Slide 1: ASX transmittal: results for year ended 30 June 2010
For personal use only To Company Announcements Office Facsimile 1300 300 021 Company ASX Limited Date 24 August 2010 From Helen Hardy Pages 75 Subject RESULTS FOR THE YEAR ENDED 30 JUNE 2010 This Transmittal is confidential. If you have received this document in error, please contact Origin Energy i
Slide 2: 2010 Full Year Results Announcement
Financial Year Ended 30 June 2010 g 24 August 2010 For personal use only Celebratingg a decade of growth 2010 Full Year Results Announcement
Slide 3: Important Notice
Important Notice This presentation does not constitute investment advice, or an inducement or recommendation to acquire or dispose of any g , in anyy jjurisdiction (including securities in Origin, ( g the USA). ) This p presentation is for information p purposes p only, y, is in a summaryy form,, an
Slide 4: Outline
For personal use only Outline 1. Performance Highlights 2. Financial Review 3 Operational Review 3. 4. Outlook 5. Appendix 3
Slide 5: 1. Performance Highlights
For personal use only 1. Performance Highlights
Slide 6: Underlying Profit increased by 10% driven by strong Retail performance
Origin’s Underlying Profit increased by 10% driven by strong Retail performance and contributions from new projects For personal use only Statutory Profit (1) $612 million down 91% St t t Statutory E Earnings i g per Sh Share (1) 69 7 cps 69.7 d down 91% Underlying EBITDA $1,346 million up 10% Under
Slide 7: Access to funds from APLNG dilution has contributed to growth
Access to funds as a result of the dilution of Origin’s CSG interest in Australia Pacific LNG and their ongoing redeployment into operating assets have been a significant contribution to growth over the last two years … For personal use only Compound Average Growth Rate since listing: g • Total Shar
Slide 8: Major projects completed during the year
During the year a number of major projects were successfully completed that added to earnings in the current year … For personal use only • Completed expansion of the Mt Stuart Power Station • Commenced commercial operations p of the Cullerin Range g Wind Farm • Achieved full commercial production f
Slide 9: New opportunities to access additional resources
We have created new opportunities to access additional resources … For personal use only • Acquired 100% interest in the Ironbark CSG exploration permit (formerly Pangaea) • Achieved drilling success at Trefoil and Rockhopper in the Bass Basin and Redback South and Redback in the Perth Basin • Incre
Slide 10: 2. Financial Review
For personal use only 2. Financial Review
Slide 11: 2010 Financial Highlights
2010 Financial Highlights Statutory Profit $612 million down 91% For personal use only EPS – Statutory 69.7 cps down 91% Revenue $8,534 million up 6% Underlying y g EBITDA $1,346 $ , million up p 10% Underlying EBIT $896 million up 9% Underlying Profit $585 million up 10% EPS – Underlying 66.6 cps u
Slide 12: Profit & Loss – Reconciliation of Statutory and Underlying
Profit & Loss – Reconciliation of Statutory and Underlying (($ million)) Jun 10 Jun 09 Change Statutory NPAT 612 6,941 -91% For personal use only Items Excluded from Underlying Profit(1)(2) Impairment of assets (23) (218) Increase (decrease) in fair value of financial instruments 10 (114) Gain on di
Slide 13: Underlying Financial Performance
Underlying Financial Performance ($ million) Jun 10 Jun 09 Change For personal use only Revenue 8,534 8,042 6% U d l i EBITDA Underlying 1 346 1,346 1 219 1,219 10% Underlying EBIT 896 819 9% Underlying net financing costs (13) (32) -59% Underlying tax expense (232) (183) 27% Non-controlling Interes
Slide 14: Underlying EBITDA up 10% to $1,346 million
Underlying EBITDA up 10% to $1,346 million Segment ($ million) Jun 10 Jun 09 Change Exploration & Production 250 264 -5% For personal use only Generation 182 107 70% Retail 568 479 19% Contact Energy 346 369 -6% Total 1,346 1,219 10% • Exploration & Production: Contributions from Kupe and increased
Slide 15: Depreciation & Amortisation increased 11%
Depreciation & Amortisation increased 11% as capital intensive investments commenced contribution … ($ million) Jun 10 Jun 09 Change For personal use only Exploration & Production 170 158 8% Generation 44 18 144% Retail 65 58 12% Contact Energy 129 135 -4% Total 408 369 11% • Exploration & Productio
Slide 16: Share of ITDA of Equity Accounted Investees increased 35%
Origin’s share of Interest, Tax, Depreciation and Amortisation (ITDA) of Equity Accounted Investees increased 35%, with a full year of the Australia Pacific LNG JV compared d with ith 8 months th iin th the prior i year For personal use only ($ million) Jun 10 Jun 09 Change Exploration & Production
