Origin Energy Limited · ASX:ORG
Origin Energy — Macquarie Infrastructure Conference (June 2003)
26 slides from Origin Energy's conference presentation, Jun 18, 2003
Slide 1: Competitive Outcomes in the Australian Energy Industry
Origin energy Competitive Outcomes in the Australian Energy Industry Macquarie Infrastructure Conferen
Slide 2: Origin Energy
Origin energy
Slide 3: The difference in historical demand forecasts for gas had profound implications
The difference in historical demand forecasts for gas had profound implications for supply and transmission infrastructure ‘Australian Domestic Gas Consumption {Potajoues per annum) + Official ABARE gas demand forecasts have varied Saeed Sgnifcanty over te years | wr «The 1997 and 1999 forecasts for
Slide 4: Perceptions of a gas shortage in eastern Australia and industry structure
Origin contended that perceptions of a gas shortage in eastern Australia were to do with industry structure prior to deregulation + Until deregulation energy infrastructure was limited and markets were heavily regulated + State owned utilities dominated generation, distribution and retailing + Limit
Slide 5: Updated AGSO reserves assessments showed large gas reserves in eastern Australia
‘An updated AGSO reserves assessments combined with Origin estimates showed large gas reserves in eastern Australia post 2000. Gas ‘Cooper | Gippala | Bass 7 Totals Reserves | Basin’ | Basin | Otway | Seam Gas (cr) # Discovered 32] a9] +008 val Commercial 03 ‘ess 20008 | ©.6)| @.5)| @.03)| On| (ay Z
Slide 6: Industry deregulation increased interconnection of gas and electricity markets
Industry deregulation increased the interconnection of gas and electricity markets, allowing new market based solutions + Opening markets stimulated eastern, Australian gas exploration - with a number of resources contracted or waiting to come on line + NEM provided basis for rational ‘matching of s
Slide 7: The industry has responded to these new market conditions
The industry has responded to these new market conditions. + New transmission pipelines built or commissioned ~ Since 1995 over 6,000 kms of transmission pipelines built or under Construction in eastern Australia (Australia wide nearly 9000 kms and over $3 billion spent). + New gas fields to be deve
Slide 8: Origin has actively pursued new projects such as BassGas
Origin has actively pursued new projects such as BassGas...... + Project will supply: 20PJ natural gas per year - 10% of Victoria’s gas supply for 15 years £80,000 tonnes of LPG per year 1 million barrels of condensate per year + Origin will purchase all sales gas + First gas late 2004 + Government
Slide 9: The offshore Otway Basin: major new gas resources
«the offshore Otway Basin.. 2 major new gas resources [jj discovered, Thylacine & Geographe, in May 2001. Feasibility studies completed. Environmental studies now underway. Woodside signed conditional gas sales agreement with TXU in ‘August 2002. First gas expected 2006
Slide 10: Coal seam gas (CSG)
....and coal seam gas (CSG) A Rockhampton 10 CSG supplies 25% of Queensland gas market Origin is Australia’s largest producer & supplies 40% of QLD’s CSG sales Major contracts signed during 2002 for the supply of AMC (from 2004) and AGL (from 2005) $1 billion investment planned over next 10 years in
Slide 11: Origin Energy
Origin energy
Slide 12: Mid 1990s electricity interconnectors were limited
In the mid 1990's electricity interconnectors were limited effectively isolating the states in separate electricity markets each with its own unique supply mix @) wan + Over supply of generation in VIC and NSW + VIC supporting SA + Generation construction in preference to interconnector construction
Slide 13: Industry responded with more interconnectors and price convergence
Industry has responded to the changing market providing more interconnectors, greater flexibility, & significant price convergence between states 1050MW QLD oomw Enrepreneua ‘ane ‘ork commenced forupgrace + Pending supply problems have been met + Over 7,500 MW of generation added since 1996 - approx
Slide 14: Current and committed NEM capacity will meet demand until about 2008
Consequently, Origin estimates current & committed capacity in the NEM will meet projected demand until ~2008 + ESAA & NEMMCO forecast 50000 demand to increase by ‘coo [NEM Supply and Demand 7000MW this decade «0000 + Qld ong generation with over 2500MW added or committed 25000 1999-2003, plus NSW I
Slide 15: Generation type needed depends on duration of supply tightness
The type of generation needed depends on the duration of potential tightness in the supply/demand balance + This shortfall is best served by peaking plant with shorter lead time to construct Even by 2010, only peaking capacity required. Off Peak and intermediate covered entirely by coal, renewables
Slide 16: Gas powered generation is cost competitive with new coal
Gas powered generation is cost competitive with new coal for intermediate & peak operation ‘00.00 ‘100.00 Ei soon Pew ‘Boat Brown BCoal- Back BECT BOCeT + Gas turbine based technologies are most competitive for new peaking plants required by market + Development times are short 6.9 months for Open C
Slide 17: MRET will drive investment in renewables
MRET will drive incremental investment in energy and capacity from renewables 25,000 Renewables GWh + Mandated Renewable Energy Target requires 9500GWh by 2010, has driven new investment activity 100MW of wind currently installed; to grow to T1000KW Origin has 120MW under contract and is developing
Slide 18: Current average market prices reflect oversupply of baseload
Current average market prices reflect the oversupply of baseload and trend below new-entrant SRMC....... | “onto + In competitive markets with excess 2) aaa capacity short run marginal cost (SRMC) drives prices + Without other incentives coal is most competitive for base load generation + Ease of en
Slide 19: Origin is an active participant in the electricity markets
Origin Energy is an active participant in the electricity markets and is well positioned for new opportunities + Merchant generation (built Roma, Ladbroke Grove & Quarantine) + Contracted generation (eg Mt Stuart purchase, current WA Peaker opportunity) + Have reviewed a number of assets including p
Slide 20: Significant retail presence and customer base
Origin also has a significant retail presence and customer base to ensure channels to market seven" wand to reduce development risk on gas production and power generation projects Origin
Slide 21: Full Retail Contestability timetable
Full Retail Contestability timetable Fuel Contestable | 2003/2004 | 2005 & Now beyond NSW & Vic | Gas Elec WA Gas Over 1 TD Elec | Over 300 MWh QLD Gas | Over 100 TY Elec Over 200 MWh SA Gas Over 10 TJ Elec ACT Gas Elec | Over 100 MWh aL Likely FRC for all No FRC customers "customers planned Origin
Slide 22: Origin Energy
Origin energy
Slide 23: Medium term projects that will contribute to growth
In the medium term Origin will benefit from projects that will contribute to growth * Projects contributing Projects initiated but Jun-Dec ‘02 not yet contributing Mt Stuart power: station: 288 MW New CSG Contracts ‘Acquisition of Fairview / Durham coal seam gas assets * Perth Basin gas and oil disc
Slide 24: Strong cash flows and balance sheet capacity cover growth capex
‘Strong cash flows and balance sheet capacity will cover acquisitions to date and future growth capex Grout capital expenditure estimates of Compared with calendar 2002 fre cash flow + Identified growth capex through the next 4 years is likely to exceed $1.3 billion Gtendsr 2) Annual free cash flow
Slide 25: Long term value delivery to shareholders
In the long term Origin will continue to deliver value to shareholders through: Dec Jun Dec Jun Dee oor oro [WEEP m Ret © Generation WNetwons| + A strategic position that has differentiated Origin from other energy companies in Australia + A focus on risk management and improving the performance of
Slide 26: Origin Energy
Ongin energy
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