Origin Energy Limited · ASX:ORG
Origin Energy — Non-Deal Roadshow (September 2011)
76 slides from Origin Energy's roadshow presentation, Sep 5, 2011
Slide 1: Origin Energy 2011 International Roadshow - Asia
Origin Energy 2011 International Roadshow - Asia 5-9 September 2011
Slide 2: 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 3: Outline
Outline 1. Strategy and Performance 2. Outlook 3. Australia‟s Leading Integrated Energy Company 4. APLNG: CSG to LNG project 5. Portfolio of Growth Opportunities 6. FY2011 Operational Highlights 3|
Slide 4: 1. Strategy and Performance
O origin 1. Strategy and Performance
Slide 5: Origin's strategy is to be integrated across the competitive segments of Australian energy
Origin‟s strategy is to be integrated across the competitive segments of the Australian energy industry • Listed in the S&P/ASX 20 index with a market capitalisation of approximately A$15 billion and over 5,200 employees1 • Australia‟s largest energy retailer, servicing 4.5 million electricity, natu
Slide 6: Origin has delivered consistent growth through development and acquisition
Origin has delivered consistent growth through development and acquisition … Fuel Generator Retailer Extensive thermal and Australasia’s largest Australasia’s largest renewable fuel position generation portfolio energy retailer • Strong domestic gas supply • Diversified across different • Large, inc
Slide 7: Proposition to shareholders: steady cashflows with EPS growth averaging 10-15%
Origin‟s proposition to shareholders is steady and predictable cashflows with EPS growth averaging 10-15% per annum Total Shareholder Return – Origin and S&P/ASX 100 Index 1,800 1,600 Origin Energy 1,400 S&P/ASX 100 • Origin has delivered 27% per 1,200 annum compound average growth rate of Total 1,0
Slide 8: Strategy has delivered growth in underlying earnings through capital deployment
Origin‟s strategy has delivered growth in underlying earnings through the deployment of capital in value enhancing activities Underlying EBITDA CAGR 19%1 Underlying Profit CAGR 23%1 (Earnings per Share CAGR: 16%1) Funds Employed CAGR 18%1 Free Cash Flow CAGR 26%1 8| (1) and (2) See slide 73 for End
Slide 9: FY2011 15% increase in Underlying Profit driven by new investments
In FY2011 a 15% increase in Origin‟s Underlying Profit was driven by significant contributions from new investments Statutory Profit $186 million down 70% Statutory Earnings per Share(1) 19.6 cps down 71% Underlying EBITDA $1,782 million up 32% Underlying Profit $673 million up 15% Underlying Earnin
Slide 10: Invested $5 billion and committed US$6 billion to APLNG
During the year Origin invested $5 billion in development and acquisitions and committed US$6 billion to fund its share of APLNG FY2011 funding and capital management initiatives • Raised $2.3 billion of equity via a pro rata entitlement offer • Syndication of a $2.15 billion and US$350 million thre
Slide 11: Progress in continued development of existing business
Origin has made significant progress in the continued development of its existing business … Exploration and Production – Full year contributions from Kupe and an increased share in Otway – APLNG now supplying Darling Downs Power Station and the Yarwun refinery – First 2P Reserves booked at Ironbark
Slide 12: 2. Outlook
O origin 2. Outlook
Slide 13: An investment in Origin today provides a stake in...
