Origin Energy Limited · ASX:ORG
Origin Energy — Merger or Acquisition (July 2008)
22 slides from Origin Energy's merger presentation, Jul 4, 2008
Slide 1: Origin Energy
origin energy Origin Energy 4 J uly 2008
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
Slide 3: Contents
Contents • Origin Board to recommend shareholders reject BG’s bid • Response to BG’s contentions on Origin’s CSG reserves • Expanding markets for CSG: Power generation LNG 3 3
Slide 4: Origin Board to recommend shareholders reject BG's unsolicited takeover bid
Origin Board to recommend shareholders reject BG’s unsolicited takeover bid • BG announced on 24 June an intention to make an unsolicited off-market takeover bid at $15.50 cash per share, less the final dividend (BG says Bidder’s Statement and Offers will be despatched to Origin shareholders within
Slide 5: BG attempting to secure an option over Origin with a highly conditional bid
BG in effect are attempting to secure an option over Origin, and to impose unduly restrictive conditions on Origin’s business activities, by announcing a highly conditional bid at a price already rejected by the Origin Board • BG’s bid requires a number of regulatory approvals (ACCC, FIRB, NZ OIO, N
Slide 6: Response to BG's Contentions on Origin's CSG reserves
Response to BG’s Contentions on Origin’s CSG reserves • Origin reserves growth • Reserves methodology • Origin reserves quality and well density • Reversion • Reserves available for an LNG development • CSG benchmarks 6 6
Slide 7: CSG industry is characterised by rapid reserves growth at this stage
The CSG industry is characterised by rapid reserves growth at this stage in the development cycle Source: RISC Presentation to UBS Conference 19 June 2008. 7 7
Slide 8: Origin's reserves increases are in line with expectations at this stage of development
Origin’s reserves increases are in line with expectations at this stage of development and are consistent with % changes across the industry Spring Gully case study 1P and 2P reserves converging on 3P reserves since 2003 • The convergence of 1P and 2P reserves to 3P reserves in the Spring Gully fiel
Slide 9: Origin has a prime acreage position in the sweet spots of Queensland CSG
Origin has a prime acreage position in the “sweet spots” of Queensland CSG in terms of both quantity and quality of resource Surat & Bowen Basins Acreage Position Spring Gully/Fairview Area Undulla Nose Area Note: The Undulla Nose Area is represented here as bounded by the Leichhardt-Burunga Fault i
Slide 10: Over 75% of operated CSG 2P & 3P reserves are in areas with higher well densities
Over 75% of Origin’s operated CSG 2P & 3P reserves are in areas with higher well densities Wells per Acre and Net Acres: Origin v QGC Reserves • Origin has over 75% of operated Resources reserves in areas with higher well density (first quartile on A chart) A This gives confidence in the existing
Slide 11: Two thirds of Origin's 3P reserves are not subject to reversionary interests
While some of Origin’s CSG interests were acquired with reversionary interests attached, two thirds of Origin’s 3P reserves are not subject to any reversionary interests… • Origin obtained interests in a variety of areas through permit awards and acquisitions from various companies including Pangaea
Slide 12: Under current market conditions and planned development, reversion will not occur
Under current market conditions and planned development, reversion will not occur Origin Energy Reserves and Contingent Resources • The theoretical 25,000 maximum reversion Theoretical Maximum 20,000 Reversionary Interest of current 3P Petajoules (PJ) Reserves is 15% and 15,000 for 2C Resource is 10
Slide 13: Origin has clear leadership in certified CSG reserves for an LNG Project
Origin has clear leadership in certified CSG reserves, and is well positioned to satisfy the reserves threshold for an LNG Project… Current Reserves & LNG Project Requirements 12,000 3P Internally Committed • Origin has the highest 2P and 2P Contracted 3P reserves available for an 10,000 3P Uncommit
Slide 14: Recent CSG transactions provide a range of valuation benchmarks
Recent CSG transactions provide a range of valuation benchmarks upon which to value Origin’s CSG assets… Valuation Metrics $/GJ (3P Reserves) QGC – BG Group $0.67 Santos – Petronas $1.32 - $1.65 Arrow – Shell $0.52 - $0.77 Source: Origin estimates based on publicly available information. • Each benc
Slide 15: Expanding markets for CSG: Power generation and LNG
Expanding markets for CSG: Power generation and LNG 15 15
Slide 16: Origin has focussed on creating new channels to market for increasing gas reserves
Origin has for some time focussed on the need to create new channels to market for monetising the increasing gas reserves base in Eastern Australia… Potential Gas demand by sector – including three CSG to LNG projects of 3MTPA 2,500 2,000 Gas demand (PJ/a) 1,500 1,000 500 0 08 10 12 14 16 18 20 22 2
Slide 17: Origin's fuel-integrated generator-retailer strategy provides domestic channels to market
Origin’s fuel-integrated generator-retailer strategy provides us with domestic channels to market through power generation and the domestic gas market Origin Gas Demand and Sources of Supply 300 Potential additional gas Source: Origin data and into power generation internal estimates 250 Origin Reta
Slide 18: Commitment to proceed with Mortlake Power station and Uranquinty purchase
Origin has today announced our commitment to proceed with our $640M Mortlake Power station project and the $700M purchase of Uranquinty Power Station from Babcock & Brown Power Mortlake Uranquinty • As announced in late 2007, Origin’s Board • Origin has previously announced that it “was was due by m
Slide 19: Origin's retail position provides the opportunity to develop generation capacity
Origin’s retail position provides it with the opportunity to develop generation capacity… • Origin has the ability to satisfy its Energy Demand electricity requirements from Peak Demand 40 8,000 either its own assets (power Annual Demand and Generation dispatched (Twh) plants) or through contracts P
Slide 20: By 2010 Origin will have quadrupled its gas-fired power generating capacity
By 2010, with Uranquinty and Mortlake, Origin will have quadrupled its gas-fired power generating capacity and will hold a balance of efficient baseload and flexible open-cycle plant… • Total gas-fired generation capacity to increase from ~700 MW today to 2,800 MW by 2010 plus long-term contract rig
Slide 21: Origin is seeking to demonstrate the value of its CSG assets
Origin is seeking to demonstrate the value of its CSG assets by pursuing opportunities that accelerate the monetisation of these assets • In early June, Origin commenced a formal process to invite proposals from suitably qualified and experienced parties, who represent the leading players in the glo
Slide 22: Summary
Summary • Origin Board to recommend shareholders reject BG’s highly conditional bid, which fails to adequately reflect the value of Origin’s business and prospects. • Origin has a prime acreage position in Queensland CSG in terms of both quality and quantity of resource and has clear leadership in c