Slide 1: Presentation to Analysts and Financial Markets
To Company Announcements Office Facsimile 1300 135 638 For personal use only Company ASX Limited Date 16 August 2018 From Helen Hardy Pages 49 Subject Presentation to Analysts and Financial Markets Please find attached a release on the above subject. Regards Helen Hardy Company Secretary 02 8345 500
Slide 2: 2018 Full Year Results
For personal use only Origin Energy 2018 Full Year Results Full year ended 30 June 2018 Frank Calabria, CEO and Lawrie Tremaine, CFO 16 August 2018
Slide 3: Important Notice
Important Notice Forward looking statements For personal use only 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 certa
Slide 4: Outline
Outline For personal use only 1. Performance Highlights ‐ Frank Calabria 2. Financial Review ‐ Lawrie Tremaine 3. Operational Review ‐ Frank Calabria 4. Outlook ‐ Frank Calabria 3 16 August 2018 2018 Full Year Results Announcement
Slide 5: Performance Highlights
For personal use only Performance Highlights Frank Calabria, CEO 4 16 August 2018 2018 Full Year Results Announcement
Slide 6: Financial highlights
Financial highlights For personal use only Statutory Profit Underlying Profit Underlying EBITDA (continuing operations) (continuing operations) $218 million $838 million $2,947 million 12.4 cps 47.7 cps Including H1 FY2018 impairments of Up $438 million or 110% on FY2017 Up $774 million or 36% on FY
Slide 7: Sustainability highlights
Sustainability highlights For personal use only People Customer Total Recordable Incident Frequency Rate (TRIFR) Addressing affordability and transparency down from 3.2 to 2.2 Improved Net Promoter Scores, #1 Tier 1 retailer Refreshed purpose and values for Strategic NPS Employee engagemen
Slide 8: First full year of production at APLNG
First full year of production at APLNG For personal use only Commodity prices LNG cargoes delivered Sales revenue (APLNG 100%) 80 13 140 6 70 11 120 5 100 60 9 US$/mmbtu 4 US$/bbl 80 A$bn 50 7 3 60 40 5 2 40 30 3 1 20 Jul‐16 Oct‐16 Jan‐17 Apr‐17 Jul‐17 Oct‐17 Jan‐18 Apr‐18 0 0 JCC (LHS) FY17 FY18 AP
Slide 9: APLNG unit cost reductions on-track
APLNG unit cost reductions on‐track For personal use only Key Outcomes Initial Targets Metric FY2018 FY2018 June 2019 Guidance Actual target run rate Cost reduction and Well cost1 A$m/well 2.4 1.9 1.2 productivity improvement Operating cost2 A$/GJ 1.3 1.3 1.0 • Flatter, smaller, asset‐led structure
Slide 10: Supply response in wholesale markets
Supply response in wholesale markets For personal use only Electricity Natural Gas Actual Forward price 250 16 14 200 12 150 10 A$/MWh A$/GJ 8 100 6 4 50 2 0 0 Sep‐16 Mar‐17 May‐17 Sep‐17 Mar‐18 May‐18 Jul‐16 Nov‐16 Jan‐17 Jul‐17 Nov‐17 Jan‐18 Jul‐18 Apr‐17 Apr‐18 Apr‐19 Apr‐20 Jul‐16 Oct‐16 Jan‐17
Slide 11: Increased competition in retail markets
Increased competition in retail markets For personal use only Customer movement Customer activity Market churn (‘000 customers) (‘000 customers) Rolling 12 month average FY18 25% 40 3,000 30 23% 20 2,500 10 21% 2,000 0 19% (10) 1,500 (20) 17% (30) 1,000 (40) 15% 500 (50) 13% (60) 0 Dec‐16 Jun‐17 Dec
Slide 12: Transforming customer experience
Transforming customer experience For personal use only • Increasing supply – Eraring, Pelican Point and renewables More • Flat/falling tariffs in FY2019 – Absorbed 3% electricity price increase in NSW affordable • No increases for hardship customers since 2016 • Low rate concession products in SA, V
Slide 13: Active role in policy development
Active role in policy development Support NEG • Investment signal in low emissions and reliable generation For personal use only objectives • Support more ambitious targets for the electricity sector over time • We support sensible reform provided no unintended consequences − Conditional discounts t
Slide 14: Making progress on key commitments
Making progress on key commitments For personal use only Balance sheet repair – approaching target capital structure Disciplined capital management initiatives implemented Improving returns Becoming a low cost operator − Step change reduction in costs at APLNG on track − Cost to serve reduct
Slide 15: Positioned for the future
Positioned for the future Today’s portfolio Growth opportunities For personal use only APLNG strong foundations Integrated Gas • On track to international competitiveness • Entering stage 2 in the Beetaloo • Delivering into strong Asian demand − Targeting liquids rich plays • Significant cash genera
Slide 16: Priorities and opportunities are aligned to our strategy
Priorities and opportunities are aligned to our strategy Connecting customers to the energy and technologies of the future For personal use only Leading customer experience • Making energy more affordable, smarter, easier and more sustainable and solutions Accelerating towards clean • Targeting rene
