Origin Energy Limited · ASX:ORG
Origin Energy — Merrill Lynch Australia Investment Conference 2006
48 slides from Origin Energy's conference presentation, Sep 18, 2006
Slide 1: ASX announcement cover note
Origin energy To Company Announcements Office Facsimite 1300 300 021 Company Australian Stock Exchange Limited Date 18 September 2006 From Bill Hundy Pages 48 Subject PRESENTATION Attached for your information is a presentation to be made by Mr Grant King, Managing Director to the Merrill Lynch Aust
Slide 2: Investing for growth
Investing for growth Presentation to the Merrill Lynch Australia Investment New York _ September 2006-—
Slide 3: Important Notice
important Notice Page 2 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
Slide 4: Outline
Outline ¢ Industry background and Origin’s strategy ¢ Strategy Implementation e Financials Page 3 Origin.
Slide 5: Industry background and Origin's strategy
Industry background and Origin’s strategy ecm iesecanennibinmnnesicnesttittt necesita gnc en a
Slide 6: End use sales of electricity, gas and related products around A$40 billion
End use sales of electricity, gas, and related products and services in Australia and NZ are around A$40 billion per annum and are growing steadily with energy usage Australian End Use Energy Sales A GROWING MARKET and Growth in GDP « Growth in domestic Energy Sales (PJe} GDP {%) » demand for natura
Slide 7: Changes to Australia's energy industry over the last decade
Changes to Australia’s energy industry over the last decade provide the opportunity for some companies to grow more rapidly than the market as a whole... GasNet Cumulative asset sales in the Australian energy sector since 1995 takeover “ Incomplete Mergers by T 90 7) ein Progress One bag, bj given 8
Slide 8: Origin's financial objectives and business strategies
Origin’s financial objectives and business strategies have been established to respond to changes in the energy industry since the mid 90’s... ¢ Financial Objective - Steady and predictable cashflows ~ EPS growth of 10-15% pa on average « Business Strategy - Positioned in the competitive (rather tha
Slide 9: These strategies have resulted in significant growth
These strategies have resulted in significant growth increasing value for shareholders... no ners + Free cash flow per share has _ grown at a CAGR 25% since listing a « EPS has increased from 13 cents z © per share in 2000 to 42 cents per 2 x04 share in 2006 * + Since 2001 Origin has steadily aa inc
Slide 10: Strategy implementation
JIE Strategy implementation
Slide 11: Origin positioned in competitive segments of the energy industry
Origin has positioned itself in the competitive (rather than regulated) segments of the Australian energy industry... .. and by implementing this strategy effectively can better manage risk and enhance the range of growth opportunities Page 10
Slide 12: We explore for gas and oil close to domestic energy markets
We explore for gas and oil mostly close to domestic energy markets in Australia and New Zealand. Exploration in these areas provides new opportunities for Origin Energy to supply retail and wholesaie markets. Our exploration areas Australia Onshore Cooper/Eromanga Onshore Otway Offshore Otway Offsho
Slide 13: 2006 Exploration assets and areas of interest
Perth Basia Otway? Basins 2006 Exploration assets and areas of interest Page 12 User Guide OQ —— Auckians Taranaki/Mortht
Slide 14: Origin's 2P reserves increased significantly year on year
Origin’s 2P reserves increased significantly year on year with reserves additions in Spring Gully adding 170 PJe... Proved and Probable Reserves (PJe)'” PJe Mmboe 2P reserves at 30 June 2005 2,220 381 add field appraisal (Spring Gully) 170 29 add acquisitions (Pangaea CSG, BassGas, Otway) 171 29 fes
Slide 15: Oil reserves in the Perth Basin depleting; condensate and LPG reserves
While oil reserves in the Perth Basin are depleting quickly Origin has significant condensate and LPG reserves... Sales gas & LPG Condensate Crude oil Total ethane PJ Kt KbbI Kbbi Pje Mmboe 2P at 30 June 2005 1,986 1,667 20,266 6,992 2,220 381 Additions and revisions 277 207 304 840 294 50 Productio
Slide 16: High impact opportunities in exploration portfolio
There are a number of high impact opportunities in Origin’s current exploration portfolio including ‘Top Waarre Max Amplitude map 30 view of Aragorn prospect Late Cretaceous depth structure and seismic amplitude Otway Basin - Aragorn prospect Page 15
Slide 17: Taranaki Basin - Kora prospect complex
Taranaki Basin - Kora prospect complex Fane PEP 38491 Base Oligocene depth structure map Kora 4 s{ Kora 2 bf Kora Kora 4 West ee al i aoe! es
Slide 18: Canterbury Basin - Carrack lead
Canterbury Basin - Carrack lead Seonithe. Packt Senn Page 17
Slide 19: Major development projects
