Origin Energy Limited · ASX:ORG
Origin Energy — Investor Presentation (June 2006)
115 slides from Origin Energy's investor presentation, Jun 7, 2006
Slide 1: ASX announcement cover note: presentations to institutional investors
Origin energy To Company Announcements Office Facsimite 1300 300 021 Company Australian Stock Exchange Limited Date 7 June 2006 From Bill Hundy Pages 115 Subject PRESENTATIONS Attached for your information are presentations to be made by senior management of Origin Energy to a briefing of institutio
Slide 2: Australian Operations - the value of integration
Australian Operations - the value of integration per scan ~~ Karen Moses Chief Operating a. Austratia June 2006
Slide 3: Disclaimer
Disclaimer Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect and these statements speak only as of the date of this presentation. This presentation should not be relied upon as a recommendation to buy or sel
Slide 4: The competitive advantages of Origin's Australian Operations
The competitive advantages of Origin’s Australian Operations were identified and strategies adopted to enhance them weenes Ce ee ee ee ee ee »Gas focussed I ! .Market driven - first mover advantage I | .Local geoscience/operational expertise I a es *Scale” 1 .Dual fuel capability | -Supply, risk man
Slide 5: Overview of Australian Operations
Overview of Australian Operations Exploration & Production + Over 1900 PJe reserves Market-focussed portfolio «Cooper Basin «Otway Basin «Bass Basin «Coal seam gas Origin Energy owns, develops and procures energy and related products and services to provide customers with better Retail choices to me
Slide 6: The Australian Operations group is focussed on core operational capabilities
The Australian Operations group is focussed on core operational capabilities ... (census ge devas gn Creag etvoden B95 z 3 g & $ cBREERBEREE - Retail sales provide revenue certainty - Assets provide cost certainty .. and best opportunities to manage risk and to «capture and increase value across the
Slide 7: Australian Operations is structured with clear accountabilities
Australian Operations is structured with clear accountabilitie and defined linkages ni bur LPG (supply, shipping, distribution and sales) Oil & Gas Production Corporate & Business Customers Asset Energy Risk Management Management : (OEAM) Services Generation Sales and Operations | Marketing Buy it T
Slide 8: Outline
Outline ¢ Oil & Gas Production ¢ Generation Operations ¢ Retail Mass Market ¢« Asset Management e Risk Management Page 7
Slide 9: Oil & Gas Production
Oil & Gas Production ai nil en Spring Gully Lang Lang Origin Page &
Slide 10: Origin has a diverse portfolio and operates more onshore gas plants
Origin has a diverse portfolio and operates more onshore gas plants in Australia than any other player Perth Basin Otway/Bass Basins Page 9
Slide 11: Mix of mature assets and development projects fuelling growth
Origin has a mix of mature assets and development projects fuelling growth Cooper Maturity > Big, liquids rich Exploration: Australia (Aragorn) Offshore gas NZ Halladale & ~ os Black he BassGas NY ackwatch? Kupe Kenya 7 ao a Thylacine/ India Vic Storage’ Watloons.> Surat, Denison Peat Beharra Spring
Slide 12: Production from the Cooper Basin has dominated sales
Production from the Cooper Basin has dominated sales and WA oil has enhanced short term earnings... Area/Basin Region 2005 2004 Cooper SA / Qld C49 42.6 Denison Qld 6.7 7.6 Surat Qld 6.6 5.2 Coal Seam Gas Qld 9.8 9.3 Katnook/Ladbroke Grove SA / Vic 6.4 6.0 Perth Basin gas WA 2.3 2.2 Perth Basin oil
Slide 13: Reserves are well placed to access the market