Slide 17: Financial Review
For personal use only Financial Review Lawrie Tremaine, CFO 16 16 August 2018 2018 Full Year Results Announcement
Slide 18: Strong underlying financial performance
Strong underlying financial performance For personal use only Statutory Profit/(Loss) Underlying Profit 300 218 (Continuing operations) 1,000 (200) 838 (700) A$m A$m (1,200) 500 (1,700) (2,200) 0 FY16 FY17 FY18 FY16 FY17 FY18 Operating Cash Flow Underlying ROCE (Continuing operations) (Continuing op
Slide 19: Underlying profit from continuing operations more than doubled to $838 million
Underlying profit from continuing operations more than doubled to $838 million For personal use only Movements in Underlying Profit $235 million (269) 504 1,022 (116) 184 $ million 838 319 400 FY17 ‐ Continuing EM EBITDA IG EBITDA Share of APLNG Tax/Other 1FY18 ‐ Continuing Discontinued FY18 ‐ Total
Slide 20: Energy Markets Underlying EBITDA increased by 21%
Energy Markets Underlying EBITDA increased by 21% Movements in Energy Markets Underlying EBITDA For personal use only 60 (35) (48) 61 2 (68) 1,811 478 (131) 1,492 Electricity Gas +$279 million +$121 million FY17 Electricity Volume Competition / Electricity Wholesale Natural Gas Volume Natural Gas Co
Slide 21: Integrated Gas Underlying EBITDA increased by 67%
Integrated Gas Underlying EBITDA increased by 67% Movements in Integrated Gas Underlying EBITDA For personal use only 106 (63) (13) (29) 214 289 Share of APLNG Origin only costs 1,251 +$546 million ‐$42 million 747 FY17 LNG Volume LNG Price Domestic Revenue APLNG opex/ Commodity hedging Other FY18 o
Slide 22: $2.6 billion free cash flow at APLNG
$2.6 billion free cash flow at APLNG For personal use only APLNG uses of cash $1.3 billion 6,000 distributable cashflow • Effective oil price of US$56/bbl 5,000 • Project finance debt $2.6 billion free – Principal repaid $0.9 billion 4,000 cashflow – Interest paid $0.4 billion • $1.3 billion distrib
Slide 23: Cash flow improvement
Cash flow improvement For personal use only FY2018 FY2017 Change • Working capital increases impacting cash conversion Underlying EBITDA 2,947 2,173 774 – FY2018 driven by coal and LREC Non‐cash items (primarily share of APLNG) (1,269) (743) (526) inventory and timing of APLNG cost Change in working
Slide 24: Delivering on balance sheet commitments
Delivering on balance sheet commitments Adjusted net debt (A$bn) Capital structure For personal use only 6x 10 8 5x 6 6.5 4x 4 Interim Target (3.0 ‐ 3.5x) 3x 2 Target (2.5 – 3.0x) 0 2x FY16 FY17 FY18 FY16 FY17 1 FY18 Debt/EBITDA • $1.5 billion cash from operating activities and APLNG • $1.5 billion
Slide 25: Oil price risk management
Oil price risk management For personal use only FY2019 oil hedging payoff FY2020 oil hedging payoff 90 90 FY19 effective price FY20 effective price 85 FY19 effective price after hedging 85 FY20 effective price after hedging 80 80 Effective oil price (US$/bbl)11 1 Effective oil price (US$/bbl) 75 75
Slide 26: Operational Review
For personal use only Operational Review Frank Calabria, CEO 25 16 August 2018 2018 Full Year Results Announcement
Slide 27: Energy Markets
For personal use only Energy Markets 26 16 August 2018 2018 Full Year Results Announcement
Slide 28: Improved returns from generation portfolio
Improved returns from generation portfolio Electricity sources and uses For personal use only 45 40 • Increased generation more than covered retail sales and reduced market price exposure 35 − 14% increase at Eraring to 15.9TWh (NSW) 30 − 1.5TWh new supply from Pelican Point (SA) 25 • Eraring averag
Slide 29: Continuing to grow gas sales volumes
Continuing to grow gas sales volumes For personal use only Energy Markets Domestic Gas sales (PJ) 300 250 • Secured additional 69 PJ for the east coast domestic markets • Record gas sales volume 200 − Business customer sales up 26.5 PJ − Gas directed to generation up 5.2 PJ 150 • Flexibility to dire
Slide 30: Competing in market and improving customer experience
Competing in market and improving customer experience For personal use only Net customer movement Origin Interaction NPS Strategic NPS1 FY17 FY18 40 21.7 20 30 ('000s) 16.1 ‐ (13) (20) (47) (16) (40) FY17 FY18 #1 of Tier 1 retailers (60) H1 FY18 H2 FY18 • Responded to competitive activity and grew c
Slide 31: Increased activity driving higher retail costs
Increased activity driving higher retail costs For personal use only Customer activity Electricity and Natural Gas Cost to Serve (A$m) (‘000 customers) 17 11 3,000 42 13 23% increase in 624 customer activity 541 2,500 2,000 15% increase in cost to serve 1,500 1,000 FY17 Competitive Bad debts Digital
Slide 32: Digitising interactions, products and services
