Origin Energy Limited · ASX:ORG
Origin Energy — Investor Day (June 2016)
114 slides from Origin Energy's investor day presentation, Jun 9, 2016
Slide 1: ASX Company Announcements fax cover
To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 9 June 2016 From Helen Hardy Pages 114 Subject Investor Day and Site Tour Presentation Please find attached a release on the above subject. Regards Helen Hardy Company Secretary 02 8345 5000 – helen.hardy@originenergy.co
Slide 2: Investor Day and Site Tour
ORIGIN ENERGY Investor Day and Site Tour Grant King, Managing Director Frank Calabria, CEO Energy Markets David Baldwin, CEO Integrated Gas 9-10 June 2016
Slide 3: Important Notices
Important Notices 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 in re
Slide 4: Outline
Outline Corporate Overview • CEO address • Business Overview • Integrated Wholesale Portfolio Strategy Energy Markets • Customer Strategy • New Energy Solutions • Business Overview • Markets Integrated Gas • Value and Resilience • Strategy in Action 3
Slide 5: CEO Address
CEO Address Grant King, Managing Director 4
Slide 6: Origin's strategy of connecting resources to markets
Origin’s strategy of connecting resources to markets is pursued through a clear focus on its 2 businesses and 3 priorities designed to drive continued improvement in Origin’s performance A leader in A regionally significant energy markets position in natural gas and LNG production Growing contributi
Slide 7: Two external influences: oil price and COP21
Two external influences have impacted Origin’s priorities and prospects – Oil Price and COP21 Fall in Oil Price Increasing global commitment to reduction in carbon emissions 140 Actual and Projected Global Greenhouse Gas Emissions1 120 100 80 60 40 Spot Brent (US$/bbl) 20 Spot Brent (A$/bbl) 0 Origi
Slide 8: Delivering on commitments to reduce debt
In response to lower oil prices Origin is delivering on commitments to reduce debt Achieved to date Ongoing initiatives Targets • Net Debt below $9 billion in Sale of Contact, reducing Remaining asset sales debt by $3 billion FY2017 Reduce capex • Net Debt includes the effect of $2.5 billion
Slide 9: Asset sale program on track for A$800+ million debt reduction
The asset sale program is on track to deliver a A$800+ million reduction in debt without materially impacting underlying business operations • $355 million proceeds for Mortlake infrastructure at an incremental cost of approximately $26 million per annum Incremental FY2017 A$m Proceeds costs (FY17)
Slide 10: APLNG project de-risked and close to completion
The APLNG project is increasingly de-risked and close to completion after an eight-year journey 50% JV EIS APLNG US$8.5bn APLNG Upstream Train 1 Bechtel Train 1 project with COP approval FID 1 Project FID 2 project Performance finance lender Finance complete Test complete test Dec-07 Dec-08 Dec-09 D
Slide 11: Paris Agreement and Origin's gas and renewable portfolio
The Paris Agreement has been ratified, committing Australia to a carbon emissions reduction of 26-28% by 2030. Origin is well positioned to respond through its gas and renewable portfolio World primary energy demand and CO2 emissions Energy in a carbon constrained world Mtoe Gt • The Paris Agreement
Slide 12: Wind and solar reducing dispatch of coal plants in SA
In SA wind and solar are reducing dispatch and margins for existing coal plants, increasing reliance on gas generation for reliability Source: Deloitte Access Economics, November 2015 11
Slide 13: Increased LNG supply and floating regasification
Increased LNG supply. Will LNG demand surprise to the upside? MTPA Source: Wood Mackenzie Q2 2016 450 400 350 300 250 200 150 100 50 0 2000 2002 2004 2006 2008 2010 2022 2024 2026 2028 2030 2032 2034 2012 2014 2016 2018 2020 Probable Development Under Construction Operational Source: IGU 2016 World
Slide 14: Will batteries displace gas as a balancing fuel?