An investment in Origin today provides a stake in … • Australia‟s leading integrated energy company • Leading Australian energy position secured via $3.1 billion NSW acquisition in March 2011 • Largest retail energy customer base • Large and diversified generation portfolio across the National Elect
Slide 14: A transformational year: $5 billion invested in growing the business
A transformational year has seen Origin invest $5 billion in growing and developing its business • Origin‟s investments in development projects and acquisitions are expected to make initial or increased contributions to Origin‟s earnings in FY2012: - A full year contribution from the Integral Energy
Slide 15: Actively managing and adding to debt facilities
Origin is actively managing and will appropriately add to its debt facilities … Origin Debt and Bank Guarantee Maturity Profile as at 30 June 2011 Origin Debt and Bank Guarantee Maturity Profile as at 30 June 2011 Origin will fund contributions to its 2,500 ongoing business and APLNG from a range of
Slide 16: Opportunities driving medium to longer term growth
Origin has established a set of opportunities that will drive growth in the medium to longer term … • The first phase of the APLNG project, following a commitment of US$6 billion (Origin‟s 42.5% share) in July 2011 • A Final Investment Decision on APLNG Train 2 • Te Mihi geothermal project via its s
Slide 17: Capital expenditure remains significant across all segments
Capital expenditure remains significant across all business segments in the next financial year … Acquisition and Growth Capital Expenditure by Segment The forward capital program includes: Growth Capital Expenditure by Segment • Origin share of APLNG Train 1 expenditure(1) 5,000 Origin's contributi
Slide 18: 3. Australia's Leading Integrated Energy Company
3. Australia’s Leading Integrated Energy Company
Slide 19: Market leading energy retailer with diversified portfolio
Origin has emerged as Australia‟s market leading energy retailer, with an energy portfolio diversified by geography and fuel type … Origin Generation Capacity1 by fuel: by region: Gross Profit by Retail Product and Underlying EBIT Margin1 Retail Gross Profit Margin ($) and Underlying EBIT Margin (%)
Slide 20: Generation portfolio capacity more than doubled
Over the year, Origin has more than doubled the capacity of its generation portfolio … Peak Demand vs Generation Capacity(1)(2) NEM NEMMarket MarketShare Shareof of Generation Capacity(3),(4) Generation Capacity (3)(4) 10,000 Origin 9,000 TRUenergy 8,000 Peak Demand 2011 Mac. Generation (customer as
Slide 21: Integrated position complemented by third party contracts
Origin‟s integrated position is complemented by contracts with third parties and helps provide diversity of supply and natural hedges for the Retail business Origin Domestic Gas Supply/Demand Origin Domestic Gas Supply/Demand PJ 200 Third Party Contracts 150 Origin JV Partners - Retail & Contracted
Slide 22: Gas production diversified across eastern Australia basins
Origin‟s gas production in eastern Australia is diversified across CSG in Queensland, as well as the Cooper, Bass and Otway basins … PJe Cooper Basin 50 PJe PJe APLNG Other PJe Other 50 50 50 40 Liquids 40 40 30 Gas 40 Liquids Liquids Liquids 30 Gas 30 Gas 20 30 Gas 20 20 10 10 20 10 - FY10 FY11 - 1
Slide 23: Thermal and wind development options
Origin continues to progress a number of thermal and wind development options … Origin's Generation Portfolio & Development Options • Origin‟s thermal generation 14,000 pipeline includes 3,670 MW 1,314 of gas fired options, 12,000 enabling Origin to respond 587 1,502 10,000 to market, regulatory and
Slide 24: Clean Energy Plan and Carbon Pricing Mechanism
The Australian Government released its Clean Energy Plan and the details of its proposed Carbon Pricing Mechanism in July 2011 The Australian Government has proposed a Carbon Pricing Mechanism from 1 July 2012 • Interim three year, fixed-price period starting at $23 per tonne of C02-e on 1 July 2012