Reserves are well placed to access the market Sales gas & ethane LPG Condensate Crude oil Total PJ Kt Kbbt Kbbl PJe 2P at 30 June 2004 1,972 1,610 21,586 8,876 2,220 Additions and revisions 80 116 (723) 120 83 Production (66) (59) (597) (2,004) (83) 2P at 30 June 2005 1,986 1,667 20,266 6,992 2,220
Slide 14: Explorers have overwhelmingly found gas
While the initial focus of petroleum exploration in Australia has been on finding oil, explorers have overwhelmingly found gas...... 240,000 180,000 120,000 Petajoules equivalent (PJE) 60,000 Estimated recoverable hydrocarbon resources discovered to 1 January 2003* 40,000 fi Condensate & LPG @ Natur
Slide 15: Supply / demand analysis for eastern Australia
Origin’s supply / demand analysis for eastern Australia in 2001 showed large uncontracted demand creating perceived shortfall in local supply....... Eastern Australian gas demand Origin Energy estimates 2001 Eastern Australian gas demand Origin Energy estimates 2005 [=a] Uncontracted | ME Total Cont
Slide 16: Upstream industry committed over $3 billion to new developments
An increase in gas focused exploration and development has seen the upstream industry commit over $3 billion to new developments... t Patricia/Baleen (producing) - Bream gas-cap development (producing) Minerva (producing) Casino (proposed) CSG fields in the north Bowen, central Bowen and Sydney Basi
Slide 17: Strategy of looking for gas where it is easy to market
Origin’s strategy of looking for gas where it is easy to market, rather than easy to find, has resulted in significant growth in reserves and new contracts ... Origin Energy Origin Energy Proved and Probable (2P) Reserves Exploration and Production Gas Contracts (by buyer) 2500 4200 i 2P reserves Ei
Slide 18: Investment in Coal Seam Gas adds to near term growth
investment in Coal Seam Gas adds to near term growth.... + Initial CSG contracts underpinned by conventional resources and contracts « Spring Gully Development is underpinned by gas sale to AGL Legend as vNemetermae [ + Knowledge of market and portfolio of reserves and contracts led to gas being del
Slide 19: Spring Gully CSG development continues to outperform
The Spring Gully CSG development continues to outperform expectations, with further expansion now approved...... « Spring Gully production is now in excess of 35 TJ/d, with higher gas rates and lower water rates than expected Approval of Stage 3 & 4 will take production potential to over 85 TJ/d (eq
Slide 20: Privatisation in Victoria opened the market
Privatisation in Victoria opened the market to bring forward new opportunities..... = Potential Power e Station Sth West Pipetine GassGas” | Pipetine ¢ Origin’s retail and contract position in Victoria allowed BassGas and Thylacine/ Geographe to proceed ahead of other projects « SEAGas pipeline prov
Slide 21: BassGas project approaching completion
Development of the BassGas project is approaching completion with gas now flowing into the market... BassGas Project (42.5%) « Commissioning and defect rectification work nearing completion. « Raw gas was re-introduced into the offshore facilities in tate April « Gas introduced into the onshore plan
Slide 22: Portfolio flexibility allows investment at the right time
... Using the flexibility of this portfolio allows investment opportunities to be captured at the right time Page 2¢ Ownership of rights to 2P gas reserves addressing eastern Australian gs markets 25% 20% + 5% 4 @ Contracted from Others El Contracted from OE Upstream ------------------------- MUncon
Slide 23: Electricity Generation
Electricity Generation Page 22 Quarantine power station Origin.