Will batteries displace gas as a balancing fuel? While battery costs will continue to decline, they are not competitive with grid delivered energy Source: Grattan Institute, May 2015 Source: Grattan Institute, May 2015 “storing energy turns out to be surprisingly hard and expensive...and it would tr
Slide 15: Near term milestones
Near term milestones Timing Train 1 revenue recognition 1 March 2016 Bechtel Performance Test Completed 30 April 2016 Asset sales progress Through FY2016 and FY2017 Train 1 project finance lender tests met and sponsor H1 FY2017 guarantees partially fall away Train 2 completion H1 FY2017 Train 2 reve
Slide 16: Two businesses executing on strategic priorities
Origin’s two businesses are executing on strategic priorities Continued strong performance in Energy Markets APLNG project increasingly de-risked, strong operational performance Energy Markets Energy Markets Cash Flow Upstream 100% complete, Downstream 97% complete Underlying EBITDA From Operating A
Slide 17: Improving Returns in Energy Markets
aIN ENERGY O IMPROVING RETURNS origin IN ENERGY MARKETS Frank Calabria ceo Energy Markets Investor Day 9 June 2016 gi = * ,e (e) s: (pe c — o\ ay? ,
Slide 18: The energy market continues to evolve
The energy market continues to evolve as we expect Electricity market shifting to renewables Gas market becoming more volatile Consumers becoming more empowered 17
Slide 19: Vision to become most trusted energy solutions provider
We are confident in our vision to become the most trusted energy solutions provider 18
Slide 20: Strategies to move closer to the customer and improve returns
Our strategies to move closer to the customer and improve returns Integrated wholesale New energy Customer strategy portfolio strategy solutions strategy • Increasing investment in • Leading customer • Solar (business & renewables experience & service residential) • Competitively priced fuel • Low c
Slide 21: Integrated business model benefiting from changing market dynamics
Integrated business model benefiting from changing market dynamics Increased renewables will result in higher wholesale ...improving the competitiveness of our integrated electricity prices as coal exits... business over time SA Price Duration Curve 2010 and 2016 Indicative split between wholesale &
Slide 22: Delivering on our commitments in FY2016
Delivering on our commitments in FY2016 Expanding Natural Gas margins • Significant growth in gas margins Maintaining Electricity margins • Maintaining electricity gross profit following structural decline • Increasingly competitive cost of electricity as we invest in utility scale renewables; e
Slide 23: Increased operating cash flow and reduced capex improving returns
Increased operating cash flow and reduced capital expenditure are improving returns Predictable and improving EBIT to Sales Clear focus on earnings and cash flow margins improving return on capital EBITDA & operating cash flow ($m) Energy Markets margins (%) Energy Markets ROCE (%) 1,600 15% 12% 10%
Slide 24: Strong growth opportunities over the next two years
Strong growth opportunities over the next two years Stabilising Natural Gas margins • Maintaining already strong gas margins • Upside exposure to higher oil prices longer term • Gas market volatility may provide further opportunities Improving Electricity margins • Increasing wholesale returns;
Slide 25: Agenda
Agenda Integrated wholesale portfolio strategy Customer strategy New energy solutions strategy 24
Slide 26: Integrated Wholesale Portfolio Strategy
INTEGRATED WHOLESALE PORTFOLIO STRATEGY Tony Lucas General Manager Energy Risk Management Greg Jarvis General Manager Wholesale & Trading and Business Sales @) origin
Slide 27: Integrated portfolio strategy
Integrated portfolio strategy 1 • Gas market volatility • Supply shifting to renewables Outlook • Renewable certificate and wholesale energy prices increasing • Battery economics improving 2 • Competitively priced fuel position Integrated Portfolio • Access to transport Strategy • Generation flexibi
Slide 28: LNG demand increasing gas market volatility
