Origin Energy Limited · ASX:ORG
Origin Energy — Macquarie Conference 2008
19 slides from Origin Energy's conference presentation, May 7, 2008
Slide 1: ASX announcement cover note for Macquarie Conference presentation
For personal use only To Company Announcements Office Facsimile 1300 300 021 Company Australian Stock Exchange Limited Date 7 May 2008 From Bill Hundy Pages 19 Subject PRESENTATION Attached for your information is a presentation being made today by Mr Grant King, Managing Director to the Macquarie C
Slide 2: Origin Energy Macquarie Conference May 2008
For personal use only Origin Energy Macquarie Conference May 2008 1
Slide 3: Important Notice
Important Notice For personal use only • This presentation should not be interpreted as a response by Origin to the proposal by BG Group to acquire all of the shares in Origin. Any recommendation to acquire or dispose of any securities in Origin and any response by Origin will be required to be made
Slide 4: Fuel-integrated generator/retailer strategy has increased resource, generation and retail positions
Since listing in 2000, Origin has steadily increased its resource, generation and retail positions by consistently implementing a fuel-integrated generator/ retailer strategy For personal use only Fuel Retail Generation 4,000 4.0 3,500 2P Reserves Customers 3.5 (PJe) 4,000 (millions) 3,000 Generatio
Slide 5: Fuel-integrated model has delivered NPAT growth at a CAGR of 24.3%
The fuel-integrated model has delivered NPAT growth at a CAGR of 24.3%, to a current 2008 consensus forecast of around $430 million For personal use only Net Profit After Tax (NPAT) Origin Energy Net Profit after Tax (NPAT) 500 450 400 350 300 A$ million 250 200 150 100 50 - June 2000 June 2001 June
Slide 6: Origin has doubled its market cap every 3-4 years
As a result of NPAT growth Origin has doubled its market cap every 3-4 years, to $9.2B (pre receipt of the BG proposal) For personal use only Origin Energy Market Capitalisation Market Capitalisation 10,000 8,000 A$ million 6,000 4,000 2,000 0 March March March March March March March March April 20
Slide 7: Growth to continue across a portfolio of opportunities
We expect growth to continue as we exploit a substantial portfolio of opportunities across the business… For personal use only Fuel Retail Generation • Otway, Yolla • Darling Downs • NSW retail • Kupe • Mortlake • Green • Coal Seam Gas • Mt Stuart expansion customer base growth • Exploration • Quara
Slide 8: BG's proposal implies a changed approach to valuing the company
BG’s proposal implies that Origin’s growing resource position (esp. in CSG) changes the approach to valuing the company… For personal use only Origin P/E ratio Origin has traded historically on a P/E ratio of 16-22, 35 Post-proposal reflecting the strong 30 P/E earnings and consistent 25 NPAT growth
Slide 9: Origin is the leader in published 2P reserves and CSG production
Origin is the leader in published 2P reserves and CSG production in Australia For personal use only CSG Reserves CSG Production 3,000 35 CSG Reserves CSG Production 30 2,500 Production 12 Months to Dec 07 (PJ) 25 2,000 2P Reserves (PJ) 20 1,500 15 1,000 10 500 5 - 0 in al ui dn PB ie gy s gy w r 4 r
Slide 10: As gas prices increase, so does the economically viable resource
As gas prices increase, so does the size of the economically viable resource* For personal use only Schematic illustration of relationship between gas prices and economically viable CSG reserves * Because of Economically variances in viable CSG cost structure reserves between geographies, (PJ) not a
Slide 11: Extensive acreage position across the two prime CSG fairways in Queensland
Origin has an extensive acreage position across the two prime CSG fairways in Queensland For personal use only • Origin’s share of 2P reserves is 2,470 PJ (July 2007), while 3P reserves are estimated at 4,578 PJ (quotes exclude Bowen Basin Basin CSG CSG Bowen exploration potential) Fairview && Sprin
Slide 12: Carbon reduction targets and emissions trading likely to lead to carbon prices of $20-60
Origin believes there is an increasing likelihood that carbon reduction targets and an Australian emissions trading scheme will result in carbon prices of $20-60 by 2020 For personal use only Australian 2020 carbon abatement cost curve • McKinsey analysis suggests that, for Australia to achieve a $~
Slide 13: A domestic carbon price above $20-30 would put upward pressure on gas prices
A domestic carbon price above $20-30 per tonne would put strong upward pressure on gas prices For personal use only Short run marginal costs Marginal of generation Generation Costs vs Carbonvs carbon price Price 140 • Coal currently sets the benchmark price for electricity and is cheaper 120 120 tha
Slide 14: Access to international LNG markets likely to increase gas prices
Access to international LNG markets is likely to result in significant increases in gas prices … For personal use only LNG Pricing in Asia Pacific 13 Source: Woodmackenzie, Global LNG Online, LNG Insights April 2008 13
Slide 15: As gas prices increase, so does the economically viable resource
As gas prices increase, so does the size of the economically viable resource* For personal use only Schematic illustration of relationship between gas prices and economically viable CSG reserves * Because of Economically variances in viable CSG cost structure reserves between geographies, (PJ) not a
Slide 16: New production infrastructure in areas where we hold prospective acreage
The BassGas Project, Otway Gas Project, Kupe Gas Project and CSG developments are each establishing new production infrastructure in areas where we hold prospective acreage… For personal use only 15 …opening up the potential for further exploration and development in these and related areas 15
Slide 17: Extensive portfolio of exploration prospects
Origin has an extensive portfolio of exploration prospects. Some of these prospects are illustrated below and will be For personal use only drilled or considered for drilling over the next few years … Origin Unrisked Estimated Basin / Area Permit Equity Prospect / Field Name Mean Recoverable Gas Oil
Slide 18: Significant position in the premier geothermal resource in Australia
Origin has a significant position in the premier geothermal resource identified to date in Australia For personal use only Long run marginal cost of electricity generation, wind v geothermal Estimates for mature technologies • The lowest-cost large- $/MWh scale technology likely 80-120 to qualify fo
Slide 19: In Summary
In Summary For personal use only • Origin historically has been valued as a utility-type stock with strong and reliable earnings growth (made possible by our fuel-integrated business model) • The current share price (P/E 32) reflects a different perspective, valuing Origin as much for its resource p