Slide 24: Generation assets developed opportunistically
Generation Assets have been developed opportunistically to capture supply constraint benefits or supported by third party contracts Conventional natural gas. Coat seam gas LPG seaboard terminal Peaking power plant Cogeneration piant Page 23
Slide 25: Generation plants externally or internally contracted
Generation plants are either externally or internally contracted, focussing Generation group on plant availability and operational integrity Major Origin | Origin | Capacity | Type | Operation | Availability | Contracting Power Int. % MW Se s Party Plants : S Worsley 50 120 Cogen | Base Th Western :
Slide 26: NEM supply/demand tightness expected
In the absence of new build over the next 5-10 years the NEM will move in to a period of supply/demand tightness not seen since the 1970s NEM Supply and Derrand « Major coal fired capacity investments during the 70s and 80s took the NEM reserve margin to 40-50% « Continued incremental investment to
Slide 27: Forward curve for electricity is rising
The forward curve for electricity is rising but does not yet signal that new generation capacity is required Victorian spot market and contract market electricity prices ECAP FPC as at sas : L. 7-771 30/06/05 $20 +: : | ___- ICAP FPC as $18 4. -| se2aiesio6,| --—- $045 Aug 05 foes 8 B55 $8338 8 & >
Slide 28: Integrated players will drive next round of generation investment
Origin believes it is most likely that integrated players will drive the next round of investment in generation......... 5 Victorian monthly average pool prices and retail tariffs 15 Internalising risk reduction provides potential value capture for integrated players Retailer risk - squeezed margins
Slide 29: 5000+ MW of new capacity announced 2005-10
The requirement for new generation has been recognised by the market with announcements of 5000 + MW of capacity to be built in the period 2005->10 ... generation projects under construction or in advanced planning stages Capacity (MW) 2,506 Projects under construction are shown in solid colour 2,00
Slide 30: Ladbroke Grove Generation demonstrates how integration works
Ladbroke Grove Generation is a good demonstration of how integration works oe Ladbroke Grove Page 29 « Ladbroke Grove gas resource unsuited to retail sales « Generation allows gas to be monetised » Low cash cost of total investment allows plant to operate baseload « Retail electricity sales provides
Slide 31: Competitive electricity supply via medium term wholesale contracts
Origin has a competitive electricity supply - primarily medium term wholesale contracts ws °o Energy Demand N ot he oS Peak Demand 45 4 40 4 Annuat Demand and Generation dispatched (Twh) 4,000 3,000 + 2,000 + 1,000 Origin Generation Origin Retail Load Peak Demand and Installed Capacity (MW) « Owned
Slide 32: Uncoordinated carbon based regimes across the industry
A large number of ‘uncoordinated’ carbon based regimes currently exist across the industry with no single nor long term regime clear at this time ... REC national scheme in place until 2021 GPR national scheme NGAC NSW scheme with extension announced from 2012 to 2020 GEC Qld scheme in place until 2
Slide 33: Importance of valuing carbon
Importance of valuing carbon « Market should bring forward least cost investment in new capacity « Least cost needs to be assessed in light of potential constraint on emissions of greenhouse gases « A modest cost of carbon can make gas-fired more competitive than coal for base-load « Investors in ex
Slide 34: Retail - Mass Market
Retail Mass Market Page 33
Slide 35: Scale economies and dual fuel drove first round of consolidation
Post privatisation, scale economies and dual fuel drove the first round of consolidation Eastern Australia Market share of customers: 2004 Eastern Australia Market share of customers: 1998 Origin Origin Energy Energy 4% 16% | Origin Energy Private Companies | NSW Government a Qid Government a Vic Go
Slide 36: Retail position concentrated in South East Australia
Origin’s retail position is concentrated in South East Australia 6 months July to December 2005 Product information and % Natural Gas Electricity LPG change from Dec 04 Revenue (ASm) 460 (1%) 843 (3) 277 (+9%) Gross margin (AS$m) 85 (9%) 139 ¢-9%) 73 (1%) Sales (PJ) 62 61%) - - Sales (TWh) - 7.8 (-5
Slide 37: Integration of gas and electricity has occurred
