Slide 1: Investor Presentation for Half Year Results (ASX cover note)
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 16 February 2017 From Helen Hardy Pages 48 Subject Investor Presentation for Half Year Results Please find attached the investor presentation relating to Origin Energy’s Results for the half year en
Slide 2: 2017 Half Year Results
For personal use only 2017 HALF YEAR RESULTS Half year ended 31 December 2016 Frank Calabria CEO, Gary Mallett CFO 16 February 2017 Origin Energy | 2017 Half Year Results Announcement 1
Slide 3: Important Notices
Important Notices 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 cert
Slide 4: Outline
Outline For personal use only Performance Highlights Frank Calabria Financial Review Gary Mallett Operational Review Frank Calabria Outlook Frank Calabria Appendix Origin Energy | 2017 Half Year Results Announcement 3
Slide 5: Performance Highlights
For personal use only PERFORMANCE HIGHLIGHTS Frank Calabria Origin Energy | 2017 Half Year Results Announcement 4
Slide 6: Origin's key priorities
Origin’s key priorities For personal use only REDUCING DEBT AND LEADERSHIP IN LEADERSHIP IN IMPROVING RETURNS ENERGY MARKETS INTEGRATED GAS • Maximise earnings and • “Digital first” • Transition from project to operating cash flow • Customer experience, lifetime operations • Limit capital expenditur
Slide 7: Delivering on key commitments
Delivering on key commitments For personal use only H1 FY2017 H2 FY2017 FY2017 Targets Completed APLNG project • Continued growth in • Underlying EBITDA guidance Announced intention to IPO earnings and operating improved to $2.450 - $2.615 conventional upstream assets cash flow billion, subject
Slide 8: Solid operational performance in Energy Markets and Integrated Gas
Solid operational performance in Energy Markets and Integrated Gas For personal use only Increasing earnings Completion of development projects and in Energy Markets transition to operations in Integrated Gas $m Energy Markets underlying EBITDA TJ/d Ramp up of APLNG Operated Production 1,400 1,400 1
Slide 9: 2017 Half Year Financial Highlights
2017 Half Year Financial Highlights For personal use only Statutory Loss Underlying EBITDA Underlying Profit $(1.68) billion $1,145 million $184 million (95.6) cps 10.5 cps Up $277 million on H1 FY2016 Down $70 million on H1 FY2016 Down $1.4 billion on H1 FY2016 All segments contributed to Reflects
Slide 10: Non-cash impairment of $1.9 billion (post-tax)
Non-cash impairment of $1.9 billion (post-tax) For personal use only Post –tax • Origin’s 37.5% share of APLNG’s impairment charge Assets impairment ($m) Assets held by APLNG 1,031 - Assumptions such as oil price, AUD/USD exchange rates, discount rates and costs have impacted the Browse Basin 578 va
Slide 11: Energy Markets EBITDA of $734 million increased by $13 million
Energy Markets EBITDA of $734 million increased by $13 million Movements in Energy Markets Underlying EBITDA For personal use only LPG and Solar & Cost to serve Energy Services 750 Gas (-$30 million) Electricity (+$22 million) (+$1 million) (+$20 million) 730 7 13 734 8 (7) 710 721 (50) 690 78 670 4
Slide 12: Integrated Gas EBITDA of $442 million increased by $305 million
Integrated Gas EBITDA of $442 million increased by $305 million Movements in Integrated Gas Underlying EBITDA For personal use only 500 LNG (+$266 million) E&P (+$39 million) 12 (19) 450 24 (27) (36) 46 400 442 350 305 300 $ million 250 200 150 137 100 50 - HY2016 LNG Contracted LNG Spot Domestic Oi
Slide 13: Origin continues to focus on reducing operating and capital costs
