Origin Energy Limited · ASX:ORG
Origin Energy — H1 FY2008 Earnings Presentation
36 slides from Origin Energy's earnings presentation, Feb 28, 2008
Slide 1: Results for the half year ended 31 December 2007 transmittal
For personal use only To Company Announcements Office Facsimile 1300 300 021 Company Australian Stock Exchange Limited Date 28 February 2008 From Bill Hundy Pages 36 Subject RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2007 This Transmittal is confidential. If you have received this document in error
Slide 2: Interim Results Announcement - Media Presentation
For personal use only Interim Results Announcement Half year ended 31 December 2007 Media Presentation 28 February 2008 1
Slide 3: Outline
Outline For personal use only • Performance Highlights • Financial Review • Operating Review • Outlook - All references to $ are references to Australian dollars unless otherwise specifically marked - All comparative data are in relation to the prior corresponding period, 1 July 2006 to 31 December
Slide 4: Performance Highlights
For personal use only Performance Highlights 3
Slide 5: Origin achieved an Underlying Profit of $200 million
Origin achieved an Underlying Profit of $200 million… For personal use only • Steady earnings in line with expectations Profit, EBITDAF and cash flow consistent with prior corresponding period increasing CSG production and BassGas offsetting maturing assets and delays in Otway high revenues fr
Slide 6: Origin continues to build its business
Origin continues to build its business … For personal use only Exploration and Production Retail Increased CSG production Tariff increases in electricity and gas Otway commissioning commenced On track with Sun Retail integration Halladale / Blackwatch and Swift Maintained customers numbe
Slide 7: Origin has delivered steady underlying earnings
Origin has delivered steady underlying earnings … For personal use only • Revenue $3,817 million 33% • EBITDAF $608 million 3% • EBIT $634 million 31% • Statutory Profit $335 million 44% • Underlying Profit $200 million 3% • OCAT $385 million 5% • EPS – Statutory 38.3 cps 32% • EPS – Underlying 22.9
Slide 8: Financial Review
For personal use only Financial Review 7
Slide 9: Profit & Loss - Statutory
Profit & Loss - Statutory For personal use only ($ million) Dec 07 Dec 06 % change Revenue 3,817 2,865 33 EBITDAF(1) 608 590 3 EBIT 634 482 31 Net financing costs (104) (96) (9) Tax expense (146) (108) (35) Minority Interests (49) (53) 6 Statutory Profit 335 233 44 Statutory EPS 38.3 cps 29.0 cps 32
Slide 10: Underlying Profit $200 million, 3% lower than prior half year
Underlying Profit $200 million, 3% lower than the prior half year ($ million) Dec 07 Dec 06 For personal use only Impact Impact % after tax & NPAT after tax NPAT change OEI & OEI Statutory Profit 335 233 44 Significant items Asset sales - Networks 147 – Mokai geothermal assets 9 Change in FV of fin.
Slide 11: EBITDAF $608 million, up 3%
EBITDAF $608 million, up 3% Divisions ($ million) Dec 07 Dec 06 % change For personal use only Exploration & Production 133 140 (5) Generation 28 46 (38) Retail 201 166 21 Contact 246 238 4 Networks 16 Adjustment for discontinued business (16) EBITDAF 608 590 3 • E&P: Growth in BassGas and CSG offse
Slide 12: Capital Expenditure
Capital Expenditure ($ million) Dec 07 Dec 06 For personal use only Stay-in-business 70 79 Growth Exploration & Production 305 172 Generation 240 13 Retail 38 16 Contact 56 23 Total capital expenditure 708 303 Acquisitions (net of cash) 6 16 Capex including acquisitions 714 320 • E&P: Predominantly
Slide 13: Operating Cash Flow After Tax increased by 5%
Operating Cash Flow After Tax increased by 5% while funds employed increased by 20% as a result of the Sun Retail For personal use only acquisition and continuing E&P capital expenditure ($ million) Dec 07 Dec 06 EBITDAF 608 590 Discontinued Networks Operations - 16 Change in working capital (48) (7
Slide 14: Less than 5% of debt portfolio maturing in next 12 months
Origin has less than 5% of its debt portfolio maturing in the next 12 months and… For personal use only Origin Debt & Bank Guarantee Maturity Profile (Financial years, $ million) 2,000 MTN & PP Loans Contact 1,800 • Diversified funding base comprising domestic and US 1,600 bonds, syndicated bank 1,4
Slide 15: Fully franked interim dividend declared
A fully franked interim dividend of 12 cps has been declared (prior period 10 cps fully franked)… For personal use only Dividends - cents per share 25 Franking 100% 100% 40% 100% 100% 100% 100% 100% Payment and DRP 20 • Ex-dividend date 5 March 2008 • Date of record 11 March 2008 11 15 • Payable 4 A
Slide 16: Operating Review
For personal use only Operating Review 15
Slide 17: Exploration & Production: major capital program delivering record production
Exploration & Production: Major capital program now delivering record production as new producing areas… For personal use only • EBITDAF of $133m, down 5%, reflecting higher 350 350 exploration expenses (up $9m) Dec-07 • CSG and BassGas gas sales more than offset 300 Dec-06 300 decline from maturing
Slide 18: Investments in new production areas to offset Cooper Basin decline
Over the last decade Origin has made a series of investments in new production areas to offset the anticipated decline of the Cooper Basin and other traditional gas producing areas… For personal use only 45 • The Cooper Basin is in decline as contract Origin Gas Production by Half Year volumes begin
Slide 19: Oil production from Perth Basin continues to decline