integration of gas and electricity has occurred. Retail and generation integration is increasing 3,000,000 E Gas MElectricity 2,500,000 Government Owned ' , ; : [ , i : | , — es 3 3 4 > & & & ma & uw a s 3 s ia Pa Sd < & oS & & * < e Ra * Generation capability ° Government owned entities are primari
Slide 38: Levels of churn reflect underlying market structures
Levels of churn reflect the underlying market structures and available gross margin... 60% 40% 35% 30% 25% 20% 15% % Churn: Monthly data annualised 5% 0% 10% + Mass Market Churn: Completed & Pending 55% +—+ 50% 4 45% +4 eo VIC Elec mem Vic Gas [| swe NSW Elec voc SW Gas A. | | amen SA EEC cme SAGAS
Slide 39: Customer contracting requires more sophisticated targeting
The extent of customer contracting means acquisition will require more sophisticated targeting and value propositions... Open to Switching Retained & Contracted Switched & Contracted Ne Will not Switch .. requiring enhanced system functionality and a Origin ryer COMPEtitive cost base energy
Slide 40: Margins sustained despite high churn
Despite high levels of churn, with focus on customer segmentation and operating costs, margins have been sustained... Retail Gross Margin ($) and EBIT Margin (%} 600 6.0% FE 500 | 5.0% & ¢ = = 4004 1 4.0% ¥ é z= 2 = & 4 fc fh 300 3.0% & ge = 2 ra g E £ 200 4 2.0% B & & 2 8 z 100 4 + 1.0% 04 + 0.0% 2
Slide 41: Improved systems and processes reduce cost to serve
Origin has moved to improve systems and processes and thereby significantly reduce its cost to serve .... In-House evolution is the preferred path forward Pasarté: Team analysis
Slide 42: Increasing focus on volume, margin and targeting valuable customers
...and increasing focus on volume, margin and targeting valuable customers « Detailed market understanding ~ through data analysis, segmentation and product development, focussing on high volume / high margin customers + Be competition enabied in ail markets ~ ensure that we are able to compete when
Slide 43: Response to Greenhouse concerns creating new opportunities
Response to Greenhouse concerns is creating new opportunities Major EU Socially Responsible Investment Funds Investment in Renewable Generation - Worid ($b) Number of SRI Funds, cumulated 313 in the period 1980 to 2003 280 189 ; | 20 4 = i 1980-4 1985-9 1990-4 1995-9 -} 2002-. i ey ‘ 80. 8. 6. 2000:
Slide 44: Ability to differentiate products
.. and there is ability to differentiate products Page 43 Origin.
Slide 45: Green positioning now a core Origin product
“Green” positioning now a core Origin product and complements our asset positioning farigney OPED : Origin Page 44
Slide 46: Networks
Networks Page 45
Slide 47: Networks Key Indicators
Networks Key Indicators 2005 Total Sales Revenue $159m EBITDA $30m EBIT $28m Capex $im Networks Under Management Natural gas 20,002 km Water 3,448 km Page 46
Slide 48: The SESA Pipeline shows ability to get projects online
The SESA Pipeline shows Origin’s ability to respond to operational issues and get projects online a “d SRTTAUEIRIUA Sarton Approval and Engineering _ Construction | |Operation _
Slide 49: Key management systems support management and control of risk
Key management systems support management and control of risk Disclosure & Reporting Continuous isclosur® A Project Management System complements existing controls Origin Page 48
Slide 50: Risk management framework
Opportunities from the integrated business are not without risk. Our risk management framework requires e Page 49 Maintaining a strong focus on risk in relation to the operation and management of all Origin businesses Using a formal risk assessment process to identify and classify risk Assigning and
Slide 51: Operational Risk managed under Health Safety & Environment system
Operational Risk is managed under the Health Safety & Environment Management System Operational Risk covers areas such as: «Plant & Equipment Failure « Exposing employees or contractors to potential harm « Reliability / Availability « Business Continuity and Disaster Recovery ¢ Systems integrity Saf
Slide 52: Commodity Risk managed across the whole business
Commodity Risk is managed across the whole business within tightly controlled exposure limits Eastern Australian gas demand Long Te rm Origin Energy estimates 2005 00 = soo Supply/Demand = 704 i «oo | Market Structure & 400 i £ = Assets vs Contracts = 200 i ° Price risk ne O02 2004 2006 2008 2050-20