1 LNG demand and linkage to oil prices expected to increase volatility in the gas market Gas demand & price volatility increasing Gas flows changing East Coast Weekly Gas Demand & Price 1 South West Gas Pipeline (SWQP) Flows 1 35,000 $8.00 2,000 $7.00 30,000 1,500 $6.00 25,000 to QLD $5.00 1,000 20,
Slide 29: Origin supports measures to reduce carbon emissions
1 Origin recognises that climate change is a global challenge and unequivocally supports measures to reduce carbon emissions In Paris, Australia has committed to a 26% to 28% The electricity sector accounts for 33% of Australia’s reduction in carbon emissions by 2030 carbon emissions Australian Tota
Slide 30: Renewable supply supported by flexible generation
1 Renewable supply will be supported by flexible generation Supply shifting to renewables. Gas generation Impact of renewables on the load duration curve reducing however is more valuable NEM production1 Change in NEM Load Duration Curve 100% 80% As more renewables are installed there is a reduced e
Slide 31: Trends result in upward pressure on prices
1 These trends will result in continued upward pressure in prices Energy prices increasing in all markets, in particular Renewable energy prices increasing South Australia Renewable Energy Price Forward energy prices CAL17 100 90 100 80 80 70 $/MWh 60 60 $/certificate 50 40 40 30 20 20 June 2014 Jun
Slide 32: Battery economics improving; OCGT still required
1 When economic, batteries will move energy within the day. OCGT will still be required to firm intermittent supply Battery economics improving, but still a while before No new coal likely to be built there is mass market appeal Customer battery payback Renewable Build and Coal Retirement 2012 to 20
Slide 33: Integrated wholesale portfolio strategy
2 Integrated wholesale portfolio strategy Balance between markets and fuels to deliver a competitive cost of energy Flexibility through gas supply Flexibility through generation fuel and capacity, supported and transport by competitively priced renewables Gas supply & demand Capacity Capacity Energy
Slide 34: Access to reserves at competitive prices
2 Access to reserves at competitive prices remains a competitive advantage Sources of Energy Markets East Equity resources (Bass 1 Coast Gas Portfolio Gas and Otway) and long dated contract with BHP / Esso provides significant volumes in the south Beach gas contracted until December 2024 plus Origin
Slide 35: Access to transport manages swings in gas market
2 Access to transport enables us to manage swings in gas market demand and supply Move gas to highest priced markets SWQP Provide services to LNG market Moomba Wallumbilla Connect resources to electricity and gas markets Movement of gas 34
Slide 36: Flexible fuel and generation portfolios
2 Flexible fuel and generation portfolios compliment a market with increasing renewable supply Origin’s energy portfolio flexibility Long capacity with geographic diversity TWh (FY2015 volumes) Capacity, MW 40 35 30 Business 25 20 15 10 Retail 5 0 Min Production Max Production Sales NSW QLD VIC SA (
Slide 37: Renewable strategy and LRET position
2 With more certainty on the renewable energy target and reducing PPA prices, our renewable strategy will see us contract more of our future liability at historically low prices Origin LRET position 8 7 Number of LRECs (millions) 6 5 4 Ability to contract at 3 low prices to meet 2 future liability 1
Slide 38: Gas strategy has created significant value
3 Execution of our gas strategy has created significant value Competitive fuel position & access to transport Significant uplift in gas gross profit Gas gross profit Service provider to LNG market, providing ~1 mtpa of LNG for export 400 Execution of long dated, flexible sales 300 agreements to
Slide 39: Generation strategy capturing market volatility
3 Execution of our generation strategy is capturing volatility in the market Wind supplemented by gas-fired generation Fuel and generation flexibility capturing price spikes SA Wind output and Origin OCGT Origin SA Gas usage and SA Power price 1200 300 45 $250 40 1000 250 $200 Daily Avergae SA Pool
Slide 40: Integrated portfolio costs flat in 1H2016
3 In a rising market, our integrated portfolio costs were flat in 1H2016 NEM Spot Prices Rise 23% Origin’s Energy Procurement Cost Flat $/MWh 50 Origin Supply HY2016 Market Origin outcome (18.6 TWh) Market Increase Flat 40 Spot (+$9/MWh) (+$0.2/MWh) Wholesale market Increase Flat Contract 30 (+$1/MW
