Origin Energy Limited · ASX:ORG
Origin Energy — Investor Presentation (June 2006)
42 slides from Origin Energy's investor presentation, Jun 7, 2006
Slide 1: Origin Energy ASX presentation fax cover
Origin energy To Company Announcements Office Facsimite 1300 300 021 Company Australian Stock Exchange Limited Date 7 June 2006 From Bill Hundy Pages 42 Subject PRESENTATION Attached for your information is a presentation to be made by Mr Grant King, Managing Director to a briefing of institutional
Slide 2: Overview of Origin Energy: Key Strategic and Operational Issues
Overview of Origin. Energy Key Strategic and Operational issues Grant King - Managing Director jim et ecminmtibermannvenmnainnry Snes tens igacaortncrsrase June 2006
Slide 3: Disclaimer
Disclaimer Any forward looking information in this presentation has been prepared on the basis of a number of assumptions which may prove to be incorrect and these statements speak only as of the date of this presentation. This presentation should not be relied upon as a recommendation to buy or sel
Slide 4: Welcome and Administrative Arrangements
Welcome and Administrative Arrangements Day One - Wednesday, 07 June 2005 Day Two - Thursday, 08 June 2005 Event 06:36 am Meet for breakfast 07:15 am Depart Roma for Spring Gully Arrive Spring Gutly 08:15 arn CSG presentation From Martin Ritey - Manager QLO Producing Assets 09:15 am hen operating we
Slide 5: Emergency evacuation instructions
Page 4 In the event of an evacuation alarm «Move to the Emergency Assembly Area -Await instructions from Floor Wardens elf evacuation is necessary, please stay with the Floor Warden to be taken to Wynyard Park where a head count and role call will be taken Origin
Slide 6: Origin's Executive Management Team is organised to ensure clear accountabilities
Origin’s Executive Management Team is organised to ensure clear accountabilities... Managing Director & CEO Chief Cperating Officer Australia Karen Moses Executive General Manager| Major Developm. Projects Executive General Manager| Exploration Andrew Stock Rob Willink Contact Energy Chief Executive
Slide 7: Slide 7
Slide 8: End use sales of electricity, gas and related products in Australia
End use sales of electricity, gas, and related products and services in Australia is around A$38 billion per annum and are growing steadily with energy usage... Australian End Use Energy Sales A GROWING MARKET and Growth in GDP A GROWING COMPANY " Gemand for natural ges, 2] Ny 7 Rowena ur 288 fn 200
Slide 9: The major changes that have shaped the energy industry
The major changes that have shaped the energy industry in the last decade include: « Privatisation of government owned electricity generators, distributors and retailers and gas distributors and retailers; * Deregulation of energy markets resulting in competitive markets for the supply of gas and el
Slide 10: Privatisation and subsequent sale and consolidation
Privatisation and subsequent sale and consolidation... Cumulative asset sales in the Australian energy sector* 100 Incomplete Mergers (ORG/CEN and AGL/ALN} El In Progress @ Compieted Sales AS Billion 3 ‘e ‘\ Ho a se 9 fo re oe Poh PS Os ie ae e .. has resulted in a high volume of transactions occurr
Slide 11: Segment integration and consolidation by market participants continued
in 2005 segment integration and consolidation by the market participants continued... VIC(SA Energy Market Ownership Evolution® 1995 1996 Snowy Hydro Snowy Hydra i SESE abrakel st: aoe .. With CLP, AGL & Snowy Hydro successful in achieving increased consolidation and integration growth Origin Source
Slide 12: Deregulation and the introduction of contestability
Deregulation and the introduction of contestability in the energy sector commenced in the mid 1990’s... Gas Vic Electricity Gas SA Electricity Gas NSW Electricity Gas QLD Electricity Gas WA Electricity Outer Bar Legend inner Bar Not Contestable .. but gradual implementation has left room for continu
Slide 13: Anticipating these changes, Origin believed the industry would separate
Anticipating these changes Origin (then Boral) believed the Industry would separate into the regulated and the contestable segments... Natural Gas «= = = = Electricity » Regulated monopoly businesses Competitive segments .. and established Envestra as the first large listed company focused on regula
Slide 14: Infrastructure area now heavily populated with similar investors
This area of infrastructure is now heavily populated with similar investors: * Duet « Alinta and Alinta Infrastructure holdings * Babcock & Brown Infrastructure « Challenge Infrastructure * Gasnet * APT « Spark * SP Ausnet Origin Page 13
Slide 15: Abundant thermal fuel and excess generation capacity, low electricity prices
An abundance of thermal fuel and excess generation capacity has resulted in low wholesale electricity prices Victorian spot market and contract market electricity prices $76 24 fa) BEES: hy ‘i 7] ICAP FPC as at $25 ae . WY 3 we 30/06/05 S > 2 3 [E=5 Monthly Average Spot Price =="1 Year Forward Price
