Slide 1: Investor Presentation for Half Year Results
To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 17 February 2022 From Helen Hardy Pages 58 Subject Investor Presentation for Half Year Results Please find attached the investor presentation relating to Origin Energy’s Results for the half year ended 31 December 2021.
Slide 2: 2022 Half Year Results
Origin Energy 2022 Half Year Results Half year ended 31 December 2021 Frank Calabria, CEO & Lawrie Tremaine, CFO 17 February 2022
Slide 3: Outline
Outline 1. Introduction - Frank Calabria 2. Financial Review - Lawrie Tremaine 3. Operational Review - Frank Calabria 4. Outlook - Frank Calabria 2 17 February 2022 2022 Half Year Results Announcement
Slide 4: Introduction
Introduction Frank Calabria, CEO 3 17 February 2022 2022 Half Year Results Announcement
Slide 5: HY2022 financial summary
HY2022 financial summary Statutory Profit/(Loss) Underlying Profit Underlying EBITDA $(131) $268 $1,099 million million million (7.4) cps 15.2c cps Reflecting impairment and capital gain tax Up $41 million reflecting higher oil, partly offset Down from $1,154 million in HY2021 expense associated wit
Slide 6: Shaping Our Business for a Transforming Energy Landscape
Shaping Our Business for a Transforming Energy Landscape • Positive outlook for Energy Markets: – Tailwinds from higher wholesale electricity prices, partially offset by higher energy procurement costs – Improving gas margins off the back of higher domestic gas prices in the second half 2022 – Conti
Slide 7: Shaping our business for a changing energy landscape
Shaping our business for a changing energy landscape Retail Origin Zero Say on Climate Superior customer Tailored customer Ongoing decarbonisation service model decarbonisation solutions commitment linked to strategy Octopus Energy Sale of 10% interest in APLNG Eraring/battery Exposure to global ene
Slide 8: Sale of 10% interest in APLNG
Sale of 10% interest in APLNG – opportunity to crystalise value • Agreement executed to sell 10% of APLNG for net proceeds of ~$2 billion • ConocoPhillips exercised its pre-emption rights on the same terms • Transaction completion expected in the first half of CY2022 • Retain existing two APLNG boar
Slide 9: Notice provided to potentially close Eraring from 2025
Notice provided to potentially close Eraring from 2025 NSW Roadmap - Energy NSW Capacity Outlook 9,000 40 8,000 35 Committed and expected 7,000 by Summer of 30 2027 Capacity MW 6,000 Online by 25 2026 if required Legislated Committed and expected 5,000 prior TWh by 20 2030 Summer of 2026 4,000 15 3,
Slide 10: Our priority is to support our people and local communities
Our priority is to support our people and local communities • A transition plan for our people will focus on: – Training, skills and career planning – Redeployment opportunities – Funding the completion of all current apprenticeships and traineeships – Health and wellbeing support • Also committed t
Slide 11: Battery storage proposed for Eraring site
Battery storage proposed for Eraring site NSW Average Half Hourly Prices • As coal retires and is replaced by renewable generation we 2022 2025 2030 expect increased frequency of low or negative prices (similar to South Australia) • Battery storage, pumped hydro and gas peaking portfolios are well p
Slide 12: Delivering on our emissions goals
Delivering on our emissions goals Eraring Emissions 16 • In 2021, the International Energy Agency (IEA) recommended advanced economies phase out 14 coal fired power plants by 2030 • Origin has always recognised we have an million tonnes of CO2e 12 important contribution to help Australia 10 decarbon
Slide 13: Delivering for our stakeholders in HY2022
Delivering for our stakeholders in HY2022 Getting energy right Our Customers Our Communities Our Planet Our People ✓ Spike (demand response) ✓ Regional procurement increased ✓ Shareholder vote on climate ✓ TRIFR 3.41, up from 2.7 at June growing to ~69k customers to 19% total procurement spend chang
Slide 14: Financial Review
Financial Review Lawrie Tremaine, CFO 13 17 February 2022 2022 Half Year Results Announcement
Slide 15: Strong commodity prices drive higher underlying profit
Strong commodity prices drive higher underlying profit Movements in underlying Profit ($m) 268 227 156 222 59 408 367 8 HY21 EM EBITDA IG - Share of IG - other EBITDA Corporate EBITDA Depreciation Other HY22 APLNG profit & amortisation 1 Lower wholesale electricity Oil hedge position Primarily Lower
Slide 16: Major accounting adjustments
Major accounting adjustments Statutory Loss of $131 million for HY2022 was driven primarily by the impacts of the divestment of the 10% share of APLNG APLNG Sale • Non-cash impairment of APLNG ($193 million): − Recognised to reduce the carrying value of the assets sold to the expected net proceeds o
Slide 17: Strong APLNG cash flow