Slide 41: Renewable strategy buying certificates at low prices
3 Execution of our renewable strategy enabled us to buy certificates at low prices for surrender in future years LREC spot prices 90 80 • Purchase of certificates when the market was 70 oversupplied has allowed us to bank certificates for $/certificate 60 surrender against future 50 liabilities 40 •
Slide 42: Renewable energy costs continue to fall
3 Our renewable strategy to date has been prudent as renewable energy costs continue to fall with utility-scale solar challenging wind as the lowest cost Australian Renewable PPA Prices ($2016) and Forward Cost Estimates 140 130 120 Majority of our LRET obligations will be satisfied at prices well b
Slide 43: Customer Strategy
CUSTOMER STRATEGY | | Jon Briskin | General Manager Retail
Slide 44: Customer strategy
Customer strategy 1 • Competition remains predominantly price led Outlook • Churn stabilising • Price deregulation 2 • Leading customer experience & service • Low cost business model Customer Strategy • Increase customer lifetime value • Innovative & differentiated products and services 3 • Digitall
Slide 45: Market remains competitive, churn stabilising
1 The market remains competitive, although churn is stabilising Competitive offers in market Churn is stabilising Electricity and Natural Gas Churn Rates 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Origin Churn Market Churn Source: AEMO; Origin internal analysis 44
Slide 46: Becoming a digitally enabled retail organisation
2 We are rapidly becoming a digitally enabled retail organisation, clearly focused on increasing customer lifetime value and delivering innovative & differentiated products & services Leading Innovative & Increase customer Low cost differentiated customer experience & business model products & lifet
Slide 47: Customer first culture driving experience and service
3 Customer first culture and digitally enabled service design driving customer experience and service Core metrics improving Experience & service will drive lower churn over time Jun 13 May 16 Promoters far less likely to churn Customers registered than detractors 183k 1,010k on MyAccount Churn % Cu
Slide 48: Process innovation enabling a low cost business model
3 Continued focus on process innovation and optimisation to enable a low cost business model Improvement in our operational performance Cash cost to serve down Natural Gas and Electricity Cash Back office efficiencies with new Cost to Serve 1 business process outsourcing partner 700 Industry lea
Slide 49: Managing customer lifetime value
3 Managing customer lifetime value to provide differential treatment and improve margins Using data and analytics to understand our Differentiated treatments creating value customers’ value and needs Targeted renewal treatments reducing high value customer churn Lower churn Customer across the lifet
Slide 50: First to market with Predictable Plan
3 First to market with an innovative & different product proposition Insight driven proposition underpinned by analytics Driving positive customer and business outcomes “I just wish I knew how much I was going to pay each month.” It’s PREDICTABLE – pay the same amount for 12 months Tailored pric
Slide 51: New Energy Solutions
NEW ENERGY SOLUTIONS origin Frank Calabria ceo Energy Markets Phil Mackey General Manager Solar and Emerging Businesses
Slide 52: Extending beyond grid based energy supply
Extending beyond grid based energy supply to offer new energy solutions to consumers 51
Slide 53: New energy solutions
New energy solutions 1 • Strong growth in business segment Solar & storage • Solar and battery storage solutions 2 Centralised energy • Market leading position in serviced hot water services • Growing presence in embedded networks 3 • Rapidly scaling up capability Metering • Roll out of meters conti
Slide 54: Demand for business solar growing
1 Demand for innovative solar solutions in the business segment is growing Total Solar Market (600 MW in FY2016) Govt. sponsored feed-in Declining Consumer Consumer solar expected to tariff schemes volumes offset by growth in continue to decline until MW/month Business solar storage triggers next wa