Oil production from the Perth Basin continues to decline, as is oil, condensate and LPG production from the Cooper Basin although at a more modest rate For personal use only • Oil production from the mature Perth Basin oil fields 10 Origin Liquids Production by Half Year has followed a steep decline
Slide 20: Growing gas reserves and monetising through good channels to market
As well as growing its gas reserves Origin has been able to monetise these reserves through good channels to market… For personal use only Origin's CSG Reserves Origin's CSG Production 2,500 120 Half Year ended 31 December 2,250 Half Year ended 30 June 100 2,000 Darling Downs up to 44 PJ/a 1,750 80
Slide 21: Generation: operational performance steady
Generation: Operational performance steady with Mt Stuart moving from externally to internally contracted plant… For personal use only • EBITDAF 38% lower – reflecting steady 80 250 operational performance and the transition of Dec-07 Mt Stuart from external to internal Dec-06 contracting Total Reve
Slide 22: Committed additional gas fired power generation
Origin has committed to build an additional 876 MW of gas fired power generation, including Australia’s largest For personal use only combined cycle gas turbine plant at Darling Downs… Darling Downs Power Station • 120MW expansion of Quarantine peaking power 4,000 station in Adelaide increasing Orig
Slide 23: Well positioned to capture value from climate change developments
Origin is well positioned to capture value from key climate change developments… For personal use only Geothermal • Origin acquired a 30% stake in a JV with Geodynamics Ltd. The JV owns permits in South Australia • Geodynamics have drilled 3 wells to-date. Habanero 3 was completed in early 2008 and
Slide 24: Retail: Sun Retail contribution offset by higher energy costs
Retail: Contribution from Sun Retail was partially offset by higher energy purchasing costs For personal use only 3,000 350 • EBITDAF of $201 million up 21% • Higher purchasing costs across all Dec-07 300 commodities 2,500 Dec-06 Higher average prices in the NEM EBITDAF & Capex ($m) 250 Higher g
Slide 25: Sun Retail has boosted scale of Retail business
Sun Retail has boosted the scale of the Retail business with commodity revenues up $935 million… For personal use only Product information and % Natural Gas Electricity LPG change from Dec 06(1) Product Revenue ($m) 481 (+2%) 1,768 (+101%) 289 (-4%) Gross Profit ($m) 61 (-18%) 258 (+48%) 62 (-20%) E
Slide 26: Large forward curve movements caused mark-to-market movements
Large movements in the forward curve have caused significant movements in mark-to-market values For personal use only $180 $170 Victorian Spot and Forward Contract Electricity Prices $160 • Forward curve (FC) for Jun 07 high and $150 backwardated in response to drought conditions (large positive cha
Slide 27: Churn rates have started to ease
Churn rates have started to ease over the 6 months period. Origin acquired over 236k new accounts for a net gain of 4k gas and electricity accounts For personal use only Mass Market Churn: Completed and Pending# December 2007 Origin Energy Accounts Numbers 45% Vic Elec Vic Gas (‘000) Natural Qld Ele
Slide 28: Leadership position in green energy sales and carbon responsibility
Origin has clearly established its leadership position in green energy sales and carbon responsibility… For personal use only A leading market position* and leading market products Origin Energy 33% • In December 2007 Origin had signed 361,000 GreenPower customers • Unit sales of grid-connected sola
Slide 29: Contact Energy: higher retail price and increased generation
Contact Energy: Higher retail price and increased generation offset higher gas costs For personal use only 1,200 300 Dec-07 • EBITDAF of $246 million, 4% higher Dec-06 1,000 250 • The main operating factors that contributed were: EBITDAF & Capex ($m) Total Revenue ($m) 800 200 an increase in elect
Slide 30: Networks (Discontinued Business): sale to APA
Networks (Discontinued Business): In April 2007, Origin entered into an agreement to sell its Networks business to APA for $556 million For personal use only 120 20.0 • The Networks business was sold in two Total Revenue, EBITDAF & Capex ($m) Dec-07 18.0 parts: 100 Dec-06 Settlement for the sale o
Slide 31: Outlook
For personal use only Outlook 30
Slide 32: Second half expected to deliver stronger performance
Based on prevailing market conditions Origin expects the second half of the financial year to deliver a stronger For personal use only performance than the first half, due to: • an expected decrease in the wholesale cost of electricity as already observed in the past two months of the second half; •
Slide 33: Large forward schedule of major projects
Origin has a large forward schedule of major projects each of which will add to earnings and cash flow For personal use only Major Project Timetable Financial Year FY 07 FY 08 FY 09 FY 10 FY 11 FY 12 Calendar Year 2007 2008 2009 2010 2011 BassGas CSG - SG Phase 4 Otway Gas Project Quarantine Expansi
Slide 34: Projects and opportunities delivering ongoing growth
Origin already has in place projects and opportunities that will deliver ongoing growth… For personal use only Leading CSG reserves position and increasing production volumes Major liquids-rich offshore gas projects progressively coming on-line: BassGas producing, Otway commissioning, Kupe under
Slide 35: For personal use only
For personal use only 34
Slide 36: For more information
For more information For personal use only For more information on Origin Energy please contact Angus Guthrie Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61-2-8345 5558 Mobile: + 61-4-1786 4255 Alternatively visit our website www.originenergy.com.au and follow the p