Slide 53: Many opportunities to improve performance
There are many opportunities to improve performance Strengthen operational performance Upgrade operational capabilities Identify and implement operational synergies Capture the vale of vertical integration Enhance the customer experience Make the right choices at the right time - to explore, to prod
Slide 54: Australian Operations - the value of integration
drigin Net y Australian Operations - the value of integration ja secmmemiermenencnaanrrmnnni savant aren ipcaeien ea gs er Na Karen Moses oc Chief Operating Officer, Austral June 2006
Slide 55: Overview of Origin Energy Exploration
Overview of Origin Energy Exploration Rob Willink Executive General Manager, Exploratio nara i June 2006 Seeneeee
Slide 56: Disclaimer
Disclaimer Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect and these statements speak only as of the date of this presentation. This presentation should not be relied upon as a recommendation to buy or sel
Slide 57: Significant exploration interests in Australia and New Zealand
Perth Basin Sydney Taranaki /Northland Otway/Bass Basins Basins New io Zealand Weltington Canterbury Basin Origin Energy holds significant exploration interests in oil & gas prospective basins in Australia & New Zealand Page 3
Slide 58: Risk-balanced portfolio of exploration opportunities
These interests provide the company with a risk-balanced portfolio of exploration opportunities c Canterbury Basin Taranaki/ High) Offshore Northland Basin Otway Basin Onshore Otway Ba) Cooper Basin «..” & CSG Low Low ane ae :. ‘High Reward ... and many of these opportunities specifically target the
Slide 59: Proven track record in exploration success
As operator, Origin has a proven track record in exploration success 2001 2002 2003 2004 2005 2006 OT a | Offshore - Otway Basin Onshore : Perth Basin Offshore : ‘Bass Basin ‘Onshore ‘Surat Basin ..and most of these discoveries are already, or will soon be on production, generating significant reven
Slide 60: Onshore 2005/06 drilling and seismic activity
in its Onshore areas, 2005/06 saw Origin participate in the drilling of 35 wells, as well as in the acquisition of several seismic surveys, at a combined total cost of $45 million Basin | Perth we | EP 320/611 a | BP 4ta/Lia “asia EP 368 Surat PL TI ATP 375P/PL 174 | ATP 470P # | PL Exploration a |
Slide 61: Offshore 2005/06 seismic acquisition
In its Offshore areas, exploration endeavours in 2005/06 focussed on the acquisition of high resolution 2D & 3D seismic surveys to mature new prospects to drilf in the future, at a cost of $14 million Page 7 Basin g 4 i 1 ViCIPat(y) ] viC/Pa3 4 T/30P 4 Ti3aP | Bonaparte 4] NT/RL1- WAGR 4 T/48P | Per
Slide 62: New areas in New Zealand applied for
In addition, new areas in New Zealand were identified as potentially prospective for both oil & gas and applied for successfully : " ser Northland Basin can Canterbury Basin wuity Puchfic -.-- vos Meenas +
Slide 63: Onshore exploration program ahead
The next 12 months will see Origin continue an active exploration program in its Onshore areas with wells targeting both oif & gas in all of its existing areas Basin r Apr May Jun Ju! lov Dec Jan Feb Mar Apr May Jun 1 ate ilies Mil eS |} Perth : 4 Russ 2D 7 : | ep 320/L11 en a ee J EP 413/L414 H : i
Slide 64: Offshore exploration wells planned
Offshore, exploration wells are planned in the Otway Basin and New Zealand, both targeting gas to address domestic markets Basin- | Otway } VIC/P37(v) 1 VIC/PAt{y) n Feb Mar Apr May Jun Jul Dec Jan Feb Mar Apr May Jun eo com ee eee j : Thylacine sav i i : ww 4 vicepa3 : : : : 4 /30P : : : 4 T/34P |
Slide 65: Exploration expected to be major value contributor
In the long term, exploration is expected to be major vaiue contributor to Origin through reserve additions & future production Value Creation High; Identifying new core areas _ Maturing emerging — 0000 “. core areas. oe Page 1t
Slide 66: Potential high impact exploration opportunities
Page 12 So what are the potential “high impact” opportunities in Origin’s current exploration inventory? ®@ Aragorn - Otway Basin...Australia ® Kora - Taranaki Basin..New Zealand ® Carrack - Canterbury Basin..New Zealand ® Lamu Basin ...Offshore Kenya
Slide 67: Otway Basin - Aragorn prospect