Slide 55: Solar and battery storage solutions
1 Solar and battery storage solutions will ultimately integrate with our core commodity offering Solar proposition resonating with business segment Battery proposition remains niche at current prices Sales of Solar as a Service Storage solution being integrated increasing with solar plus grid
Slide 56: Growth in Centralised Energy Services
2 Strong growth opportunities in Centralised Energy Services Serviced Hot Water Embedded Electrical Networks 122k customers Growth opportunity, particularly in NSW Strong growth track record and Synergies with Acumen Metering potential Potential to grow beyond energy services 55
Slide 57: Growing digital metering capability
3 Growing our capability in digital metering Cumulative digital meters installed 70 Building capability for low cost, efficient # digital meters installed (000s) 60 deployment of digital meters 50 40 Foundation for product innovation and differentiation 30 20 Clear focus on customer experience
Slide 58: Slide 58
Slide 59: Becoming the most trusted energy solutions provider
Becoming the most trusted energy solutions provider Integrated wholesale New energy Customer strategy portfolio strategy solutions strategy • Increasing investment in • Leading customer • Solar, business & renewables experience & service residential • Competitively priced fuel • Increase customer li
Slide 60: Strong growth opportunities over the next two years
Strong growth opportunities over the next two years Stabilising Natural Gas margins • Maintaining already strong gas margins • Upside exposure to higher oil prices longer term • Gas market volatility may provide further opportunities Improving Electricity margins • Increasing wholesale returns;
Slide 61: Fuelling Better Lives - Integrated Gas
w) i119 FUELLING BETTER LIVES David Baldwin ceo Integrated Gas Investor Day 9 June 2016
Slide 62: Integrated Gas priorities
Integrated Gas remains committed to the priorities we outlined in February Continue execution momentum Deepen resilience to sustained low oil price Secure new high value markets Manage the portfolio with discipline Build the capability and culture to deliver 61
Slide 63: Conversation roadmap
Conversation roadmap Creating Overview of value Break & Further Integrated Market Our strategy through questions questions Gas resilience 62
Slide 64: Integrated Gas asset map
BONAPARTE BASIN sin BROWSE i BASIN BEETALOO BASIN MIDDLE EAST/ INDIA JAPAN er ne APLNG (Downstream) COOPER BASIN APLNG (Upstream) IRONBARK PERTH BASINS oTWAY BASSGAS NEW ZEALAND OUR PEOPLE, IN COMMUNITY
Slide 65: Our focus
Our focus REPUTATION SAFETY LEADERSHIP PERFORMANCE STRATEGY 64
Slide 66: An example – being in community
An example – being in community REPUTATION 65
Slide 67: How we create value
How we create value Value Underpinning proposition beliefs Integrated Gas lowers the cost of Australia’s ▪ Global demand for gas and oil grows vast onshore and near-shore resources and ▪ From the early 2020s, connects them to high-value markets – Global LNG market shifts from being long to short – E
Slide 68: Conversation roadmap
Conversation roadmap Creating Overview of value Break & Further Integrated Market Our strategy through questions questions Gas resilience 67
Slide 69: Gas expected to fuel the future
Gas is expected to be a major part of fuelling the future World primary energy demand – new policies scenario 2013-40 growth in gas demand by region (000s of PJe) ▪ Gas and renewables increase most as 7% Nuclear the world Asia 26 transitions toward 19% Renewable a cleaner future 5% ▪ Gas growth is 1
Slide 70: Global LNG oversupplied until early 2020s
The global LNG market is forecast to be oversupplied until the early 2020s, after which new supply will be required Global LNG supply demand outlook MTPA 500 LNG Market will need 130-170 MTPA of additional supply by 450 2030 400 3 Three time horizons 350 2 1 LNG supply outpaces demand 300 growth as
Slide 71: China gas growth key driver of LNG demand
China gas growth is a key driver of LNG demand recovery. Potential upside if Chinese domestic unconventional resources or pipe gas import fall short of forecast China gas supply demand outlook1 mtpa 450 Demand 400 Additional LNG required from LNG uncontracted 350 2019 imports required ▪ China is exp