Slide 25: 4. APLNG: CSG to LNG project
4. APLNG: CSG to LNG project Artist’s impression of the LNG facility on Curtis Island Origin and APLNG exploration and production permits in the Surat and Bowen basins
Slide 26: APLNG major milestones culminating in FID
APLNG has achieved major milestones during the year … State and Federal approvals of Environmental Impact Statement Binding agreement with Sinopec for 20-year 1-train LNG off-take agreement and Sinopec was issued 15% equity in APLNG Completion of front-end engineering and design studies Sign
Slide 27: Staged investment toward first gas in 2015
A staged investment enables continued progress towards first gas in 2015 … Compelling Project Benefits • Leverages strong growth in Asian energy markets • Revenues linked to international oil prices • Significant contribution to Origin‟s earnings once operational • Prudent contracting strategy with
Slide 28: APLNG well placed to execute all components
APLNG is well placed to successfully execute all components of the project Strong and aligned joint venture Australia‟s largest 2P CSG reserves base Australia‟s largest, and world‟s largest CSG operators ConocoPhillips owner of Optimised Cascade® Process ConocoPhillips-Bechtel experience i
Slide 29: Strong aligned joint venture: Origin, ConocoPhillips, Sinopec
APLNG is underpinned by a strong, aligned joint venture that combines Origin‟s leading position in Australian CSG development and ConocoPhillips‟ extensive LNG and CSG capabilities … • Australia‟s largest integrated • Integrated energy company • Integrated energy and chemical company energy company
Slide 30: Asian LNG markets are robust
Asian LNG markets are robust, with opportunities for long term contracting Asian LNG Supply and Demand LNG Contracts by project and buyer Mtpa mmtpa Tokyo Gas Pluto 1 160 Kansai Electric Gorgon Osaka Gas PNG LNG TEPCO 140 QCLNG Chubu Electric Uncontracted LNG Supply1 120 GLNG Kyushu Electric Uncontr
Slide 31: APLNG increased production and reserves
APLNG has continued to increase production and reserves(1) … PJ APLNG Gas Production 100 80 APLNG Dilution • APLNG production increased by 36% to 97 PJ as supply Origin Share commenced to Rio Tinto‟s Yarwun refinery and 60 Darling Downs Power Station 40 • Daily production capacity reached 320 TJ/day
Slide 32: Commitment to local communities and the environment
APLNG continues its commitment to local communities and the environment to operate sustainably … Supporting the Community • Social Impact Management Plan to identify community needs and direct investment • Boosting local skills via apprenticeships, scholarships and training • Regional Community Cons
Slide 33: Controls and risk mitigation plans in place
Appropriate controls and risk mitigation plans are in place … Strong Management and •• Industry leaders engaged for all key contracts and services of the project Broad resourcing channels to obtain quality people with specialised skills Quality Teams • Integration and interfacing team established to
Slide 34: 5. Portfolio of Growth Opportunities
5. Portfolio of Growth Opportunities
Slide 35: From where will the fuel come?
Origin has always focussed on the strategic question “from where will the fuel come?” to meet future energy needs Source: BP Statistical Review of World Energy June 2010. • Origin continues to focus on addressing this question in domestic markets in Australia and New Zealand, and is also increasingl
Slide 36: Appraisal and development of APLNG and Ironbark CSG assets
Origin is pursuing the appraisal and development of its APLNG and Ironbark CSG assets in Queensland … • In the Surat and Bowen basins, the APLNG CSG to LNG project provides access to growing Asian demand, while Ironbark provides a substantial resource to address either domestic or international mark
Slide 37: Diversified energy resource opportunities, geothermal