Origin continues to focus on reducing operating and capital costs Movements in operating costs Capital Expenditure and Cash For personal use only (H1 FY2016 to H1 FY2017) Contributions to APLNG1,2 700 4,000 650 3,000 $ million $ million 600 2,000 End of Worsley JV 550 1,000 500 - H1 Corporate E&P En
Slide 14: Financial Review
For personal use only FINANCIAL REVIEW Gary Mallett Origin Energy | 2017 Half Year Results Announcement 13
Slide 15: Underlying EBITDA increased by $277 million to $1,145 million
Underlying EBITDA increased by $277 million to $1,145 million Underlying EBIT relatively stable (excluding the impact of Contact) For personal use only Underlying EBITDA Underlying EBIT ($ million) HY2017 HY2016 Change HY2017 HY2016 Change Energy Markets 734 721 13 576 557 19 Integrated Gas 442 137
Slide 16: Underlying profit of $184 million decreased by $70 million
Underlying profit of $184 million decreased by $70 million For personal use only ($ million) HY2017 HY2016 Change Underlying EBITDA 1,145 868 277 NewCo D&A ceased from 7 December (in line D&A – E&P (133) (136) 3 with accounting standard requirements) D&A – Energy Markets, Corporate, Contact (167) (1
Slide 17: Operating cash flow of $495 million increased by $27 million
Operating cash flow of $495 million increased by $27 million For personal use only Movements in Cash Flow From Operating Activities 800 700 Impact of ongoing cost reduction 277 (275) initiatives and lower risk 600 management costs 500 $ million 55 495 468 30 400 Share of APLNG EBITDA, 30 exploration
Slide 18: Adjusted net debt stable at $9.1 billion
Adjusted net debt stable at $9.1 billion For personal use only Movements in Adjusted Net Debt - 30 June 2016 to 31 December 2016 10 (0.5) 0.2 9 0.3 9.1 9.1 (0.4)1 0.1 8.9 0.3 8 $ billion 7 6 5 30-Jun-16 Cash Flow Asset Capital Cash Interest 31-Dec-16 FX 31-Dec-16 Adjusted Net f rom sales expenditure
Slide 19: Origin continues to hold sufficient liquidity for all foreseeable funding requirements
Origin continues to hold sufficient liquidity for all foreseeable funding requirements For personal use only Origin Debt & Bank Guarantee Pro-forma Maturity Profile as at 31 December 2016 Loans & Bank Guarantees - Undrawn • $5.7 billion1 of undrawn committed bank facilities Loans & Bank Guarantees -
Slide 20: Operational Review
For personal use only OPERATIONAL REVIEW Frank Calabria Origin Energy | 2017 Half Year Results Announcement 19
Slide 21: Energy Markets
For personal use only ENERGY MARKETS Origin Energy | 2017 Half Year Results Announcement 20
Slide 22: Digital first - product and service innovation
ENERGY MARKETS Digital first - product and service innovation, driving customer experience and lifetime value For personal use only Product innovation Increasing online interaction Online sales increased 21% Predictable Plan 125k 103k Solar as a Service Solar Boost 1H16 1H17 eBilling accounts
Slide 23: Customer - Improved experience, competitiveness and margins
ENERGY MARKETS Customer - Improved experience, competitiveness and margins For personal use only Customer account growth (‘000) 4,000 3,830 3,846 3,000 • Improved customer experience: 2,741 2,740 2,000 Elec - Customer NPS (Interactive) up 4 points Gas to +13 1,000 1,089 1,107 - Ombudsmen complaints
Slide 24: Natural Gas - Sustainable volume growth, long term competitive cost of supply
ENERGY MARKETS Natural Gas - Sustainable volume growth, long term competitive cost of supply and transportation flexibility For personal use only PJ Energy Markets’ Sources and Uses of Gas 120 • Increased volumes to LNG customers with oil 100 price linkage • Ramp gas replaced with contracted gas, 80
Slide 25: Electricity - flexible fuel and generation portfolio