Slide 72: Sinopec growing import capacity; APLNG ownership
Sinopec is growing import capacity and APLNG has well-aligned project ownership structure Australia Pacific LNG Sinopec’s APLNG receiving terminals Tianjin LNG, Strong shareholders Tianjin (3mtpa) and operators Under construction 37.5% 37.5% 25% due to come online in 1H CY2017 Qingdao LNG, Shandong
Slide 73: LNG spot prices weak until early 2020s
LNG spot prices are expected to remain weak until the market tightens in the early 2020s Global LNG supply demand Asian LNG price forecast Nominal $US/mmbtu 16 Japan Spot Japan long-term contract price 14 12 3 10 Three time horizons 8 2 1 LNG finds a tight price band around the US marginal cost As f
Slide 74: APLNG marginal cost competitive with US LNG
APLNG’s marginal cost to supply incremental volumes is competitive with US LNG and lower than forecast spot prices LNG short run marginal cost DES North Asia today, US $/mmbtu 3.8 2.8-3.3 ▪ APLNG’s marginal cost structure supports continued development and production above contracted volumes ▪ IRR o
Slide 75: Most new LNG supply from US from 2020s
From the 2020s, most new LNG supply is expected to come from the US. LNG pricing is expected to reflect this Cost curve of unsanctioned projects available to meet demand1 Global LNG supply demand 74 (1) Origin modelling based on McKinsey Energy Insights data
Slide 76: Australian gas competing with US exports
Longer term, Australian gas delivered into Gladstone LNG plants at US$6/mmBtu is expected to compete with US exports US LNG delivered to Asia 2020s Australian LNG delivered to Asia 2020s US$/mmBtu (real) US$/mmBtu (real) 6.5 to 9.0 6.5 to 9.0 3.5 to 6.0 A$5-8/GJ 2.0 to 4.0 Henry Hub Liquefaction1 Sh
Slide 77: East Coast gas market expected to tighten
East Coast gas market is expected to tighten from the early 2020s… East Coast Australia supply demand outlook PJ/a Other LNG Domestic APLNG LNG 10% above nameplate 2,500 LNG + Domestic demand Opportunity ~500 PJ/a 2,000 1,500 1,000 500 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 20
Slide 78: Conversation roadmap
Conversation roadmap Creating Overview of value Break & Further Integrated Market Our strategy through questions questions Gas resilience 77 |
Slide 79: APLNG project nearly complete with strong performance
The APLNG project is nearly complete with strong operational performance both in upstream and downstream APLNG current performance … Upstream project 100% complete ▪ Since starting the Bechtel Performance Test, Train 1 has exceeded nameplate capacity Downstream project 97% complete ▪ 22 LNG cargoes
Slide 80: Managing oil and LNG price risk
Integrated Gas is managing oil and LNG price risk Oil price risk management LNG price risk management ▪ Integrated Gas annual oil exposure of 23-25 mmboe LNG spot price exposure via APLNG ▪ December 2015: purchased 15 mmboe JCC indexed FY17 Developed internal capabilities to manage physical and
Slide 81: APLNG average operating costs consistent with guidance
APLNG’s average operating costs are consistent with guidance Cash cost Feb 16 June 16 A▪ In operated fields, additional wells in later Targeted average steady state years in lower permeability areas are offset average average by lower well costs. Increase in non- FY17-23 A$b A$b operated costs B▪ E&
Slide 82: Supply for two trains on track
Supply for two trains is on track, production capacity is increasing Well deliverability rising in Orana and Combabula with dewatering Supply for both trains is on track TJ/day TJ/day 3000 3.0 Monetisation opportunity Orana Un- 2.0 Talinga 2000 contracted Non- LNG Additional operated capacity Non- N
Slide 83: Type curves flatter and longer than FID estimates
Overall type curves are flatter and longer than FID estimates, with stable EUR. Sustain capital expenditure is in line with guidance due to reductions in operated well costs Average type curves Actions Condabri and Combabula Spring Gully, Condabri, Combabula At FID Latest view ▪ Targeting reduced Wa
Slide 84: Reducing cost per well through Crystal