Slide 16: Increase in gas exploration and development committed over $3 billion
An increase in gas focused exploration and development has seen the upstream industry commit over $3 billion to new developments... t Patricia/Baleen (producing) - Bream gas-cap development (producing) Minerva (producing) Casino (proposed) CSG fields in the north Bowen, central Bowen and Sydney Basi
Slide 17: Origin's financial objectives and business strategies
Origin’s financial objectives and business strategies were established to respond to these changes in the energy industry... « Financial Objective ~ Steady and predictable cashflows ~ EPS growth of 10-15% pa on average « Business Strategy ~ Positioned in the competitive (rather than regulated) segme
Slide 18: Origin reports its business across four segments
Origin reports its business across four segments covering its operations in Australia, New Zealand and the Pacific... Exploration and Production «Over 2,100 Ple 2P reserves and annual sales of over 80 PJe «Diverse acreage position across Australia and New Zealand +A leading Australian CSG producer R
Slide 19: Origin's strategy patiently implemented over ten years
Origin’s strategy has been patiently implemented over the last ten years... 997 1998 1999 2000 2001 2002 2003 2004 2005 2006 iiding Retail capabilities — Spin off of regulated assets => Envestra Energy 21 acquisition (retail gas) Powercor acquisition {retail electricity) CitiPower acquisition (retai
Slide 20: In E&P Origin focussed on finding gas close to markets
In E&P Origin focussed on finding gas close to markets... 1997 1998 1999 2000 2001 2002 2003 2004 005 2006 <= Legacy position in Cooper, onshore Otway, Bass, Perth, Surat and Bowen Basins Peat CSG acquisition......Australia’s first long term CSG contract signed with BP Bulwer Island Yolla 2 appraisa
Slide 21: In generation Origin built capabilities in cogeneration and peaking plants
..while in generation Origin has steadily built capabilities in development of cogeneration and peaking plants... 997 1998 1999 20 2001 2002 2003 2004 2005 2006 uilding generation capabilities Investment in small cogeneration facilities Commissioning of Osborne Cogeneration facility - Australia’s la
Slide 22: Growth in generation capacity from 51.4% interest in Contact Energy
A significant part of the growth in generation capacity comes from the acquisition of a 51.4% interest in Contact Energy... Retaif and generation coverage across NZ 28% of generation capacity “EG © 50% thermal OtahehuB ® 15% geothermal Cembmed cycle @ 35% hydro gas curbing 33cawy 29% of electricity
Slide 23: Key issues in implementing Origin's strategies
in the course of implementing Origin’s strategies there have been a number of key issues... « Regulated vs competitive positioning and cost of capital « Risk management strategies - the value of integration « The energy supply demand balance and the need to source gas close to markets « Retail conso
Slide 24: Competitive advantage in regulated infrastructure is a low WACC
Competitive advantage in regulated infrastructure is a low WACC, requiring stable cash-flows from secure assets with monopoly characteristics, and incompatible with high growth aspirations... Natural Gas : Origin maintains an equity investre 8 in Envestra and provides ; Electricity __ Regulated mono
Slide 25: Risk management in deregulating markets through integration
Origin believed risk management in deregulating markets would be critical and picking a winning segment difficult... (aesienilsin ge doves gn Creag etvoden B95 - Retail sales provide revenue certainty - Assets provide cost certainty ... SO integrated across fuel, generation and retail to provide nat
Slide 26: Different view on energy supply demand dynamics
Origin also took a fundamentally different view to many industry participants on energy supply demand dynamics... Origin’s supply / demand analysis for eastern Australia in # 2001 showed large uncontracted demand creating perceived shortfalf in focal supply....... Eastwen Australian gay donvand Crlg
Slide 27: Consolidation in the energy retail market
The company believed consolidation in the energy retail market was inevitable with initial positioning critical to long term survival Eastern Australia Eastern Australia Market share of customers: 1998 Market share of customers: 2004 Origin Energy 16% Origin — Hf origin Energy Energy Listed Companie
Slide 28: Carbon intensity expected to evolve as an issue
Origin believed carbon intensity would inevitably evolve as an issue, but regulation and economics uncertainties large... Price ($/REC} .. therefore developed options in low greenhouse emission technologies to selectively implement as carbon regimes are put in place Origin Page 27
