800 630 • EBITDAF was $369 million, down 25% on last year, Jun-09 primarily due to extreme hydro events in Jun-08 conjunction with transmission constraints between
Slide 42: 4. Outlook
4. Outlook origin
Slide 43: Projects expected to increase contributions in coming year
A number of projects Origin has been developing are expected to make initial or significantly increased contributions to financial performance in the coming financial year • Full year contribution from the Uranquinty and expanded Quarantine Power Stations • Full year contribution from the recently c
Slide 44: Major projects to contribute in years ahead
Origin will continue to progress the development of several major projects in its existing business which are expected to make contributions in the years ahead • Development of the 550 MW Mortlake Power Station which is due for completion in late 2010 • Continued development of domestic CSG producti
Slide 45: $5.3 billion funding to grow the business
The past year has been challenging for financial markets and many companies have been severely constrained in accessing capital to fund their businesses… As at 30 June 2009 Undrawn Available Adjusted Adjusted Committed Cash Funding Net Cash(1) Gross Debt Debt Capacity Facilities Source: Origin (1) N
Slide 46: 2009 Full Year Results Announcement
Financial Year Ending 30 June 2009 19 August 2009 2009 Full Year Results Announcement
Slide 47: Further Information
Further Information Media Lina Melero General Manager, Corporate Communication Email: [email protected] Office: +61 2 8345 5217 Mobile: + 61 4 27 017 798 Website www.originenergy.com.au 47