Origin’s push to reduce $/well and $/GJ continues through Crystal Targeting cost per well down >50% from Phase 1 Example Crystal initiatives Full costs for an average Walloons vertical well, A$m No low-value activities. >6 hours per well Reduction in well clean out A$4m per year operations during co
Slide 85: Bringing wells online several times faster
Origin is raising the metabolism of learning by bringing wells online several times faster APLNG Gas Production (TJ/d) Nameplate capacity plus 10% 2 Train • Delivery Packages of 10-100 wells are ranked Contracted based on breakeven price ($/GJ) and reservoir Demand and execution risks • At any given
Slide 86: E&A programme for FY17/18
E&A programme focused on appraising new areas and trialling new technologies in FY17/18 FY17/18 E&A Programme Map Example FY17/18 Scope projects Spring Gully Flank Test horizontal well types in new areas Spring Gully Flank Peat Flank Reedy Cr S 175 Peat Flank De-risk upcoming development; find sweet
Slide 87: Reducing operating cost and improving reliability
Targeting reduced operating cost by scaling up efficiently and improving reliability Initiatives to reduce operating costs Example initiatives to deliver operating cost reductions are in place APLNG operational costs for operated assets Current A$/GJ Improvement area performance FY21 target Operate
Slide 88: Conversation roadmap
Conversation roadmap Creating Overview of value Break & Our Further Integrated Market through questions strategy questions Gas resilience 87
Slide 89: So far today we have covered
So far today we have covered… Global demand for gas and oil grows From the early 2020s, – Global LNG market shifts from being long to short – East Coast gas market tightens toward export parity – East Coast gas supply gap creates opportunity Australian resources are globally competitive using
Slide 90: Conversation roadmap
Conversation roadmap Creating Overview of value Break & Our Further Integrated Market through questions strategy questions Gas resilience 89
Slide 91: Strategy to lower cost of Australian gas and connect to markets
Our strategy is to lower the cost of Australia’s vast onshore and near-shore gas resources and connect them to high-value markets Best-in-class find & develop costs INNOVATION Access to Access to RESOURCES MARKETS Portfolio of onshore and Proven capability in both high value/ near shore resources em
Slide 92: Best-in-class find & develop costs: Innovation
Best-in-class find & develop costs INNOVATION 91
Slide 93: Origin just beginning the CSG learning curve
Origin is just beginning the CSG learning curve – US shale producers have brought $/GJ down by 5x in the last decade … Drill time First year production Where did the value come Rig days per gas well MMcfd from? Cost out and execution (20%) 16 20% 1.9 14 Hunting sweet spots (15%) Enabled by advanced
Slide 94: Crystal is a culture and platform for innovation
Crystal is a culture … and a platform for innovation Crystal 10x it – tweaks to foster innovation ▪ Process Simple, automated core processes. Clear accountabilities Nail the basics ▪ Targets we didn’t know how we’d meet Change the industry. 10x, not 5%. 10x aspirations ▪ Any good idea can be Scienti
Slide 95: Six innovation experiments
Six current innovation experiments tackle high value levers, while strengthening our innovation culture Potential Objective Technical experiment annual value Where we end up Optimised well ▪ Apply to 2016 well A$10-30m Every well is an Sweet spots design and field pack opportunity to layout ▪ 12 wee
Slide 96: Access to Resources
Access to RESOURCES Portfolio of onshore and near shore resources 95
Slide 97: Capital spend reduced and investment decisions improved
Capital spend has been reduced and investment decision making improved Non-APLNG capital spend reduced Better investment decisions A$m1 Origin has reviewed past E&P investments and improved capital investment process and decision analytics. This has resulted in a new capital decision making process
Slide 98: Non-APLNG execution: Halladale, Yolla, Beetaloo
Non-APLNG execution focused on the highest value projects and exploration Halladale Speculant Yolla Beetaloo Expected to be online early FY2017 Yolla MLE Compression project is Beetaloo exploration program is Drives increased production and progressing to schedule continuing on track earnings in FY2