Origin is expanding its portfolio of diversified energy resource opportunities both domestically and in growing markets offshore … Innamincka geothermal tenements - Australia • Deeps JV (Origin 30% interest): the Joint Venture is working toward the drilling of the Habanero 4 well during FY2012 to co
Slide 38: Hydro opportunities: Purari Hydro Power Project and Transform Solar
… hydro power opportunities such as the significant resource potential of the Purari Hydro Power Project in PNG … Purari Hydro Power Project - PNG • PNG Energy Developments Limited (50:50 JV between Origin and PNG Sustainable Development Program) is evaluating the hydro- electric potential of the Pu
Slide 39: 6. FY2011 Operational Highlights
6. FY2011 Operational Highlights
Slide 40: Exploration & Production
O origin Exploration & Production
Slide 41: E&P Underlying EBITDA increased 30%
Exploration & Production Underlying EBITDA increased 30%, driven by increased contributions from Kupe, Otway, BassGas and APLNG … Exploration and Production Segment • Underlying EBITDA up 30% to $325 million reflecting 800 400 increased production from Kupe, BassGas and Jun-11 Jun-10 APLNG, and Orig
Slide 42: Gas and liquids production both up around 30%
Gas and liquids production both increased by around 30% over the prior year … PJe Origin Annual Gas Production mmboe PJe Origin Annual Liquids Production mmboe 120 21 25 4.3 100 17 20 3.4 80 14 15 2.6 60 10 10 1.7 40 7 20 3 5 0.9 0 0 0 0.0 FY06 FY07 FY08 FY09 FY10 FY11 FY06 FY07 FY08 FY09 FY10 FY11
Slide 43: Otway and BassGas share of production increased
Otway and BassGas share of production increased 53% and 38% respectively over the prior period Otway • Share of production increased by 53% due to Origin‟s increased equity interest from 31% to 67% in March 2010, partially offset by production constraints • Origin assumed operatorship from Woodside
Slide 44: Kupe first full year of production
Kupe successfully delivered its first full year of production … Kupe • Production increased 84% due to its first full year of production since its commencement in December 2009 • A successful plant integrity inspection was completed in the December Quarter 2010; a further statutory inspection is sch
Slide 45: Origin added 968 PJe of 2P reserves
Origin added 968 PJe of 2P reserves across its interests, or 834 PJe including production, taking 2P reserves to 7,041 PJe … Origin 2P reserves(1)(2) movements: Origin and APLNG 2P Reserves (1)(2) 2P Reserves Additions Production Net PJe mmboe (PJe) (revisions) Movement 14,000 2,410 APLNG 864 (48) 8
Slide 46: Generation
O origin Generation
Slide 47: Generation delivered 80% increase in Underlying EBITDA
Generation delivered an 80% increase in Underlying EBITDA due to a full year contribution from Darling Downs Power Station … Generation Segment 500 1,000 • Underlying EBITDA increased 80% or $145 million 450 900 to $327 million reflecting increased capacity Jun-11 Total Revenue & Underlying EBITDA (
Slide 48: Darling Downs, Eraring and Shoalhaven power stations
Darling Downs, Eraring and Shoalhaven power stations provide significant operational flexibility … Darling Downs Power Station • Provides intermediate to baseload operation (540 MW) as well as peaking generation (90 MW) through its duct-firing capabilities • Generated over 2,800 GWh over the year at
Slide 49: Mortlake Power Station to commence operations
Mortlake Power Station is expected to commence operations in the first half of financial year 2012 Origin's Generation Portfolio & Development Options 14,000 12,000 1,314 587 1,502 10,000 8,000 MW 3,670 6,000 550 4,000 5,310 2,000 0 Operating Under Thermal Wind - Wind - Wind - Aerial shot of Mortlak
Slide 50: Retail
O origin Retail
Slide 51: NSW acquisition drove 38% increase in Retail EBITDA
The acquisition of the Integral Energy and Country Energy retail businesses drove a 38% increase in Retail Underlying EBITDA Retail Segment • Underlying EBITDA up 38% to $785 million driven by four 10,000 1000 months‟ contribution from the acquired NSW retail businesses 9,000 900 Jun-11 • The Retail
