Origin Energy Limited · ASX:ORG
Origin Energy — Non-Deal Roadshow (September 2014)
43 slides from Origin Energy's roadshow presentation, Sep 8, 2014
Slide 1: ASX announcement cover note
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 08 September 2014 From Helen Hardy Pages 43 Subject ORG International Roadshow Presentation Please find attached a release on the above subject. Regards Helen Hardy Company Secretary 02 8345 5000 –
Slide 2: Origin Energy International Roadshow
For personal use only Origin Energy International Roadshow Grant King, Managing Director Karen Moses, Executive Director, Finance and Strategy September, October 2014
Slide 3: Forward looking statements
For personal use only Forward looking statements This presentation contains forward looking statements, including statements of current intention, statements of opinion and predictions as to possible future events. Such statements are not statements of fact and there can be no certainty of outcome i
Slide 4: A regional leader in energy markets
Since Origin was established in 2000 it has pursued a strategy of connecting resources to markets. Over that time it has become … For personal use only A regional leader in energy markets Leading integrated energy markets businesses in Australia and NZ At a glance: Flexible and diverse fuel port
Slide 5: Regional leader in energy markets and natural gas and LNG
Through a decade of consolidation Origin invested in the energy markets businesses, and in recent years has focused its investment on APLNG Regionally significant position in Regional Leader in Energy Markets Natural Gas and LNG production For personal use only CONTACT ENERGY EXPLORATION & ENERGY MA
Slide 6: Priorities to deliver Origin's strategy are changing
As APLNG delivers first LNG in mid-2015, and the energy markets businesses mature, priorities to deliver Origin’s strategy are changing … For personal use only Improving returns in energy markets businesses Deregulation of retail Improving customer Regional leader markets experience in energy Ca
Slide 7: Improving returns in energy markets businesses
For personal use only Improving 1. returns in energy Improving markets businesses 6|
Slide 8: Wholesale electricity prices suppressed by generation over supply
In Australia, wholesale electricity prices are currently suppressed by generation over supply, driving generators into retail markets and intensifying competition For personal use only • LNG production in Gladstone will help NEM Net Supply and Demand1 to alleviate the generation over supply 16,000 t
Slide 9: Per capita consumption decline expected to moderate
Rate of decline in per capita consumption expected to moderate however this trend will require review of policy and regulatory settings For personal use only NEM Mass Market Electricity Review policy and regulatory settings 8.00 Consumption per Capita1 7.50 Usage trend includes energy Retail price
Slide 10: Discounting impact on margins and customer accounts
While discounting has continued to impact margins, Origin has stabilised net customer accounts and is increasing its Natural Gas penetration … For personal use only Origin’s Average Signed Discount Offers for FY2014 Electricity and Natural Gas Electricity and Natural Gas (%)1 Customer Account Moveme
Slide 11: Retail Transformation positions Origin to manage costs
With completion of Retail Transformation Origin is well positioned to manage costs and improve customer experience For personal use only Cost to Serve Electricity and Natural Gas 800 Cash Cost Cost incl. TSA Lower cash 40% Churn Rates 700 cost to Origin, FY2013 Origin, FY2014 serve offset 35% Market
Slide 12: Benefits of rising gas prices captured
In Australia, Origin has captured the benefits of rising gas prices through oil-linked gas sale agreements and increasing penetration of Mass Market customers For personal use only Sources of Origin Energy Markets’ Retail market PJ/a East Coast Contracted Gas Portfolio 300 Ironbark (new equity gas)
Slide 13: Contact operates a similar integrated business model
Contact operates a similar integrated business model to Origin however Contact’s primary fuels are renewables, which are not subsidised by government regulation For personal use only Upstream FuelFuel Generation Wholesale/Retail Retailer Generator Flexible and diverse fuel Flexible generation Leadin
Slide 14: Investment in retail systems and flexible generation
