Origin Energy Limited · ASX:ORG
Origin Energy — 16th CLSA Investors' Forum, Hong Kong (September 2009)
77 slides from Origin Energy's conference presentation, Sep 21, 2009
Slide 1: ASX announcement cover note
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 21 September 2009 From Bill Hundy Pages 77 Subject PRESENTATION Attached for your information is a presentation being made by Karen Moses, Executive Director Finance and Strategy to the 16th CLSA In
Slide 2: 16th CLSA Investors' Forum, Hong Kong
21 September 2009 For personal use only 16th CLSA Investors’ Forum Hong Kong
Slide 3: Important Notice
Important Notice This presentation does not constitute investment advice, or an inducement or recommendation to acquire or dispose of any securities in Origin, in any jurisdiction (including the USA). This presentation is for information purposes only, is in a summary form, and does not purport to b
Slide 4: Outline
Outline For personal use only 1. Strategy, Performance, Growth 2. Market Summary 3. Australia Pacific LNG 4. Carbon and Renewables Strategy 5. Business Overview – Exploration and Production – Generation – Retail – Contact Energy 3
Slide 5: 1. Strategy, Performance, Growth
1. Strategy, Performance, Growth For personal use only
Slide 6: Financial objectives and business strategies
Origin’s financial objectives and business strategies have been established to respond to changes in the energy industry For personal use only • Financial Objectives – Steady and predictable cashflows – EPS growth of 10-15% pa on average • Business Strategy – Positioned in the competitive (rather th
Slide 7: Growth of operational dimensions and integration
Origin has grown the operational dimensions of each business area and has consistently sought to deepen integration…. Fuel Retailer For personal use only Generator A leading producer of gas in Eastern Largest owner and developer of gas A leading wholesaler and retailer of Australia involved in the d
Slide 8: Managing wholesale commodity price volatility
The effective implementation of this strategy helps us manage the volatility in the wholesale price of commodities… QLD Spot and Forward Contract Electricity Prices International oil and condensate prices 150 NW Shelf Condensate 140 For personal use only TAPIS SPREAD 120 120 Origin Realised Price Av
Slide 9: Growth in underlying earnings
…and has delivered growth in underlying earnings EBITDAF by business type 1400 Underlying Profit CAGR 23% For personal use only 1200 1000 EBITDAF CAGR 19% $ million 800 600 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 Networks E&P Generation Retail Contact Origin Productive Capital & Free
Slide 10: Growth in underlying earnings per share
The growth in earnings has translated into significant growth in underlying earnings per share and increasing value for shareholders 80 74 71 71 76 • Free cash flow per share(1) has grown at a CAGR 12% FCFPS 70 EPS since listing 63 For personal use only DPS 60 60 54 • EPS has increased from 13 cents
Slide 11: Statutory profit driven by ConocoPhillips investment
Origin’s Statutory Profit for the full year of $6.9 billion was driven by ConocoPhillips’ investment for a 50% interest in Origin’s CSG assets… For personal use only Statutory Profit $6,941 million up 1243% Statutory Earnings per Share 791 cps up 1241% Underlying Profit $530 million up 20% Underlyin
Slide 12: Strong position after APLNG transaction
Following the APLNG transaction Origin is in a strong position to grow and develop its business with access to cash and undrawn committed debt facilities of $5.3 billion and substantial additional balance sheet capacity As at 30 June 2009 For personal use only Undrawn Available Adjusted Adjusted Com
Slide 13: Access to $5.3 billion of cash and undrawn debt
With access to $5.3 billion of cash and undrawn debt facilities, Origin is well placed to fund opportunities to grow and develop the business Origin Debt & Bank Guarantee Maturity Profile Origin Committed Growth Capex Profile For personal use only 2,400 2,400 2,200 Loans & Bank Guarantees - Undrawn
Slide 14: 2. Market Summary
For personal use only 2. Market Summary
Slide 15: Growth in energy demand and Origin's market share
Growth in energy demand for electricity, natural gas and LPG has averaged around 4% per annum since the 1980s even through times of economic recession For personal use only Origin’s share of Eastern Australian end use energy markets has grown from 10% in 2000 and in excess of 15% today and the Compa
Slide 16: Evolution of Australian energy markets since mid 1990s