Slide 17: Underlying financing costs reduced
Underlying financing costs reduced reflecting ongoing benefit of Australia Pacific LNG transaction ($ million) illi ) Jun 10 Jun 09 For personal use only Interest Revenue 113 137 Interest Expense (126) (169) Underlying Financing Costs (13) (32) Unwinding of discounted liability payable to APLNG (Ite
Slide 18: Tax Reconciliation
Tax Reconciliation ($ million) illi ) J 10 Jun J 09 Jun Underlying Profit before Tax 883 787 For personal use only Prima facie tax on Underlying Profit 268 236 Recognition of change in net tax loss position (23) (34) Share of net profit of equity accounted investees (6) (6) Other ((7)) ((13)) Underl
Slide 19: Operating Cash Flow
Operating Cash Flow (($ million)) Jun 10 Jun 09 Underlying EBITDA 1,346 1,219 For personal use only Change in working capital (179) (103) Stay-in-business y capex p ((179)) ((209)) Share of APLNG OCAT net of EBITDA(1) 18 (14) Other 61 24 Tax p paid ((102)) ((120)) Group OCAT(1)(2) 965 797 Net intere
Slide 20: Segment Cash Flow Returns
Segment Cash Flow Returns Operating Cash Flow Productive Capital OCFR (%) For personal use only ($m) % Change ($m) % Change Jun 10 Jun 09 Exploration & Production 227 -9% 1,882 32% 12.0% 17.5% Generation 172 122% 1,210 81% 14.2% 11.6% Retail 381 24% 2,613 7% 14.6% 12.6% Contact Energy 287 1% 3,428 0
Slide 21: Increase in total capital expenditure of 17%
A significant increase in expenditure on acquisitions led to an increase in total capital expenditure of 17% … For personal use only Growth Capex • 28% lower than the prior year • Reductions in Generation resulting from Darling 2,837 Downs progressing from construction to 2,426 commissioning, comple
Slide 22: Forward committed growth capital program is declining
Origin’s forward committed growth capital program is declining providing funding flexibility to address new opportunities For personal use only • O Origin’s ’ committed d investment in generation will decline post 2011 with the completion of the Darling Downs and Mortlake power stations • Upstream e
Slide 23: Fully franked final dividend of 25 cps declared
A fully franked final dividend of 25 cps, in line with the prior year, has been declared … For personal use only • Ex-dividend date 31 August 2010 • Date of record 6 September 2010 • Payment Date 28 September 2010 • Dividend payout ratio of 75% of Underlying EPS • Dividend Reinvestment Plan will app
Slide 24: 3. Operational Review
For personal use only 3. Operational Review
Slide 25: Exploration & Production
For personal use only Exploration & Production
Slide 26: Exploration & Production: EBITDA reduced 5%
Exploration & Production: EBITDA reduced 5% as contributions from new assets were offset by APLNG dilution, production constraints and higher exploration expense … For personal use only • Underlying y g EBITDA reduced 5% to $ $250 million with positive contributions from Kupe and Otway offset by APL
Slide 27: Gas production increases from Kupe and Otway
Increases in gas production from Kupe and Otway have offset production constraints in the Bass and Cooper basins and declines in other minor assets For personal use only • APLNG has increased production rates to in excess of 270 TJ/day • Kupe commenced production in January 2010; Origin’s share of g
Slide 28: Liquids production increased over the year
Liquids production increased over the year with contributions from Kupe and increased equity in Otway … For personal use only • Production of liquids from Kupe commenced in December 2009 Kupe • BassGas production reduced due to planned maintenance outage from 22 November to early April 2010 and subs
Slide 29: 2P reserves increased by 38% to 6,207 PJe
Origin’s 2P reserves increased by 38% over the year to 6,207 PJe with a 40% increase in CSG reserves … Proved plus Probable Gas LPG Cond Oil TOTAL Reserves (PJ) (kT) (kbbls) (kbbls) (PJe) For personal use only 30-Jun-09 4,267 1,650 17,312 6,691 4,484 Additions & revisions 1,774 510 5,887 (395) 1,827
Slide 30: APLNG increased production capacity for domestic contracts
Australia Pacific LNG has increased production capacity to supply the Darling Downs and Rio Tinto contracts … • APLNG remains Australia’s largest producer of For personal use only CSG as it meets domestic market contracts • Production capacity has increased to over 300 TJ/day, and is expected to inc
Slide 31: Australia Pacific LNG project progressing toward FID