Otway Basin - Aragorn prospect Top Waatre Max Amplitude map Prose Aragorn 3D 4494 kee full-told Page 13 3D view of Aragorn prospect Late Cretaceous depth structure and seismic amplitude
Slide 68: Taranaki Basin - Kora prospect complex
Taranaki Basin - Kora prospect complex PEP 38491 Kora 1/1A Ly ) yy g Pe
Slide 69: Canterbury Basin - Carrack lead
Canterbury Basin - Carrack lead Seuth Pacific - Oeeas
Slide 70: Offshore Kenya
Offshore Kenya Block L8 & L9 liter Turbidites Qe. Tetere amplitude anomalies Palaeocene clastics leads Tertiary reets | Shale wait Qa Mombasa base intrusives askew Simba west carbonate bank WwW Late Cretaceous tembo brights QD Maviont L Highstand package 2h Bavenet West Mbawa tilted fautt blocks: Ch
Slide 71: Overview of Origin Energy Exploration
Overview of Origin Energy Exploration Rob Willink anna commerttent ag ~ June 2006 Executive General Manager, Exploration
Slide 72: Major Development Projects
Major Development Projects Andrew Stock Executive General Manager, ___-Major Devetopment-Projects Tee ~ June 2006
Slide 73: Disclaimer
Disclaimer Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect and these statements speak only as of the date of this presentation. This presentation should not be relied upon as a recommendation to buy or sel
Slide 74: Major Development Projects sponsors and implements major capital projects
Major Development Projects - sponsors and implements major capital projects supporting Origin’s growth Deliver large capital projects: - Safely, environmentally & community aware - On time & on budget - Fit for purpose Identify and manage critical project risks Implement consistent delivery systems
Slide 75: Develop structured organisational capabilities
A key objective of the group is to develop structured organisational capabilities... ¢ Building In-house Project Delivery Disciplines: - Gate process for structured project decision making - Project management skills - Project systems and infrastructure - Staffed with OE permanent personnel « Develo
Slide 76: Project management framework of development phases and Gates
Origin operates a project management framework of development phases and decision “Gates”... Page 5 Determine potential value of the opportunity & alignment with the business strategy Generate and select the preferred opportunity alternative and optimise value Finalise technical defn, regulatory app
Slide 77: Key Project milestones
Key Project milestones ¢ Spring Gully Stages 1 &2 (Phase 5) ¢ SESA Pipeline (Phase 5) ¢ Thylacine/Geographe (Phase 4-5) ~ Operated by Woodside - Operations expected to commence in second half 2006 ¢« Kupe (Phase 4) - Final investment decision late June 2006 ¢ Mortlake/Spring Gully (Phase 3-4) ~ Envi
Slide 78: Key Project milestones (cont)
Key Project milestones (cont) Solar (Phase 3) - Certify 75W module Jul 06 ~ Progress to ~150 kW commercial product - Secure international partner and establish working relationships . Victorian Gas Storage (Phase 3) - Being investigated for onshore Otway Basin fields close to Otway Gas Project landf
Slide 79: Spring Gully CSG Project commissioned through mid 05
The Spring Gully CSG Project was commissioned through mid 2005 and will be reviewed tomorrow Page & Initial Stage 1 development of $199 million completed on time and on budget Development included 80 km trunk gas pipeline, initial plant and water pondage in addition to wells and flowlines for contra
Slide 80: Spring Gully Development Area
Spring Gully Development Area ig Wellhead 42 wells in Phase 1 Gas Plant 3x3500 HP compression 36TJ/d capacity Evaporation Pond 15-20,006 ki/d capacity Origin Pipeline 89km transmission pipeline 147km gathering system Page 9
Slide 81: Slide 81
Slide 82: Slide 82
Slide 83: Slide 83
Slide 84: Slide 84
Slide 85: Slide 85
Slide 86: Slide 86
Slide 87: Slide 87
Slide 88: Slide 88
Slide 89: Slide 89
Slide 90: Slide 90
Slide 91: Slide 91
Slide 92: Slide 92
Slide 93: Slide 93
Slide 94: Slide 94
Slide 95: Slide 95
Slide 96: Slide 96
Slide 97: Slide 97
Slide 98: Slide 98
Slide 99: Slide 99
Slide 100: Slide 100
Slide 101: Slide 101
Slide 102: Slide 102
Slide 103: Slide 103
Slide 104: Slide 104
Slide 105: Slide 105
Slide 106: Slide 106
Slide 107: Slide 107
Slide 108: Slide 108
Slide 109: Slide 109
Slide 110: Slide 110
Slide 111: Slide 111
Slide 112: Slide 112
Slide 113: Slide 113
Slide 114: Slide 114
Slide 115: Slide 115