The energy markets in Australia have evolved significantly from mid 1990s when they were regionally based… Wholesale Gas Market - mid 1990s Wholesale Electricity Market – mid 1990s For personal use only Dynamics Dynamics • Cooper and Gippsland dominated • Limited interconnection of markets gas suppl
Slide 17: Interconnected electricity and gas markets by 2009
By 2009 the electricity and gas markets have become largely interconnected to form an integrated electricity and gas market in eastern Australia with high levels of private ownership Wholesale Electricity Market - Wholesale Gas Market - For personal use only 2009 Interconnector Max 2009 Flows Dynami
Slide 18: Leading positions in E&P, Generation and Retail
Over the last decade Origin has established leading positions in the Exploration and Production, Generation and Retail markets in which it operates…. PJe For personal use only Eastern Australia Gas Reserves 40,000 Origin is still one of the largest holders of upstream 30,000 Origin gas reserves in e
Slide 19: Gas position as key strength
Origin’s key strength in its core Australian business is its gas position which allows it to manage wholesale risks in both gas supply and generation more effectively than its competitors… Fuel Retailer For personal use only Generator Origin’s long gas position Origin is a market leader in the Origi
Slide 20: 3. Australia Pacific LNG
3. Australia Pacific LNG For personal use only
Slide 21: Transaction with ConocoPhillips to form APLNG
In September 2008 Origin entered into a transaction with ConocoPhillips to establish a CSG to LNG joint venture known as Australia Pacific LNG (APLNG)… ConocoPhillips has subscribed for a 50% interest in Australia Pacific LNG For personal use only Assets Australia Pacific LNG includes all of Origin’
Slide 22: Joint venture structure
The joint venture provides a fully aligned and function structure that combines Origin’s leading position in Australian CSG development… For personal use only Upstream LNG Plant LNG Marketing Domestic Gas Operator Origin ConocoPhillips Joint Venture Origin Ownership 50:50 50:50 50:50 50:50 Extent of
Slide 23: APLNG progress and Gladstone site selection
APLNG is progressing well with the development of its CSG to LNG project and has now selected a site at Gladstone for its downstream operations For personal use only • APLNG has secured the Laird Point site on Curtis Island in the Port of Gladstone for its proposed CSG to LNG plant • 230 hectare sit
Slide 24: Growth in APLNG CSG reserves
APLNG continues to grow its CSG reserves with significant reserves increases that demonstrate the size and quality of APLNG’s CSG resource… 3C For personal use only 2C 3P 2P Source: Origin APLNG’s Reserves (PJ) 30 Jun 2008 30 Jun 2009(1) Change Increase 2P Reserves 4,793 7,265 + 2,472 + 52% 3P Reser
Slide 25: APLNG as Australia's largest CSG producer
APLNG is Australia’s largest producer of CSG, representing around one third of total CSG production… 500 For personal use only • Production capacity is growing significantly and by 2011 annual CSG 400 production of over 100 PJ is targeted to Annual CSG Production (PJ) service domestic contracts Aust
Slide 26: Asian LNG oil price parity trend
In the Asian market in particular there has been a trend towards oil price parity which has resulted in higher LNG prices for gas and has been a key driver of emerging interest in CSG For personal use only Asian Term Prices Late 2006 $18 2007 Oil Parity $16 Asian Prices Converge 2008-09 Ex-ship LNG
Slide 27: ConocoPhillips and Bechtel technology and experience
APLNG will leverage the technology and experience of ConocoPhillips and Bechtel in project delivery and design… • ConocoPhillips and Bechtel Global formed a Global LNG Collaboration in 1996 • The collaboration centre is staffed by employees from both companies and utilises For personal use only Cono
Slide 28: APLNG Project Update
APLNG Project Update For personal use only Milestone Timing ConocoPhillips Optimised CascadeSM Q3 2008 process selected Initial Advice Statement (IAS) Q1 2009 submitted Project declared as Significant by Q2 2009 the Queensland Government APLNG Resources increased to 7,265 Q2 2009 PJ (2P) Curtis Isla
Slide 29: 4. Carbon and Renewables Strategy
4. Carbon and Renewables Strategy For personal use only
Slide 30: Portfolio positioned for carbon constrained environment
Origin’s portfolio is well positioned for a carbon constrained environment... Fuel Retailer For personal use only Generator Origin has a significant, diverse Established generation capacity Australia’s leading GreenPower and balanced range of renewable in hydro and geothermal with a provider with a