Australia Pacific LNG project continues to progress on track in readiness for a final investment decision at the end of the year For personal use only Timing Milestone (Calendar Years)) 9 Initial Advice Statement (IAS) submitted Q1 2009 Project declared as Significant by the 9 Queensland Government
Slide 32: Progress on regulatory approvals, FEED and early works
Significant progress has been made on regulatory approvals, FEED studies and early works contracts … For personal use only Significant FEED and Early Works Contracts Awarded • $220 million contract signed with Savanna Energy Services for the provision of proprietary hybrid drilling and workover rigs
Slide 33: APLNG 2P reserves increasing by 40%
APLNG continues to mature its reserves and resources base with Proved plus Probable reserves increasing by 40% over the year For personal use only • APLNG remains the largest holder of CSG reserves in Australia • APLNG participated i i d iin 317 wells ll dduring i the h year • 2P reserves increased
Slide 34: New LNG projects well placed for growing worldwide gas demand
New LNG projects coming online from 2015 are well placed to meet the expected growing worldwide demand for gas … bcm Capacity of New LNG Projects • Substantial volumes of new LNG capacity 100 has reached the market in recent years, For personal use only however relatively limited capacity will be 80
Slide 35: Kupe production and Otway interest increase
Kupe has delivered six months production and an increase in initial reserves … Kupe For personal use only • Construction and commissioning completed • Reliable plant operation established • Origin share of 6 months production was 4 4.8 8 PJ of gas, and around 620 kbbls of liquids • Initial 2P reserv
Slide 36: Bass Basin production constrained by maintenance
Production from the Bass Basin was constrained due to an extended maintenance program and subsequently recommenced production from one well … For personal use only Maintenance activities being undertaken at BassGas Floodwaters in Coopers Creek BassGas Project Cooper Basin • Maintenance campaign at B
Slide 37: Expanded offshore and international exploration program in FY2010
In FY 2010 Origin commenced an expanded offshore and international exploration program Khorat Plateau Bang Nouan-1 B N 1 was suspended d d iin M May 2010 pending testing of the gas For personal use only encountered in the Triassic Kachanarai sands. Costs capitalised at 30 June. Tested in August 2010
Slide 38: Continued offshore and international drilling in FY2011
In FY 2011 Origin will continue with the elevated level of offshore and international drilling activity seen in FY 2010 Khorat Plateau Two onshore appraisal wells on the For personal use only Dao Ruang gas discovery in Block L15/50, Northeast Thailand, will be drilled towards the end of calendar yea
Slide 39: Generation
For personal use only Generation
Slide 40: Generation: 70% increase in EBITDA
Generation: Investments in new generation capacity provided a 70% increase in EBITDA with all new capacity contracted to the Retail segment … For personal use only • Underlying EBITDA increased 70% or $75 million to $182 million reflecting increased capacity payments f from the th Retail R t il segm
Slide 41: Cullerin Range Wind Farm and Mt Stuart expansion
The Cullerin Range Wind Farm commenced commercial operations on 1 July 2009 and provided a full year’s contribution … For personal use only Cullerin Range Wind Farm Mt Stuart Power Station Expansion • Commercial Operation date of 1 July 2009 • Completed in November 2009 • Annual capacity factor of 4
Slide 42: Darling Downs Power Station commissioned
Darling Downs Power Station was successfully commissioned in June 2010 becoming the largest combined cycle gas turbine plant in Australia For personal use only • 630 MW baseload combined cycle gas plant including three 120 MW gas turbines and a 270 MW steam turbine • Emits less than half the greenho
Slide 43: Mortlake development progressing
The Mortlake development continues to progress with commissioning expected to commence in the December Quarter 2010 … For personal use only Mortlake PS • 550 MW gas-fired peaking plant • Designed for conversion to CCGT at a later stage if required • Final project costs approximately $710 million(1)
Slide 44: Renewable energy target will drive generation developed to 2020
Without a price on carbon the renewable energy target will drive the type of generation developed between now and 2020 to meet underlying growth th in i ddemandd For personal use only • Origin’s modelling suggests 6,000 MW of Represents mandated 2020 renewable energy target new wind capacity require
Slide 45: Thermal generation capacity to exceed 3,600 MW