ENERGY MARKETS Electricity – In a rising wholesale market, a flexible fuel and generation portfolio delivered a competitive cost of energy For personal use only Calendar 2017 Forward Curve1 120 NSW QLD SA VIC 100 • Rising forward curve continues to be reflected Price - $/MWh 80 in tariffs 60 • Flexi
Slide 26: Renewables - Growing position supports a competitive cost of energy
ENERGY MARKETS Renewables - Growing position supports a competitive cost of energy and adds value to our gas position For personal use only Bundled PPA Prices1 • Origin’s short generation and REC position provides 160 an opportunity to contract renewable PPAs at attractive prices, enabling Origin to
Slide 27: New Energy Solutions - Continues to grow
ENERGY MARKETS New Energy Solutions - Continues to grow For personal use only Solar Sales Acumen Meters Centralised Energy (MW) (‘000) Services Customers (‘000) 25 100 130 90 125 20 80 120 70 115 15 60 110 50 105 10 40 100 30 95 5 20 90 10 85 0 0 80 1 1 1H15 2H15 1H16 2H16 1H17 1H15 2H15 1H16 2H16 1
Slide 28: Integrated Gas
For personal use only INTEGRATED GAS Origin Energy | 2017 Half Year Results Announcement 27
Slide 29: APLNG and Halladale/Speculant were completed during the period
INTEGRATED GAS APLNG and Halladale/Speculant were completed during the period bringing to an end a long period of significant capital expenditure For personal use only APLNG Train 2 First Cargo, APLNG Project Complete Halladale/Speculant brought online August 2016 Sinopec’s new custom-built LNG tank
Slide 30: APLNG production increased by 76% with the commencement of LNG
INTEGRATED GAS APLNG production increased by 76% with the commencement of LNG E&P production increased by 12% driven by Halladale/Speculant For personal use only PJe APLNG production (ORG share) PJe E&P business production 120 120 100 100 80 80 68 3 60 60 40 40 60 36 42 20 31 20 8 8 - - 1H16 1H17 1H
Slide 31: APLNG Train produced above design nameplate capacity
INTEGRATED GAS APLNG Train 1 produced above design nameplate capacity through the 120 day production test and Train 2 commenced production in late 2016 For personal use only APLNG Upstream Supply A$m/ APLNG Sources of Revenue TJ/d 120 day month production test 400 APLNG monthly revenue has increased
Slide 32: APLNG break even cost update
INTEGRATED GAS APLNG break even cost update For personal use only 100% APLNG (A$bn) FY17 Estimate FY18 Estimate • Previous guidance of distribution break even target of Capital expenditure – Sustain 1.4 1.4 US$42/boe was based on an average of FY2017 to FY2023. Going forward, guidance will be provid
Slide 33: Beetaloo production test and drilling indicate material shale gas resource
INTEGRATED GAS Beetaloo production test and drilling indicate material shale gas resource For personal use only Best • As announced to the ASX on 15 February 2017, a Measured and Estimated Parameters Units Estimate Discovery Evaluation Report has been submitted to the P50 area (from Contingent Resou
Slide 34: Outlook
For personal use only OUTLOOK Frank Calabria Origin Energy | 2017 Half Year Results Announcement 33
Slide 35: FY2017 Underlying EBITDA range has improved to $2,450-$2,615 million
Origin’s FY2017 Underlying EBITDA range has improved to $2,450 million - $2,615 million, subject to market conditions For personal use only • Current earnings guidance is based on2: FY2017 Guidance (A$m) Previous Current - Average FY2017 oil price of US$52.33/bbl3 Energy Markets 1,440-1,540 1,440-1,
Slide 36: Guidance commentary
Guidance commentary Energy Markets expectations For personal use only • Natural Gas gross profit to increase relative to FY2016 and prior guidance due to increased Business sales volumes and margins • Electricity gross profit to increase relative to FY2016 due to margin expansion, however lower than
Slide 37: Thank You