Slide 31: Increased Renewable Energy Target legislated
In August 2009 the Federal Government legislated an increased renewable energy target in response to climate change … GWh Renewable Energy Target 2009 -2030 For personal use only 50,000 40,000 Target 30,000 20,000 10,000 - 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 • Starting in January
Slide 32: RET to drive wind investment and peaking generation
The RET will drive significant investment in wind power generation and will require a significant capacity of peaking generation to be built to support its intermittency… Forecast Additional NEM Generation by • Wind is currently the most cost effective For personal use only Fuel Type to Meet Demand
Slide 33: Portfolio of renewable energy supply
Origin has positioned itself to respond to the RET with a portfolio of renewable energy supply… • Origin initially invested in wind through For personal use only third parties by underwriting wind farm developments by others through long term power purchase agreements • Origin’s first 30 MW wind far
Slide 34: Pipeline of gas-fired generation sites
In addition, Origin has a significant pipeline of developing and permitted gas-fired generation sites… MW Origin's Generation Capacity 8,000 For personal use only Mortlake Power Station 7,000 2,020 • 550 MW Peaking plant will provide 6,000 support to Victorian wind capacity • Site currently being pr
Slide 35: Emerging renewable technologies: geothermal and solar
Origin is a long time supporter and developer of emerging renewable technologies… Geothermal • Origin believes that hot rock geothermal power For personal use only developed at scale could provide a superior long term solution to meeting RET targets • Origin considers the Innamincka Joint Venture to
Slide 36: Carbon Pollution Reduction Scheme
The Federal Government’s policy response to climate change also includes the Carbon Pollution Reduction Scheme (CPRS) For personal use only • The CPRS is an emissions trading scheme designed to create a market price for carbon • Commencement deferred to July 2011 (originally 2010) • Permit price fix
Slide 37: Carbon prices and gas versus coal economics
As carbon prices increase, the economics of gas will surpass coal as the lowest cost fuel for generation making it an attractive option for future base load generation requirements… For personal use only Long Run Marginal Cost of Black Coal vs CCGT with $6 GJ Gas 200 Carbon Intensity by Fuel 180 Typ
Slide 38: Generation developments increase capacity and hedge support
Major developments and acquisitions are significantly increasing Origin’s generation capacity to provide greater hedge support, and position Origin’s generation portfolio for potential base load opportunities as the impact of carbon costs flows through wholesale energy prices For personal use only •
Slide 39: 5. Business Strategy
For personal use only 5. Business Strategy
Slide 40: Growth and integration within Australia
Within Australia Origin has grown the operational dimensions of each business area and has consistently sought to deepen integration…. Fuel Retailer For personal use only Generator A leading producer of gas in Eastern Largest owner and developer of gas A leading wholesaler and retailer of Australia
Slide 41: Natural hedge across the energy value chain
Origin’s operations provide an effective natural hedge and optionality to manage risk across the full energy value chain. Origin centrally monitors and manages the portfolio For personal use only Wholesale gas International Domestic Gas customers LNG customers Market Sale Sale Purchase of third part
Slide 42: Domestic gas supply portfolio
Origin’s domestic gas supply portfolio includes ownership of conventional gas reserves and contracts for purchases from third parties PJ Gas Available for Domestic Energy Portfolio 4,000 For personal use only 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Origin Equity Contracted Contracted ATP 788P 3P A
Slide 43: South West Queensland Pipeline expansion
The expansion of the South West Queensland Pipeline will provide Origin with long term gas pipeline capacity to link its Eastern Australian portfolio… • In June 2009 Origin entered into a conditional agreement with Epic Energy to underpin construction of new capacity on the South West Queensland For
Slide 44: Offshore exploration programme
In the coming year Origin has committed to a significant offshore exploration programme targeting substantial reserves increases near domestic markets in Australia and New Zealand For personal use only Northland Basin Origin, as Operator of permit PEP 38619, has secured the semi submersible rig “Kan