Investment in the energy markets businesses has been focused on retail systems to improve operational efficiency and customer experience and in flexible, low cost generation For personal use only Segment Operating Cash Flow less Segment Growth Capital Expenditure Growth Capital Expenditure 1,200 1,2
Slide 15: Delivering growth in Natural Gas and LNG
For personal use only Delivering 1. growth in Natural Gas Improving and LNG 14 |
Slide 16: Australia forecast to emerge as largest LNG exporter
Australia is forecast to emerge as the world’s largest LNG exporter with around 85 mtpa1 directed to offshore markets by 2017, four times domestic gas demand Darwin LNG For personal use only Ichthys Exporting to Asia Pacific ~12 mtpa markets where demand is set to almost double from 175 mtpa in 2013
Slide 17: APLNG joint venture with ConocoPhillips and Sinopec
APLNG is a strong and aligned incorporated joint venture, combining Origin’s Australian CSG experience with ConocoPhillips’ extensive LNG and CSG capabilities … For personal use only • One of Australia’s leading • Global independent exploration and • Integrated energy and chemical integrated energy
Slide 18: APLNG reserves base in Queensland sweet spots
APLNG’s reserves base includes prime acreage in both known and industry accepted “sweet spots” in Queensland For personal use only PJ 100% APLNG Reserves and Resources1 20,000 15,000 10,000 5,000 - Estimated Requirements APLNG tenure in the Surat and Bowen 3P 2P 1P basins at 30 April 2014 2 Ramp and
Slide 19: APLNG on track to deliver first LNG in mid-2015
At around 75% complete1 APLNG is on track to deliver first LNG in mid-2015 … Timing Milestones (year ended 30 June) For personal use only Origin and ConocoPhillips form Australia Pacific LNG Incorporated JV Q2 FY2009 Environmental approvals Q3 FY2011 Sinopec - 4.3 mtpa foundation customer Q4 F
Slide 20: Upstream gas and water processing facilities completion
Upstream Gas and Water Processing Facilities completion is a key priority … For personal use only Condabri Central Gas Processing Facility, February 2014 Orana Gas Processing Facility, July 2014 Reedy Creek Gas Processing Facility, July 2014 Reedy Creek Water Processing Facility, July 2014 … with fa
Slide 21: Drilling and gathering progressing in line with plan
For personal use only Drilling and gathering is progressing in line with plan Coil-tubing drill rig Gathering works in Condabri Wandoan Interconnect, July 2014 Talinga Pipeline Compression Facility, July 2014 Construction of the main gas pipeline is complete with gas delivery to Curtis Island timed
Slide 22: Downstream project progressing
The Downstream Project is progressing with all Train 1 and Outside Battery Limit modules in place For personal use only APLNG Curtis Island site, February 2013 aerial view APLNG Curtis Island Site, July 2014 APLNG Curtis Island site, aerial view, July 2014 APLNG Curtis Island Site, July 2014 21 |
Slide 23: Upstream investments delivered increased production
Investments in upstream assets have delivered increased availability and production For personal use only Origin Gas and Liquids Production1 Origin 2P Reserves1,2 PJe mmboe PJe 120 20.6 1,200 Production up 17% 100 17.2 1,000 800 80 13.7 600 60 10.3 400 40 6.9 Total Liquids SA Cooper & SWQ 200 Perth
Slide 24: Offsetting field decline in Otway, Bass and Cooper basins
Origin’s short to medium term focus will be on offsetting natural field decline through in field and near field developments in Otway, Bass and Cooper basins For personal use only Otway Basin • Drilling of Halladale development well expected in Q1 FY2015 and planning for drilling Geographe 3 develop
Slide 25: Growth opportunities in Cooper, Beetaloo and Browse basins
Medium to longer term growth opportunities expanded through three recent transactions in Cooper, Beetaloo and Browse basins … For personal use only Cooper Basin – JV with Senex and Planet Gas • Targeting tight sands, shale and deep coal • Close to existing infrastructure • Up to 50% interest in perm
Slide 26: Growing capabilities and increasing investment in renewables
For personal use only Growing 1. capabilities and increasing Improving investment in renewables 25 |
Slide 27: Leveraging existing renewables base of 1,213 MW
Origin is focused on leveraging its existing renewables base of 1,213 MW to increase investments in renewable energy … For personal use only Portfolio of Renewable Renewable Development Opportunities Operational Generation MW 1,500 1,000 Indonesia New Zealand 47.5% interest in Sorik 250 MW geotherma
Slide 28: Capital management and funding
