Origin Energy Limited · ASX:ORG
Origin Energy — Macquarie Australia Conference 2015
22 slides from Origin Energy's conference presentation, May 8, 2015
Slide 1: Origin Energy: Delivering on Priorities
ORIGIN ENERGY DELIVERING ON PRIORITIES Grant King, Managing Director Macquarie Australia Conference 6-8 May 2015
Slide 2: Forward looking statements
Forward looking statements This presentation contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events. Such statements are not statements of fact and there can be no certainty of outcome in relation to the matt
Slide 3: Strategy: 3 businesses and 4 priorities
Origin’s strategy of connecting resources to markets is pursued through a clear focus on its 3 businesses and 4 priorities designed to drive continued improvement in Origin’s performance A regionally A growing A regional leader significant position position in in energy markets in natural gas and re
Slide 4: Building customer loyalty and trust to mitigate competitive market
Building customer loyalty and trust is the most powerful mitigant to the impacts of a highly competitive market Digital Transformation Customer Communication 34 point 5% improvement in improvement in Net on time payment Promoter Score for behaviour new connections Origin is now leveraging its invest
Slide 5: New technology improving customer communication and retention
Implementation of new technology has improved communication with customers, allowing greater focus on retention activities through use of internal channels, resulting in improved service to customers and cost to serve benefits Operational Metrics Customer Wins and Retains Sales Channels Jun 13 Mar 1
Slide 6: Retail environment remains challenging with elevated discounting
The retail environment remains challenging with elevated levels of discounting Electricity and Natural Gas Churn Rates Origin’s Average Signed Discount Offers for Electricity and Natural Gas (%) VIC 25% 20% NSW SA 15% 10% QLD Origin Churn Market Churn 5% 0% Jul-13 Jul-14 Aug-13 Sep-13 Nov-13 Dec-13
Slide 7: Competitive cost of gas through diverse, flexible portfolio
Origin has a competitive cost of gas through its diverse and flexible gas portfolio and continues to capture benefits of rising gas prices, near term ramp gas opportunities, increasing sales volumes and market share ... Natural Gas Gross Margin 400 Continued rising domestic gas prices and cost of
Slide 8: Competitive cost of electricity through flexible generation portfolio
Origin has a competitive cost of electricity through its flexible generation portfolio with a short position to the pool Average 6 monthly Queensland Pool Prices Price Volatility and Wind Generation in South Australia 14,000 900 120 800 12,000 Average NEM Pool Price ($/MWh) Average Prices <$300/MWh
Slide 9: Renewables increase will extend supply curve and limit wholesale price rises
Increases in renewables to achieve a 2020 renewable energy target1 will extend the supply curve and limit increases in wholesale prices ... NEM Supply Bidstack - 2015 vs 20202 Impacts of Solar Generation on an High Solar Day Limited increase in net demand of around 8 TWh Marginal price of generation
Slide 10: Trends will hollow out the load duration curve
These trends will “hollow out” the load duration curve, lowering prices for baseload generation and increasing volatility and peak prices Origin’s Generation Flexibility Change in NEM Load Duration Curve Capacity Energy 9,000 40 As more renewables 8,000 35 are installed there is a 7,000 Hedge reduce
Slide 11: Recombined Exploration & Production and LNG businesses along gas value chain
Origin has recombined our Exploration & Production and LNG businesses to integrate all our activities along the gas value chain Beetaloo Basin • Origin’s first shale play APLNG (Downstream) • 2-3 ships for loading per week Browse & Bonaparte Basins • Offshore discoveries • Targeting new resources AP
Slide 12: Reserves almost entirely gas, exposed to export gas prices
Origin’s reserves are almost entirely gas, exposed to export gas prices Origin Reserves Australian domestic gas prices PJe are moving towards export parity 7,000 14.00 6,000 12.00 2014 prices 10.00 unusually low due A$/GJ 5,000 8.00 to ramp gas in QLD 6.00 4,000 4.00 3,000 2.00 - 2,000 2011 2012 201
Slide 13: APLNG upstream and downstream project progress
Sustained production from Train 1 expected in Q2 FY2016 and from Train 2 approximately 6 months later APLNG’s UPSTREAM PROJECT IS 93% COMPLETE APLNG’s DOWNSTREAM PROJECT IS 89% COMPLETE 13
Slide 14: Expected distributable cash flow from APLNG at A$100/bbl oil
At A$100/bbl oil, Origin expects its share of distributable cash flow from APLNG to be around A$900 million per annum on average from FY2017 Brent Forward and Spot Curves (A$/bbl) 140 120 100 Every A$10/bbl movement results in approximately 80 A$200 million change in FID 1 FID 2 expected distributab
Slide 15: Prioritising capital spend on upstream projects with highest returns
Origin is prioritising capital spend on upstream projects with the highest returns and shortest payback periods BASS BASIN OTWAY BASIN PERTH BASIN Sapura 3000 heavy lift vessel with Compressor Ensign 931 rig Module suspended • Senecio-3 exploration well • Successful lift of condensate • Speculant-1
Slide 16: Capital management remains a focus as APLNG nears completion
As the APLNG project progresses to completion, capital management remains a focus ... • Maintaining sufficient funding capacity to meet committed LIQUIDITY capital and funding requirements SERVICEABILITY • Ability to service debt irrespective of oil prices FLEXIBILITY • Ability to take advantage of
Slide 17: Sufficient liquidity to fund remaining APLNG contributions
Origin has more than sufficient liquidity to fund its expected remaining contributions to APLNG with maturities extending beyond FY2018 Origin Debt & Bank Guarantee Maturity Profile as at 31 December 20141 6,000 Loans & Bank Guarantees - Undrawn Loans & Bank Guarantees - Drawn 5,000 Capital Markets
Slide 18: Cash flow sufficient to service interest, capex and dividends
Cash flow from existing businesses has been more than sufficient to service all interest payments, stay-in-business capex and dividends Cash Flow Sources and Uses (ex Growth Capex) Brent Forward and Spot Curves (A$/bbl) 2,500 140 120 2,000 100 1,500 $ million 80 FID 1 FID 2 1,000 60 40 500 20 FY17 S
Slide 19: Less flexibility to improve shareholder returns in low oil price
In a sustained period of low oil price Origin has less flexibility to improve returns to shareholders ... Commitments Loss of Flexibility Actions No equity raising to fund APLNG Ability to increase dividends Reduce capital and above the current dividend operating costs Maintain dividend poli
Slide 20: Strategy: 3 businesses, 4 priorities and 5 measures
Origin’s strategy of connecting resources to markets is pursued through its 3 businesses, 4 priorities and 5 measures that drive continued improvement in Origin’s performance A regionally A growing A regional leader significant position position in in energy markets in natural gas and renewable ener
Slide 21: Thank you
THANK YOU For more information Chau Le Group Manager, Investor Relations Email: [email protected] Office: +61 2 9375 5816 Mobile: + 61 467 799 642 www.originenergy.com.au 21
Slide 22: Important Information
Important Information A reference to Contact Energy is a reference to Origin’s controlled entity (53.1% ownership) Contact Energy Limited in New Zealand. In accordance with Australian Accounting Standards, Origin consolidates Contact Energy within its result. A reference to Australia Pacific LNG or