Slide 45: Growing generation portfolio to meet retail requirements
Origin continues to grow its Generation portfolio to meet its Retail requirements… Peak Demand vs Peak Capacity Annual Demand vs Annual Generation For personal use only 7,000 35 Annual Demand and Generation Dispatched (TWh) Peak Demand and Installed Capacity (MW) 6,000 30 5,000 25 4,000 20 3,000 15
Slide 46: CPRS uncertainty and generation investment
Uncertainty around the Carbon Pollution Reduction Scheme is complicating investment decisions for generation for many market participants… MW Origin's Generation Capacity 8,000 • The likelihood of an ETS is discouraging For personal use only investment in new coal fired baseload 7,000 generation 2,0
Slide 47: Managing energy retailing margins
Origin has been able to effectively manage its energy retailing margins through building scale and effectively managing tariffs, churn, cost to serve and risk Retail Profit Margin ($) and EBITF Margin (%) • With around 3 million customers, Origin is For personal use only 1000 10.0% able to achieve s
Slide 48: Contact Energy integrated position
Contact Energy also has an integrated position which provides a natural hedge to seasonal variations in the wholesale electricity market (where hydro is the dominant fuel)… For personal use only Fuel Retailer Generator • Extensive portfolio of gas • 9 power stations with • 479,000 electricity custom
Slide 49: Contact development projects
Contact has a number of projects committed for development with substantial additional opportunities, particularly in geothermal development Projects to restore flexibility back into the portfolio are on track for commercial operation in mid-2010 • Stratford peakers (200 MW, NZ$250m): Adds flexible
Slide 50: Outlook
For personal use only Outlook
Slide 51: Projects contributing in the coming financial year
A number of projects Origin has been developing are expected to make initial or significantly increased contributions to financial performance in the coming financial year For personal use only • Full year contribution from the Uranquinty and expanded Quarantine Power Stations • Full year contributi
Slide 52: Major projects contributing in years ahead
Origin will continue to progress the development of several major projects in its existing business which are expected to make contributions in the years ahead For personal use only • Development of the 550 MW Mortlake Power Station which is due for completion in late 2010 • Continued development of
Slide 53: Access to capital in a challenging year
The past year has been challenging for financial markets and many companies have been severely constrained in accessing capital to fund their businesses… As at 30 June 2009 For personal use only Undrawn Available Adjusted Adjusted Committed Cash Funding Net Cash(1) Gross Debt Debt Capacity Facilitie
Slide 54: Appendix - Business Overview
5. Appendix - Business Overview For personal use only
Slide 55: Exploration & Production
Exploration & Production For personal use only
Slide 56: Gas production increased
Gas production increased on full year contributions from the Otway Gas Project and Taranaki Basin… For personal use only • Underlying CSG production continued to grow Dilution of Origin’s interest strongly. Despite the 50% dilution in Origin’s in APLNG CSG interests from November due to the APLNG tr
Slide 57: Liquids production growth
Liquids production grew significantly during the year with contributions from new projects and the Cooper oil program… For personal use only • First full year contribution from both the Offshore Otway Otway Gas Project and Taranaki Basin • The Cooper Oil Program resulted in increased annual Cooper B
Slide 58: Otway Gas Project and BassGas Project
Otway Gas Project • 30.75% equity interest • Operating reliably at or around peak capacity during For personal use only high demand periods • Annual production(1) of 18 PJ of gas and 190,000 barrels of liquids • Origin’s integrated business purchases around 48% of the gas output under long term cont
Slide 59: Kupe Gas Project nearing completion
In New Zealand, the Kupe Gas Project is nearing completion… Kupe Gas Project • Construction of the offshore facilities, wells and For personal use only associated infrastructure is complete • Onshore production station near Hawera is nearing completion • Expecting to open the wells and bring raw gas
Slide 60: Generation
For personal use only Generation
Slide 61: Peaking and co-generation interests in Australia and NZ