For personal use only THANK YOU For more information Peter Rice Joanna Nelson General Manager, Capital Markets Group Manager, Investor Relations Email: peter.rice@originenergy.com.au Email: joanna.nelson@originenergy.com.au Office: +61 2 8345 5308 Office: +61 2 9375 5708 Mobile: + 61 417 230 306 Mob
Slide 38: Appendix
For personal use only APPENDIX Origin Energy | 2017 Half Year Results Announcement 37
Slide 39: Reconciliation of Statutory Loss to Underlying Profit
Reconciliation of Statutory Loss to Underlying Profit For personal use only ($ million) HY2017 HY2016 Statutory (Loss) – total operations (1,677) (254) Items Excluded from Underlying Profit Fair value and foreign exchange movements1 37 (82) LNG items pre revenue recognition1 (36) (154) Disposals, di
Slide 40: Reconciliation of adjusted net debt
Reconciliation of adjusted net debt Issue Issue Hedged Hedged AUD #039;m AUD #039;m AUD #039;m For personal use only Currency Notional Currency Notional Dec-16 Dec-16 Dec-16 Interest-bearing Fair value adjustments Adjusted net liabilities on FX hedging debt transactions AUD Debt AUD 1,280 AUD 1,280 1,280 0 1
Slide 41: Energy Markets sales volumes
Energy Markets sales volumes Natural Gas sales volume (PJ) For personal use only Electricity sales volume (TWh) Half year ended 31 Change Change Half year ended 31 Change Change 2016 2015 2016 2015 December (PJ) % December (TWh) % Retail Retail NSW 5.1 4.4 0.7 16.6 NSW 4.5 4.5 (0.0) (0.2) Victoria 1
Slide 42: Energy Markets customer accounts
Energy Markets customer accounts For personal use only Customer Accounts 31 December 2016 30 June 2016 Customer Natural Natural Accounts ('000) Electricity Total Electricity Total Change Gas Gas NSW1 1,233 260 1,493 1,240 252 1,492 1 Victoria 761 165 926 761 160 921 5 Queensland 561 481 1,041 566 47
Slide 43: Energy Markets generation
Energy Markets generation For personal use only Generation portfolio Nameplate Equivalent Electricity Pool Pool Half year ended 31 Capacity Capacity Type1 Reliability Output Revenue Revenue December Factor (MW) Factor2 (GWh) ($m) ($/MWh) Eraring 2,880 Black Coal 88.7% 46% 5,841 322 55 Darling Downs
Slide 44: Renewable Power Purchase Agreements
Renewable Power Purchase Agreements For personal use only Origin’s LRET position1 8 7 6 Number of LRECS (millions) 5 4 3 2 1 - 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 ORG existing PPAs and contracts Use of REC inventory Clare Solar Extension (35MW) Lakeland Solar (
Slide 45: Important Notices
Important Notices For personal use only All figures in this report relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its controlled entities, for the half year ended 31 December 2016 (the period) compared with the half year ended 31 December 20
Slide 46: Glossary - Statutory Financial Measures
Glossary - Statutory Financial Measures Statutory Financial Measures are measures included in the Interim Financial Statements for the Origin Consolidated Group, which are measured and disclosed in accordance with applicable Australian Accounting Standards. Statutory Financial Measures also include
Slide 47: Glossary - Non-IFRS Financial Measures
Glossary - Non-IFRS Financial Measures Non-IFRS Financial measures are defined as financial measures that are presented other than in accordance with all relevant Accounting Standards. Non-IFRS Financial measures are used internally by management to assess the performance of Origin’s business, and t
Slide 48: Glossary - Non-Financial Terms
Glossary - Non-Financial Terms Term Meaning APLNG Australia Pacific LNG – an incorporated Joint Venture between Origin, ConocoPhillips and Sinopec For personal use only Bbl Barrel – An international measure of oil production. 1 barrel = 159 litres Boe Barrel of oil equivalent A generation plant’s ou