Slide 99: Non-APLNG execution: Kupe and Western Australia
Non-APLNG execution focused on the highest value projects and exploration Kupe – New Zealand Western Australia ▪ Field performing strongly compared to ▪ Waitsia well test confirms excellent prior expectations reservoir properties at depth ▪ Expect reserves upgrade for Origin ▪ Expect reserves upgrad
Slide 100: Low cost development could make onshore resources competitive
Applying Origin’s low cost development capability today could make vast new onshore resources competitive Bonaparte/ 2025-2030 East Coast uncontracted gas resources Browse Base A$/GJ developed cost, delivered to nearest market Shale PJ 10,000 Shale, tight gas, Qld CSG Qld CSG Qld CSG, >$10 Cooper Bo
Slide 101: Access to Markets
Access to Access to MARKETS MARKETS Proven capability in both high value/ emerging LNG and existing domestic markets 100
Slide 102: Portfolio of resources and market positions
Origin is creating a portfolio of resources & market positions to maximise value Portfolio of markets Portfolio of resources How we create value Domestic Producing assets with Market led Supplying Origin’s domestic development options LNG buyers can pull Origin’s Energy Markets gas & Cooper as
Slide 103: Illustration: lowering the cost of Ironbark's resources
An illustration of the strategy: Lowering the cost of Ironbark’s resources and connecting them to ENN INNOVATION Access to Access to RESOURCES MARKETS 102
Slide 104: Ironbark economic today; additional value through innovation
Ironbark is economic today. Additional value can be created through further innovation, access to LNG markets and optimising the timing of the investment decision +20% +25% +25% Crystal Innovation Access to Markets Collaborative Targeted drilling of Development timing contracting sweet spots u
Slide 105: Strategy to lower cost of Australia's gas resources
Our strategy is to lower the cost of Australia’s vast onshore and near-shore gas resources and connect them to high-value markets Best-in-class find & develop costs INNOVATION Access to Access to RESOURCES MARKETS Portfolio of onshore and Proven capability in both high value/ near shore resources em
Slide 106: Closing Comments
Closing Comments Grant King, Managing Director 105
Slide 107: Origin's priorities to drive improved returns
In order to drive improved returns for shareholders in a low oil price environment, Origin’s priorities are: GROWING CONTRIBUTION FROM ENERGY MARKETS • Continue to build customer loyalty and trust ENERGY • Maximise value of core business MARKETS • Creating new energy solutions • Engaged, high perfor
Slide 108: Appendix
O origin Appendix
Slide 109: Curtis Island - August 2014 – Last Tour
Curtis Island - August 2014 – Last Tour 108
Slide 110: Current
Current 109
Slide 111: APLNG cash cost breakeven oil price of US$42/boe
APLNG can distribute to shareholders above a cash cost breakeven oil price of US$42/boe Previous Updated Cash cost Previous Updated Guidance Guidance (targeted average steady state Guidance guidance US$/boe1,2 US$/boe1,2 A▪ In operated fields, additional wells in FY17-23) A$b A$b (69mmboe) (62mmboe)
Slide 112: APLNG Reference Information: Upstream
APLNG Reference Information Upstream Estimated Steady State Metrics Drilling rates • Operated: ~370 single vertical equivalent wells per year on average • Non-operated: participate in ~300 single vertical equivalent wells per year on average Gas Processing Facilities • Spring Gully (3 GPF with capac
Slide 113: APLNG Reference Information: Downstream
APLNG Reference Information Downstream Estimated Steady State Metrics LNG production • Two train capacity of 9.0 mtpa • ~730TJ/day gas rate per train (including fuel) • ~30,000m3/day of LNG per train LNG Storage Tanks • Capacity - 165,000m3 per tank • ~3 days to fill a Tank when two trains running C
Slide 114: APLNG Reference Information: LNG Sales and Project Finance
APLNG Reference Information LNG Sales Reference Metric Source LNG Export 20 year contracted off-take agreements with Sinopec ASX releases: Contracts Terms and Kansai Electric, based on JCC - linked pricing: - Sinopec 4.3 mtpa; signed April 2011 21 April 2011 - Sinopec 3.3 mtpa; signed January 2012 2