Origin has interests in 1,464 MW of peaking and co-generation in Australia and over 1,900 MW through Contact Energy in New Zealand… For personal use only Australia Plants Capacity (MW) Operation Fuel Osborne 180 (Cogen) Base Gas Worsley 120 (Cogen) Base Gas Bulwer Island 32 (Cogen) Base Gas Mt Stuar
Slide 62: Expansion of Australian electricity generation portfolio
In Australia Origin is undergoing a major expansion of its electricity generation portfolio Generation Plant State Operation Capacity Type For personal use only (MW) Ladbroke Grove SA Base/Peak 80 Merchant Quarantine SA Peak 216 Merchant Roma QLD Peak 74 Merchant Mt Stuart QLD Peak 288 Merchant Uran
Slide 63: Darling Downs and Mortlake Power Stations
The completion of Darling Downs and Mortlake Power Stations will add 1,180 MW to Origin’s generation portfolio For personal use only View from Darling Downs Steam Turbine Building showing Gas Turbine building Mortlake PS gas turbine at final assembly in Germany Darling Downs Power Station Mortlake P
Slide 64: Retail
For personal use only Retail
Slide 65: Retail sales and customer numbers
Origin’s retail energy sales and customer numbers have grown through acquisition providing significant scale and geographic diversity and a channel to market for its Generation and Fuel businesses For personal use only • Around 3 million customers (including LPG) across Australia • Integrated risk m
Slide 66: Second largest energy retailer in Australia
Origin is Australia’s second largest energy retailer in both Electricity and Gas, with around 2.6 million customers providing scale and geographic diversity Electricity Market Share- Retail Customer #s Gas Market Share – Retail Customer #s (1), (2) (1), (2) For personal use only Other, 10% AGL, 40%
Slide 67: Retail tariff deregulation by state
Retail tariff deregulation is progressing in each state. In respect of those states that continue to have a form of regulation, the regulatory regime is stable and transparent and has an appropriate risk management margin embedded For personal use only State Current Regulatory Regime Comment / Outlo
Slide 68: Customer churn and numbers
Markets with more attractive margins tend to have higher levels of churn For personal use only Year End Customer Numbers (000’s) Natural Gas Electricity Total June 2008 880 1,729 2,609 Change -13 +14 +1 June 2009 867 1,743 2,610 Source: Various websites including VENCorp, NEMMCO, Gasmarketco & Compa
Slide 69: Brand awareness across Eastern Australia
Origin has established strong brand awareness across the Eastern Australian market, and has obtained higher recognition than its competitors For personal use only Retailer Retailer Retailer Retailer Retailer Origin A B C D E Top of Mind 26 18 5 8 2 1 37 37 41 41 47 47 46 46 49 49 50 50 44 36 12 7 3
Slide 70: Retail systems transformation with Wipro
Origin is undertaking a transformation of its Retail systems and has partnered with Wipro to move to an integrated SAP billing and customer management platform… • Origin has partnered with Wipro in a program to transform Origin’s Retail systems For personal use only • Seeking to improve Origin custo
Slide 71: Contact Energy
For personal use only Contact Energy
Slide 72: Contact is New Zealand's leading fuel integrated energy company
Contact is New Zealand’s leading fuel integrated energy company… • 600,000 gas, electricity and LPG customers For personal use only • Generates approximately 10 TWh (25-30%) of New Zealand’s electricity annually • Mix of renewable and lower emissions generation – 15% geothermal, 35% hydro and 50% na
Slide 73: South Island drought and wholesale prices
South Island drought conditions and transmission constraints in the first half limited Contact’s ability to generate electricity during periods of high wholesale prices and resulted in Contact paying more for its energy purchases… South Island prices remain For personal use only high as drought Whol
Slide 74: 16th CLSA Investors' Forum, Hong Kong
21 September 2009 For personal use only 16th CLSA Investors’ Forum Hong Kong
Slide 75: Further Information
Further Information Investors Angus Guthrie For personal use only Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61-2-8345 5558 Mobile: +61-4-1786 4255 Website www.originenergy.com.au 74
Slide 76: Origin Energy assets - Australia and New Zealand
Origin Energy assets - Australia and New Zealand For personal use only
Slide 77: 16th CLSA Investors' Forum, Hong Kong
21 September 2009 For personal use only 16th CLSA Investors’ Forum Hong Kong
Origin Energy — 16th CLSA Investors' Forum, Hong Kong (September 2009) on 6ix