For personal use only Capital 1. management and funding Improving 27 |
Slide 29: Browse acquisition financing and debt maturity profile
The Browse acquisition was initially financed by drawdown of committed undrawn bank facilities in place to fund Origin’s commitments to APLNG For personal use only Origin Debt & Bank Guarantee Maturity Profile as at 30 June 20141 • The acquisition of a 40% interest 4,500 in the Poseidon exploration
Slide 30: Unfranked final dividend and payout ratio
An unfranked final dividend of 25 cps1 has been determined, representing a payout ratio of 77% of annual Underlying EPS For personal use only Dividends and Underlying EPS Dividends and Free Cash Flow g y per share 160 160 Dividend per share Free Cash Flow per share • First full year of 140 Underlyin
Slide 31: APLNG creates step change in earnings and cash flow
Completion of APLNG creates a step change in Origin’s earnings and cash flow For personal use only Priorities post APLNG: The first full year of contribution 1. Increase distributions to from APLNG is expected to be shareholders FY2017, with distributable cash 2. Maintain investment grade credit flo
Slide 32: Outlook
31 | For personal use only Outlook
Slide 33: FY2015 and FY2016 transitional years
Looking forward, FY2015 and FY2016 are transitional years for Origin with first contribution from LNG from mid-2015, expanding gas margins and an improving supply/demand balance in For personal use only electricity markets During the next two years Origin expects: Increased contribution from the E
Slide 34: Appendix
33 | For personal use only Appendix
Slide 35: 2014 Full Year Financial Highlights
2014 Full Year Financial Highlights ($ million) FY2014 FY2013 Change For personal use only Statutory Profit 530 378 152 Statutory EPS 48.1 cps 34.6 cps 13.5 Revenue 14,518 14,747 (229) Underlying EBITDA* 2,139 2,181 (42) Underlying EBIT* 1,353 1,438 (85) Underlying net financing cost* (192) (255) 63
Slide 36: Electricity unit gross profit
Improved margin management in second half results in year on year Electricity Unit Gross Profit down 3% ($1/MWh) compared to 9% down ($3.20/MWh) at the first half For personal use only Volumes Sold (TWh) FY2014 FY2013 Change Mass Market 18.0 20.1 (2.1) C&I 20.3 22.2 (1.9) Total 38.3 42.3 (4.0) Elect
Slide 37: Natural Gas unit gross profit
Natural Gas Unit Gross Profit expanded by 19% ($0.40/GJ) reflecting the benefit of Origin’s diverse gas supply portfolio … For personal use only Volumes Sold (PJ) FY2014 FY2013 Change Mass Market 37.1 39.4 (2.3) C&I 71.1 87.8 (16.7) Total 108.2 127.2 (19.0) Natural Gas Performance ($/GJ) FY2014 FY20
Slide 38: Cash cost to serve per customer
Cash cost to serve per customer $11 or 6% lower, reflecting operational improvements … For personal use only Cost to serve FY2014 FY2013 Change Cost to serve ($ per average customer account) (169) (180) 11 Cost to maintain ($ per average customer account) (144) (150) 6 Cost to acquire/retain ($ per
Slide 39: Contact's electricity unit gross profit margin
Contact’s Electricity Unit Gross Profit margin up 6% driven by lower energy costs following investments in generation and fuel flexibility For personal use only Volumes Sold (GWh) FY2014 FY2013 Change Mass Market 3,852 4,067 (215) C&I 4,526 4,210 316 Total 8,378 8,277 101 Electricity Performance ($/
Slide 40: APLNG capital expenditure and Origin cash contribution
APLNG capital expenditure for the year was $9.9 billion, with Origin’s cash contribution $2.8 billion For personal use only Cumulative Estimate from FID1 to Year to 30 from FID1 to (A$m) 1st sales from Train 2 June 2014 30 June (A$b) 2014 Project Capex 8,5071 21,004 24.73 Non-Project Capex: Capitali
Slide 41: Important Information
Important Information For personal use only All figures in this presentation relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its controlled entities, for the full year ended 30 June 2014 (the period) compared with the full year ended 30 June
Slide 42: Important Information
Important Information Other Information For personal use only A reference to Contact Energy is a reference to Origin’s controlled entity (53.1% ownership) Contact Energy Limited in New Zealand. In accordance with Australian Accounting Standards, Origin consolidates Contact Energy within its result.
Slide 43: Thank you
For personal use only Thank you For more information David Moon Group Manager, Investor Relations Email: david.moon@originenergy.com.au Office: +61 2 9375 5816 Mobile: + 61 437 039 310 www.originenergy.com.au 42 |