u aL Ini actin AIEEE LOR RELEREE CREE EEE! The growth of the company tomorrow is taking form today through the identification, planning, approval and construction of major development projects, Highly capital intensive and taking five or more years to develop, these projects will help drive Origin E
Slide 20: Initial production from Spring Gully field has started
Initial production from the Spring Gully field has started to monetise Origin’s substantial reserve base... + Initial Stage 1 development of $199 million completed on time and on budget including 80 km trunk gas pipeline, initial plant and water pondage in addition to wells and flowlines for contrac
Slide 21: BassGas commenced production; Otway Gas Project commissioning
BassGas commenced production during June 2006 while the Otway Gas Project is expected to commence commissioning late in the December quarter BassGas Project (42.5%) ¢ Project construction complete and commissioning commenced « Revenue is currently being offset against capital until full production c
Slide 22: Kupe gas project approved in New Zealand
In New Zealand the Kupe gas project has been approved, and new exploration seismic has been acquired LEGEND: z . 22) ornnsernie “he, Kupe Gas Project (50%) EEE ceetect vere Morthlond Syanssre . . es (Ej ou pine Basin * Final investment decision approved on 28 June « Contract for drilling rig awarded
Slide 23: Option to build two base load gas fired power plants
Origin is creating the option to build two base load gas fired power plants in areas where gas is expected to be long... Power Plant Developments Solar + Two power projects being progressed, « SLIVER modules continue to be scaled each up to 1000 MW at: up - Spring Gully in Queensland « 75W module un
Slide 24: Capital expenditure profile on growth projects
Origin continues to invest in growth with a number of major development projects approved or in an advanced stage of planning which will provide future growth in earnings Origin Energy potential capital expenditure profile on growth projects 800 FY 06 free 700 cash flow = A5583 million & 600 +4 | W
Slide 25: Origin Energy and Contact Energy producing assets
SDM iectiaE: ABEL Ai LOR RELEREE CREE EEE! Origin Energy and Contact Energy are major producers of energy in their respective markets. Origin Energy generated 1.6 terawatt- hours of electricity in 2005/06 and produced 78 petajouies equivalent of natural gas, condensate, LPG and crude oil. In New Zea
Slide 26: Producing assets, generation plants and major LPG terminals
Producing assets, generation plants and major LPG terminals in Australia and New Zealand Page 25 Clyde, Roxburgh Hew Plymouth, Taranaki Map key Conventional off & gas permits Coat searn gas perrits LPG seaboard terminal
Slide 27: New projects will increase E&P run rate to over 100PJe
New projects such as BassGas and the Otway Gas Project will increase the “run rate” from the Exploration and Production segment to over 100PJe per annum by June 2007 Origin Energy production data for year ended 30 June 2006 by area Natural Gas Crude Oil LPG Condensate | Total Total Area PJe kbbis kt
Slide 28: Spring Gully production monetising CSG reserve base
initial gas production from the Spring Gully field has started to monetise Origin’s substantial CSG reserve base... 2P Reserves (PJ) CSG Reserves i3 | CSG Production Annuai Production (PJ) .. Which represents around one third of the proved and probable CSG reserves reported by industry in Queensland
Slide 29: Contact's generation responded to higher wholesale prices
Contact’s generation responded to higher wholesale prices. Significant increases in thermal generation more than offset reduced hydro generation caused by dry weather Total generation was 11,534 GWh for 12 months ended 30 June 2006. An increase in thermal generation by 1,947GWh more than offset the
Slide 30: High planned availability across Origin's plants
in Australia, Origin Energy experienced high planned availability across all its plants... Major Origin | Origin | Capacity | Type | Operation | Availability | Contracting Power Int. % MW Party Plants Worsley 50 120 Cogen | Base 85% Western Power & Worsley Bulwer Is. 50 32 Cogen | Base 95% BP Osborn
Slide 31: Buying electricity and gas to meet customer needs
aL Ini actin AIEEE LOR RELEREE CREE EEE! In Australia, we buy electricity from the National Electricity Market (NEM). Prices are set on a half hourly basis through balancing market supply and demand. We have a large portfolio of hedge contracts which help protect the company and our customers from t
Slide 32: Substantial portfolio of equity and contracted natural gas
Significant gas contracts from the South Australian and Queensiand Cooper Basin Purchase of all gas produced from the SA onshore Otway Basin (including Origin share} ages me Ses Git Pipi vn 8 Proce SE Emam onto Contracts to purchase the Otway Gas project {including Origin share) 48.5% of natural gas