Digitising interactions, products and services For personal use only Increasing digital interactions New products and services Technology pipeline Online sales up 28% MyAccount & Mobile App (wins & retains) unique visits up 54% Visibility and control Reducing energy cost 1,822k 345k Usage Buster Hom
Slide 33: Integrated Gas
For personal use only Integrated Gas 32 16 August 2018 2018 Full Year Results Announcement
Slide 34: Increased production and realised prices
For personal use only Increased production and realised prices APLNG production APLNG domestic price APLNG LNG price (ORG share) 7.90 6.48 US$/mmbtu A$/GJ PJ 4.50 254 229 3.04 FY17 FY18 FY17 FY18 FY17 FY18 33 16 August 2018 2018 Full Year Results Announcement
Slide 35: FY2018 breakeven improvement
FY2018 breakeven improvement For personal use only US$45/boe US$39/boe 18 2 18 2 2 27 Operating breakeven 21 down US$6/boe FY18 guidance Operated well cost Non‐operated LNG spot & domestic FY18 actual savings Capex revenue/other Operating Breakeven Project Finance • FY2018 breakeven benefited from:
Slide 36: FY2019 breakeven guidance
FY2019 breakeven guidance For personal use only 100% APLNG (US$/boe)1 • Continued capex and opex savings offset by additional scope in FY2019 FY2018 Distribution breakeven 39 – Non‐operated capex from FY2018 Continued reduction in well costs (1) (US$2/boe) Opex savings and lower purchases (2) – Incr
Slide 37: 2P reserves up 5% before production
2P reserves up 5% before production For personal use only Revisions/ APLNG 100% Reserves / Resources1 FY2017 Production FY2018 extensions 1P (proven) 7,518 837 (676) 7,679 2P (proven plus probable) 12,545 584 (676) 12,453 3P (proven plus probable plus possible) 13,382 603 (676) 13,310 2C (best estim
Slide 38: Next phase at Beetaloo
Next phase at Beetaloo • NT moratorium lifted in April 2018 For personal use only • 70% interest in 18,500km2 permit • Four, stacked, unconventional hydrocarbons plays identified • Booked 6.6 TCF contingent resource (4.6 TCF Origin share) in February 2017 relating to Velkerri B shale dry gas play •
Slide 39: Outlook
For personal use only Outlook Frank Calabria, CEO 38 16 August 2018 2018 Full Year Results Announcement
Slide 40: FY2019 guidance
FY2019 guidance Provided that market conditions and regulatory environment do not materially change For personal use only Overall, Origin expects Underlying Profit to be higher and further debt reduction in FY2019 Energy Markets APLNG (100%) • Underlying EBITDA of $1,500‐1,600 million • Production r
Slide 41: Dividend
Dividend For personal use only • The Board has determined not to pay a dividend in respect of earnings for the second half of FY2018 • Subject to Board approval and no material adverse change in business conditions, our medium term outlook supports recommencement of dividends in FY2019 40 16 August
Slide 42: Appendix
For personal use only Appendix 41 16 August 2018 2018 Full Year Results Announcement
Slide 43: FY2019 breakeven guidance
FY2019 breakeven guidance For personal use only 100% APLNG (A$m) FY2018 FY2019 guidance1 Capital expenditure – Sustain 1,105 1,450 Capital expenditure – E&A 65 200 Operating expenses – pre capitalisation 1,673 1,5703 Less: Spot LNG & domestic revenue (1,345) (1,350) Operating breakeven 1,498 1,870 O
Slide 44: Statutory to underlying earnings
Statutory to underlying earnings For personal use only Reconciliation from statutory to underlying profit $m FY2018 FY2017 Change Statutory Profit / (Loss) 218 (2,226) 2,444 Items Excluded from Underlying (post‐tax) ‐ Fair value and FX movements (410) 96 (506) ‐ LNG items pre‐revenue recognition ‐ (
Slide 45: Accounting for APLNG
Accounting for APLNG For personal use only Origin Origin Share of APLNG ($m) Revenue ($m) 14,604 Cost of Sales Revenue 2,073 (11,785) Contribution Operating costs (668) 2,819 Other Income 29 Underlying EBITDA 1,405 Operating costs (1,306) Depreciation and Amortisation (695) Share of APLNG EBITDA Int
Slide 46: Important Notices
Important Notices All figures in this presentation relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its For personal use only controlled entities, for the financial year ended 30 June 2018 (the period) compared with the financial year ended 30
Slide 47: Important Notices (cont)
Important Notices (cont) For personal use only Reserves Disclosures of Origin and APLNG’s reserves and resources are as at 30 June 2018. These reserves and resources were announced on the same date as the release of this presentation in Origin’s Annual Reserves Report for the year ended 30 June 2018
Slide 48: For more information
For more information For personal use only Peter Rice General Manager, Capital Markets Email: peter.rice@originenergy.com.au Office: +61 2 8345 5308 Mobile: + 61 417 230 306 Liam Barry Senior Manager, Investor Relations Email: liam.barry@originenergy.com.au Office: +61 2 9375 5991 Mobile: + 61 401 7
Slide 49: Thank You
For personal use only Thank You