Slide 29: Strategy has grown the company's operations and profits
implementation of Origin’s financial objectives and business strategy has grown the company’s operations and profits 2,506 2P Reserves {PJe} 2,006 1,500 4 4,006 4 500 + Jun Jun Jun Jun Jun Jun oO Of OF 03 04 05 Generation Capacity (MW)" Contact Jun Jun Jun Jun Jun Jun 60 4 Oz 03 o4 o5 EBITDA by busi
Slide 30: Significant appreciation in Origin's share price and market capitalisation
This has led to a significant appreciation in Origin’s share price and market capitalisation... Origin Eneray Share Price and S&P ASX 100 Index (1 March 2000 to 2 June 2006) Grigin Share Price ($} ASX 100 Index Normalised 1 March 2000 = 1.0 SF FS GF SS MM HP SG PP sh GH VP FFG FG KM KF SF GK Fe HK S
Slide 31: Project development as the main driver for growth
Looking forward origin continues to concentrate on project development as the main driver for growth... Major Projects not yet contributing significantly to Origin’s results. ® Projects approved/unde : construction ® Yet to receive investment. .< approval < .Spring Gully power project CCGT: ‘Spr g G
Slide 32: Production from Spring Gully commenced; other upstream projects ramping up
Production from Spring Gully has commenced and other upstream projects will ramp up over the next two years... Spring Gully Coal Seam Gas (Origin 97% - Operator} + §199 million Stage 1 Project delivered on time and on budget + First gas delivered June 05: will ramp up over 2 years to help service AG
Slide 33: Power generation development options in Australia and New Zealand
Origin is progressing a number of power generation development options in Australia and New Zealand... Proposed Spring Gully Power Station « Environmental impact Statement released for public comment on 9 November 2605 « Proposai to construct a high efficiency gas fired power station of around 1000M
Slide 34: Exploration expected to be a major value contributor
In the long term, exploration is expected to be major vaiue contributor to Origin through reserve additions & future production Value Creation High; Identifying new core areas _ Maturing emerging — 0000 “. core areas. oe Page 33
Slide 35: Acquisition of Contact in 2004 strategically compatible
The acquisition of Contact in 2004 represented a strategically compatible business within Origin’s geographic sphere of operations... « Increases markets accessible to Origin with known economic, competitive and regulatory environment « Strategically compatible business - business focussed on compet
Slide 36: Contact's business based on managing risk through integration
Contact’s business, like Origin’s, is based on a model of managing risk through integration... Contact* Chriggnt Total generation Retail electricity sales Annual gas production Gas sales / internai use Source: Contact Energy, Origin Energy. Assumes 100% Contact Energy « 2005 Data .. Which has result
Slide 37: Acquisition added to size and diversity of Origin's business
The acquisition added significantly to the size and diversity of Origin’s business ... Origin Contact Combined Customers (000) - Electricity 900 >500 >1,400 - Gas 900 >80 >980 - LPG » 290 - >290 >2,670 Generation (MW)* - Gas capable plant &7Q 1,091 1,961 - Hydro 752 752 - Geothermal 340 340 3,053 Av
Slide 38: Energy Industry Structure
Energy Industry Structure Natural Gas Electricity |_Regulated monopoly businesses Competitive segments The New Zealand and Australian industry structure mirror each other - and like Origin, Contact is focussed on the competitive segments Origin Page 37
Slide 39: Competitive and regulatory structure of NZ energy industry similar to Australia
The competitive & regulatory structure of the NZ energy industry is similar to Australia, and deregulation is more advanced Contestability Ownership Structure Retail Tariff Controls Gas Electricity Gas Electricity Gas Electricity New Full Full Private & Private & x minor Zealand Gov Gov Australia Vi
Slide 40: Australia has vast uncommitted reserves of natural gas
Australia has vast uncommitted reserves of natural gas... Approximate market demand (PJ/a) Approximate remaining 2P gas reserves (PJ} Origin Major Projects ... whereas NZ’s reserves outlook’ is more constrained Page 39 Source: Other company reports and annurmcements, and Origin Energy estimates
Slide 41: Origin's share of Australian markets is less than Contact's in New Zealand
Origin’s share of Australian markets is less than Contact’s share in New Zealand... Australian nd use energy sales of gas and electricity compared with Origin Energy end use revenue 50,000 45,000 & 40,000 B og 2 35,090 < % 30,000 2 3 25,090 2 20,000 a B +8.000 s = :0,000 a 6,000 20084 2004/5 200575
Slide 42: Overview of Origin Energy: Key Strategic and Operational Issues
Overview of Origin. Energy Key Strategic and Operational issues Grant King - Managing Director jim et ecminmtibermannvenmnainnry Snes tens igacaortncrsrase June 2006