The completion of Mortlake Power Station in FY 2011 will take thermal generation capacity available to Origin to over 3,600 MW … For personal use only MW Origin's Thermal Generation Portfolio 7,000 • Darling Downs Power Station increased 6,000 Origin’s operating thermal generation capacity to 2,220
Slide 46: Wind generation expected to be dominant renewable source
In the absence of a competitive alternate renewable technology, wind generation is expected to be the dominant source of energy to meet the Renewable Energy Target • Exercised option to acquire the Yass Valley For personal use only Wind Farm project from Epuron with a capacity of between 222 MW and
Slide 47: Retail demand increasingly covered by owned or contracted generation
Origin Retail demand is increasingly covered by Origin operated or contracted generation capacity … For personal use only … reducing risk to retail earnings and creating opportunities for growth 46
Slide 48: Retail
For personal use only Retail
Slide 49: Retail: gross profit for gas and electricity increased
Retail: Gross profit for gas and electricity increased from the combined impact of effective wholesale portfolio management and tariff increases … • Underlying EBITDA increased 19% to $568 million For personal use only driven by higher gross profit and contributions from solar PV sales,, while cost
Slide 50: Integrated strategy across the energy supply chain
Origin continues to develop its integrated strategy in Australia thereby optimising value across the energy supply chain Origin Owned/Contracted EPIC QSN Pipeline contract For personal use only Gas-Fired Power Stations Enables Qld gas to be transported Uranquinty, Roma, Ladbroke to southern gas and
Slide 51: Low average electricity pool prices reduced energy costs
Low average electricity pool prices during the year reduced energy costs for Origin’s net load … For personal use only (1) (1) (1) … while volatility over the summer period provided additional returns from cap contracts and internal generation 50 (1) Average of pool prices capped at $300/MWh
Slide 52: 8% increase in electricity gross profit
Effective management of wholesale energy costs together with the revised QCA decision and other electricity tariff increases, resulted in an 8% increase in electricity gross profit For personal use only Performance Metrics and Electricity Natural Gas LPG % change from Jun 09 Commodity Revenue ($m) 4
Slide 53: Gross profit per customer improved to $323
Gross profit for gas and electricity customers improved by 9% over the year to $323/customer … Gas & Electricity Customers Jun 10 Jun 09 Change For personal use only Customer numbers (’000) 2,589 2,610 (21) Underlying EBITDA / Sales 9.5% 8.8% 0.7% Underlying EBIT / Sales 8.8% 8.1% 0.7% $ Per Custome
Slide 54: Market churn continues to increase
Market churn continues to increase in most segments … Market Churn: 12 Month Average State Fuel Jun 09 Change Jun 10 For personal use only Vic Electricity 27% - 27% Vic Gas 23% + 6% 29% QLD Electricity 19% + 3% 22% QLD Gas 12% - 12% SA Electricity 15% - 1% 14% SA Gas 11% - 11% NSW Electricity 12% +
Slide 55: Customer numbers remained largely stable
Customer numbers remained largely stable against increasing market competition with a decline of 0.8% relative to June 2009 Account Numbers For personal use only (000’s) Natural Gas Electricity Total • A marginal net increase in gas customers was Jun 2009 867 1,743 , 2,610 , more than offset by a ne
Slide 56: Retail Transformation program progressing as planned
The Retail Transformation program is progressing as planned For personal use only • Retail Transformation is Origin’s long term investment in transforming the Retail business to build capability that will support an improved customer experience and future market flexibility, and to improve underlyin
Slide 57: Sales of solar photovoltaic panels more than doubled
Sales of solar photovoltaic panels in the year has more than doubled … For personal use only • Origin has grown its solar business over the past five years and is beginning to see the benefits of this strategy with a doubling of residential and commercial sales revenue over the last 12 months to in
Slide 58: Additional sustainable energy offerings
Origin has introduced additional sustainable energy offerings … For personal use only • During the year Origin completed the acquisition of Cogent Energy, a niche provider of co- and tri-generation solutions • The business was integrated into the Origin business and two new plants installed and comm
Slide 59: LPG Underlying EBITDA up 11% to $50 million