Slide 33: Low wholesale electricity prices in Australia
The low level of wholesale electricity prices in Australia has made purchasing of the majority of electricity requirements appropriate to date... $100 $95 $904 - . cg ees Victorian Spot and Forward Contract Tasca Sod. : Price gol. ; Electricity Prices __ . 2008 Historica Forward Price $75 2007 Histo
Slide 34: Origin buys LPG each year for resale
Origin buys over 500 ktonnes of LPG each year for resale to customers Average International Propane Price (CP) 1,200 Jut04 - Jund5 JulB5 ~ Juund6 ASSI9 AS6SS 1,000 + AC A YY 800 + 600 + Propane price ($A) 400 + 200 + o4 Jule Oct Jan- Apr- Jule Oct- Jan- Apr- C4 O4 05 05 05 ite) 06 06 The internation
Slide 35: Retail energy sales to over two million customers
Origin Energy sells electricity, natural gas and LPG to more than two million customers in Australia, New Zealand and the Pacific. In New Zealand, Contact Energy has more than 594,000 gas and electricity customers. Origin Energy - Retail energy sales Natural Gas Electricity LPG Sales (PJ) 127 . - Sa
Slide 36: Deregulation and contestability in Australian energy
Deregulation and the introduction of contestability in the Australian energy sector commenced in the mid 1990’s... Gas Vic Electricity Gas SA Electricity Gas NSW Electricity Gas QLD Electricity Gas WA Electricity Outer Bar Legend inner Bar Not Contestable .. but gradual implementation has left room
Slide 37: Origin has increased its share of energy markets
Origin Energy has increased its share of energy markets substantially over this time... Eastern Australia Eastern Australia Market share of customers: 1998 Market share of customers: 2005 Origin Energy 15% FiNon Government Companies MOrigin Energy MNSW Government MQid Government Vic Government @Othe
Slide 38: Churn rates remain high; customer accounts
Churn rates remain high. This year Origin acquired over 325,000 new accounts for a net gain of 22,000 gas and electricity accounts June 2006 Customer Numbers (in thousands) Mass Market Churn: Completed & Pending* Natural Electricity | Total 60% —.... snetpeetnnnttsenae ssy | ommvic tec | 2005 900 91
Slide 39: Gross margin for all products increased year on year
The gross margin for all products increased year on year. - Year on year gas gross margin increased on higher tariffs and strong second half due to cool weather Retail Gross Margin ($) and EBIT Margins (%) zoo | i tt 1.0% + Electricity gross margin higher on lower purchasing costs and net benefit of
Slide 40: Slide 40
Slide 41: Profit & Loss
Profit & Loss Page 40 Jun 01 Jun02 Jun03 Jun04 Junos5 . (Sm) (Sm) Sm) Sm) (Sm) Revenue 1,679 2,429 3,352 3,556 EBITDA 305 405 944 532 EBIT 173 231 295 329 Net Financing Cost!) (32) (43) (49) (45) | Tax expense (38) (54) (80) (77) . 7 Minority Interests (6) (5) (5) (2). NPAT 98 129 162 205 Basic EPS
Slide 42: Origin reports its business across four segments
Origin reports its business across four segments covering its operations in Australia, New Zealand and the Pacific... Exploration and Production Over 2,436 PJe 2P reserves and annual production of 78 PJe +Diverse acreage position across Australia and New Zealand A leading A Australian CSG G producer
Slide 43: Growth required significant capital expenditure
Origin’s growth has required significant capital expenditure. Acquisitions in the Retail and Generation areas have provided immediate contributions... Juno1 Jun02 Jun03 Jun04 Jun05: Jun 06 ($m) (sm) ($m) ($m). (Sm) (Sm) Growth & Acquisitions E&P 56 129 179 313 335 600 Retail 344 78 154 46 42 56 Gene
Slide 44: Cash flow measures as primary measure of performance
Origin uses cash flow measures as the primary measure of performance within the business... Jun01 Jun02 Jun03 Jun04 Jun05 Jun 06 ($m) ($m) ($m) (Sm) Sm) Sm) EBITDA 305 405 491 532 918 1,087 Non-cash items (8) (17) 13 25 4 : (10) Change in Working 11 16 39 (48) (31) 16 Capital of. Stay in business CA
Slide 45: Conservatively geared balance sheet
This has allowed Origin to maintain a conservatively geared balance sheet and take on the extra debt to fund ongoing investment in growth Jun 01 Jun 02 Jun03 Jun04 JundO5 Jun 06 Net debt ($m) 727 633-732-861 2,743 2,411 Total equity ($m) 1,328 1,626 1,790 1,939 3,519 _ 3,646. Adjusted Debt / (debt +
Slide 46: Investing for growth
drig investing for growth
Slide 47: For more information
For more information. Page 46 For more information on Origin Energy please contact Angus Guthrie Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61-2-8345 5558 Mobile: + 61-4-1786 4255 Alternatively visit our website www. originenergy.com.au and follow the prompts to th
Slide 48: Slide 48
Origin Energy — Merrill Lynch Australia Investment Conference 2006 on 6ix