Slide 52: Retail business experienced significant growth
The Retail business experienced significant growth over the period … Year ended Retail 30 June 2011 Electricity Natural Gas LPG Solutions Revenue ($m) 5,349 (+27%) 1,180 (+11%) 670 (+6%) 445 (+128%) Gross Profit ($m) 929 (+43%) 205 (+10%) 166 (+8%) 64 (+21%) Underlying EBITDA ($m) 710 (+42%) 50 (+0%
Slide 53: Wholesale portfolio management benefited from prices and volatility
Effective management of the wholesale portfolio enabled Origin to benefit from both low electricity prices and summer volatility Low volatility outside of January Lower wholesale and February electricity prices • Wholesale electricity market characterised by low pool prices throughout the year, comb
Slide 54: Retail EBIT growth of 41%
Underlying EBIT growth of 41% was driven by the NSW acquisition, increased tariffs, favourable wholesale market conditions, increased gas consumption and growth in solar installations … Retail EBIT Movement - FY2010 to FY2011 750 700 82 650 ($ million) 600 93 550 24 1 8 711 500 450 503 400 FY2010 EB
Slide 55: NSW acquisition performed to expectations
The NSW acquisition performed to expectations in its first four months … • Including four months‟ contribution from the NSW acquisition, the Underlying EBIT/Sales margin 2011 2011 Gas and Electricity NSW (incl. NSW 2010 moved from 8.8% to 8.7% acquisition* acquisition)* • Underlying EBIT/Sales margi
Slide 56: NSW acquisition increased retail customer base over 50%
The NSW acquisition led to an increase in Origin‟s retail customer base of over 50% … Electricity and Gas Customer Numbers Movement - FY2010 to FY2011 5,000 customer accounts ('000) 567 (604) 4,000 1,636 (51) 4,137 3,000 Net change in Origin controlled customer accounts 2,589 (37) 2,000 Net IE & CE
Slide 57: Average churn rate remained stable at 18.5%
Origin‟s average churn rate remained stable at 18.5% … Combined Gas and Electricity Churn Rates Combined Combined 35% Electricity and Gas andNatural GasChurn Electricity Churn Rates Rates 35% Annualised 35% 30% NSW acquisition led to a decrease in % Churn: Monthly Data Annualised Annualised 30% 30%
Slide 58: Increased competitive activity in NSW to continue
Increased competitive market activity in NSW post the privatisation process is likely to continue, driving churn rates higher … Queensland Electricity Churn 50% Market Churn • NSW market churn has increased from an 40% Origin Churn average of 12% in the eight months prior to 1 30% March 2011, to 14%
Slide 59: Retail Transformation progressing well, SAP billing platform
Origin‟s Retail Transformation is progressing well, with 300,000 SA customers successfully migrated onto the new SAP billing platform … • Origin‟s new SAP integrated billing and customer management system is now in production • 300,000 South Australian customers were migrated into SAP in June, and a
Slide 60: New products and business lines for customers
Origin continues to develop its new products and business lines to deliver solutions for customers … Solar and Home Products E-Mobility/Electric Vehicle (EV) • Solar rooftop installations up from Charging 6,449 in FY2010 to 36,840 in FY2011 • First ChargePointTM installed in Australia • Since 2009,
Slide 61: LPG business Underlying EBIT up 5%
Underlying EBIT for the LPG business up 5% to $26 million … • Sales revenue increased 6% or $36 million, to $670 million, due to an increase in volumes, strategic price management and higher international benchmark LPG prices • Retail volumes increased 12 ktonnes, predominantly in the Australian res
Slide 62: Contact
origin Contact
Slide 63: Contact Underlying EBITDA up 3% in NZD terms
Underlying EBITDA up 3% in NZD terms as enhanced portfolio flexibility and increased retail sales were mostly offset by low wholesale market prices and higher network, gas and carbon costs … • Underlying EBITDA up 3%, or NZ$14 million, however Contact Segment declined by $1 million in terms of AUD t