For personal use only Underlying EBITDA was $50 million, up 11% from $45 million in the prior year • Sales S l volumes l were 491 ktonnes k f the for h year, up 3% on the h prior i year • Customer accounts currently 349,000, up 2,000 compared to June 2009 • CP prices increased $22/tonne 58
Slide 60: Contact Energy
For personal use only Contact Energy
Slide 61: Contact Energy: earnings lower
Contact Energy: Earnings were lower due to higher energy, network and take-or-pay p yggas costs not fullyy recovered in the wholesale and retail markets due mainly to higher than normal rainfall For personal use only • EBITDA was $346 million, million down 6% on last year, year primarily due to a lo
Slide 62: Major projects to restore portfolio flexibility
A number of major projects due for completion in the coming year will restore flexibility to the portfolio … For personal use only • Te Huka (23 MW, NZ$100m): The first phase of low- variable cost geothermal generation from the Tauhara resource area completed early early, below budget and operating
Slide 63: 4. Outlook
For personal use only 4. Outlook
Slide 64: Development projects expected to increase contributions
In the coming year a number of development projects and acquisitions are expected to make initial, or increased contributions, to Origin’s performance • A full year contribution from the Kupe in New Zealand; For personal use only • A full year contribution from Origin’s higher equity in Otway which
Slide 65: Continued expanded offshore and international drilling in 2011
In 2011 Origin will continue with the expanded level of offshore and international drilling activity seen in 2010 … For personal use only …including two appraisal wells in the Khorat Plateau in Thailand… …two exploration p wells in the Northland Basin New Zealand… …and the Silvereye exploration well
Slide 66: $3.4 billion of available liquidity
Origin has significant financial capacity to fund future growth with $3.4 billion of available liquidity including cash and undrawn facilities For personal use only • Completed C l t d refinancing fi i off A$2 A$2.00 billion billi of FY2011 debt and A$0.6 billion of additional financing in April 201
Slide 67: Opportunities to drive continued growth
Over the next year Origin is pursuing a wide range of opportunities to drive continued growth … For personal use only • A final investment decision by Australia Pacific LNG on its LNG project • The New South Wales Government’s energy asset sales process • Pursuit of a substantial portfolio of renewa
Slide 68: 2010 Full Year Results: A Decade of Growth
Full Year Ended 30 June 2010 g 24 August 2010 For personal use only Celebratingg a decade of growth 2010 Full Year Results A Decade of Growth
Slide 69: Further Information
For personal use only Further Information Investors Angus Guthrie Group Manager, Investor Relations g g g gy Email: angus.guthrie@originenergy.com.au Office: +61 2 8345 5558 Mobile: + 61 4 1786 4255 Website www.originenergy.com.au 68
Slide 70: 6. Appendix
For personal use only 6. Appendix
Slide 71: Profit & Loss – Australia Pacific LNG
Profit & Loss – Australia Pacific LNG Summary of Australia Pacific LNG’s performance Origin’s 50% Total For personal use only ($ million) Jun 10 Jun 09 Jun 10 (12 mths) (8 mths) Operating Revenue 250 Operating Expenses (161) Underlying EBITDA 89 45 29 Depreciation & Amortisation Expense (47) Income
Slide 72: Asset Impairments
For personal use only Asset Impairments ($ million) Pre-tax Post-tax Hovea Assets 14 10 Jingemia Assets 3 2 Brompton Site 4 3 N New Z Zealand l dO Onshore h A Assets t 8 6 LPG ships 4 3 Impairment of Assets 33 23 71
Slide 73: Changes in fair value of financial instruments
Changes in fair value of financial instruments Reconciliation of Statement of Financial Position and Income Statement items associated with financial instruments movements For personal use only ($ million) Jun 10 Change in net assets 24 Recognised in the Statement of Financial Position 9 g Recognise
Slide 74: Capital Expenditure by Segment
Capital Expenditure by Segment ($ million) Jun 10 Jun 09 Stay-in-business 179 209 For personal use only Growth Exploration & Production 294 531 Generation 764 1,155 Retail 88 79 Contact Energy 328 288 Total Capital Expenditure 1,653 2,262 Acquisitions (net of cash) 1 184 1,184 165 Capex including Ac
Slide 75: Invested $2.8 billion in growth, stay in business capital and acquisitions
Over the year Origin has invested $2.8 billion in growth projects, stay in business capital and acquisitions … For personal use only Balance Sheet Capacity as at 30 June 2010 $ billion Cash 0.8 Adjusted Gross Debt (2.5) Adjusted Net Debt(1) (2) (1.7) Undrawn Committed Facilities 2.6 Available Fundin