Slide 64: Contact better positioned with improved portfolio flexibility
Contact is now better positioned to manage hydrology outcomes with improved portfolio flexibility … Increased Portfolio Flexibility Generation Market Share Growth • Ahuroa Gas Storage - Enables Contact to inject and extract gas as required • Stratford Peakers - New 200 MW gas-fired peaking power sta
Slide 65: 2. Financial Review
O origin 2. Financial Review
Slide 66: 2011 Financial Highlights
2011 Financial Highlights Statutory Profit $186 million down 70% EPS – Statutory 19.6 cps down 71% Revenue $10,344 million up 21% Underlying EBITDA $1,782 million up 32% Underlying EBIT $1,194 million up 33% Underlying Profit $673 million up 15% EPS – Underlying 71.0 cps up 10% Group OCAT $1,585 mil
Slide 67: Underlying Financial Performance
Underlying Financial Performance Underlying financial measures ($ million) Jun 11 Jun 10 Change Revenue 10,344 8,534 21% EBITDA 1,782 1,346 32% EBIT 1,194 896 33% Net financing costs (143) (13) 1,000% Tax expense (316) (232) 36% Non-controlling interests(1) share of Underlying Profit (62) (66) -6% U
Slide 68: Underlying EBITDA up 32% to $1,782 million
Underlying EBITDA up 32% to $1,782 million Segment ($ million) Jun 11 Jun 10 Change Exploration & Production 325 250 30% Generation 327 182 80% Retail 785 568 38% Contact 345 346 0% Total 1,782 1,346 32% • Exploration & Production: Higher average commodity prices, a full year contribution from Kupe
Slide 69: Segment Cash Flow Returns
Segment Cash Flow Returns Operating Cash Flow Productive Capital OCFR (%) ($m) % Change ($m) % Change Jun 11 Jun 10 Exploration & Production 457 102% 2,450 30% 18.6% 12.0% Generation 340 98% 2,555 111% 13.3% 14.2% Retail 508 33% 3,690 41% 13.8% 14.6% Contact Energy 277 -4% 3,412 0% 8.1% 8.4% • Explo
Slide 70: Total capital expenditure up 64% with NSW acquisition
Acquisition of the NSW energy assets led to an increase in total capital expenditure of 64% Growth Capex • $1,626 million, 2% lower than the prior year reflecting the completion of a number of projects including Origin Capital Expenditure (1) Darling Downs and Kupe, offset by increased capex due 6,0
Slide 71: Fully franked final dividend, 70% payout ratio
A fully franked final dividend of 25 cps has been declared, representing a payout ratio of 70% of Underlying Profit Origin Dividend History • Ex-dividend date 29 August 2011 60 120% • Record Date 2 September 2011 50 100% • Payment Date 29 September 2011 • Dividend payout ratio of 70% of Dividend Pay
Slide 72: Funding and capital management initiatives
Origin has undertaken a number of funding and capital management initiatives to fund acquisitions and the ongoing capital expenditure of the business Origin Debt and Bank Guarantee Maturity Profile as at 30 June 2011 Origin Debt and Bank Guarantee Maturity Profile as at 30 June 2011 • $2.3 billion w
Slide 73: End Notes
End Notes Slide 5 (1) Market capitalisation as at 1 September 2011; Employee numbers as at 30 June 2011 Slide 8 (1) From listing, until 30 June 2011 (2) Productive Capital is funds employed including 50% of APLNG (as at 30 June 2011) and excludes capital works in progress; Free Cash Flow is defined
Slide 74: End Notes
End Notes Slide 20 (1) Origin peak NEM demand for the years ended 30 June 2010 and 30 June 2011 (2) Cullerin Wind farm capacity included at a contribution factor of 5% (3) Includes the NEM registered capacity of scheduled market generation, including applications for registration, as at 30 June 2011
Slide 75: End Notes
End Notes Slide 47 (1) Does not include acquisitions; FY2010 capital expenditure is restated to conform with the current year’s classification (2) Includes power stations that Origin owns or has contractual rights to; excludes 550 MW for Mortlake Power Station which is expected to commence operation
Slide 76: Thank you
Thank you Further Information Angus Guthrie Group Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61 2 8345 5558 Mobile: + 61 417 864 255 Website www.originenergy.com.au 76 |