Strong APLNG cash flow APLNG estimated distribution to Origin and Origin oil hedging > $1.1 billion (Net of hedging) 1,400 120 • $2.72 billion1 cash generated in HY2022, reflecting strong commodity prices and lower capex 100 1,000 • APLNG held $1.67 billion of cash at December 2021 80 • $555m cash d
Slide 18: Free Cash Flow down $320 million
Free Cash Flow down $320 million ($m) HY22 HY21 Change • Lower earnings from Energy Markets ($367 million) • Higher working capital due primarily to timing of LNG cargo Cash from operating activities (79) 669 (748) delivery ($150 million inflow in January) Cash distributions from APLNG 555 265 290 •
Slide 19: Balance sheet flexibility restored
Balance sheet flexibility restored Capital Structure 6.0 3.5x 3.0x • Committed to maintain Baa2 rating 5.0 • Expected to be at lower end of Adjusted Net Adj. Net Debt / EBITDA 2.5x Debt/EBITDA 2-3x range post 10% sale in APLNG 4.0 Adj. Net Debt ($bn) • Financial resilience to commodity cycle and cap
Slide 20: Energy Markets Underlying EBITDA down 58%
Energy Markets Underlying EBITDA down 58% Movements in Underlying EBITDA ($m) Electricity gross profit down $281 million or 56% to $222 million: • Margin impacts (-$276 million) (281) − Lower electricity tariffs (-$261 million) 635 (79) 3 (10) − Higher cost of energy (-$58 million): generation fuel
Slide 21: Integrated Gas Underlying EBITDA up 54% on higher commodity prices
Integrated Gas Underlying EBITDA up 54% on higher commodity prices Movements Underlying EBITDA ($m) (113) 112 (175) (47) 555 (28) 1,093 1,092 917 870 870 Integrated 566 538 538 Share of APLNG Gas - Other (+$526 million) (-$222 million) HY21 LNG volume LNG price Domestic revenue Opex/other income Oil
Slide 22: HY2022 Operational Review
HY2022 Operational Review Frank Calabria, CEO 21 17 February 2022 2022 Half Year Results Announcement
Slide 23: Energy Markets
Energy Markets 22 17 February 2022 2022 Half Year Results Announcement
Slide 24: Tailwinds from higher wholesale electricity prices
Tailwinds from higher wholesale electricity prices, partially offset from higher energy costs NSW electricity forward price ($/MWh) Newcastle 6000 kcal prices (A$/t) 350 100 Recent volatility in coal 300 prices driven by temporary Indonesia ban 80 on exports 250 200 60 Prices flowing to 150 40 FY202
Slide 25: FY2022 cost of energy impacted by coal supplier constraints
FY2022 cost of energy impacted by coal supplier constraints Eraring volumes Short run marginal cost NSW pool prices Eraring output (GWh) Eraring volume weighted cost NSW average pool price ($/MWh) ($/MWh) 1400 80 80 1200 70 70 1000 60 60 800 50 50 40 600 40 30 400 30 20 200 20 10 0 10 0 Jul Aug Sep
Slide 26: Improved gas outlook due to tightening domestic gas market
Improved gas outlook due to tightening domestic gas market LNG netback and domestic gas prices (A$/GJ) 250 Energy Markets contracted gas supply (PJ) Record high prices due to global supply 45 shortages 200 40 35 150 Prices 30 increase due to extreme 25 NH winter 100 20 15 Domestic gas price Prices f
Slide 27: Building our next-gen retail business
Building our next-gen retail business Technology & Operating Model Growing scale and products Investments & Alliances Gamified demand Electric vehicles 18.7% investment in global Customer first, data driven proven technology response energy & tech business Unique operating model Broadband Connected
Slide 28: Transforming through technology and new operating model
Transforming through technology and new operating model Retail X Superior customer experience Lowest cost 73% Operating and capital cost savings Customer happiness index Strategic NPS 10 8.3 out of 10 6 5 Employee happiness $200 - $250 855k 5 million reduction customers 2 250k - customers >100k (5)
Slide 29: Growing scale and products
Growing scale and products Customer accounts (‘000) Solar and Energy Services Gross Profit ($m) VPP – assets connected (MW) 42% growth 250 4,200 4,236 4,266 4,313 140 205 4,400 33 46 120 200 8 20 363 159 4,000 362 365 359 100 63 150 80 57 3,600 98 47 100 85 60 3,830 3,851 3,874 3,903 3,200 40 54 63
Slide 30: Octopus – global footprint and exponential customer growth potential
Octopus – global footprint and exponential customer growth potential Exponential customer growth Global reach increasing Renewable, Services & Tech business Customer accounts (‘000, LHS) $6 billion + and revenue growth (£bn, RHS) Energy assets under management CPPIB 6% 16,000 GIM 7% investment 2,000
Slide 31: Integrated Gas
Integrated Gas 30 17 February 2022 2022 Half Year Results Announcement
Slide 32: APLNG delivered stable production while maintaining low cost
APLNG delivered stable production while maintaining low cost Quality resource and assets Low-cost operator PJ APLNG production (100%) A$m APLNG Capex + Opex (100%)1 A$/GJ 400 1,400 4.0 1,200 300 1,000 3.5 800 200 600 3.0 400 100 200 - - 2.5 H1 H2 H1 H2 H1 H1 H2 H1 H2 H1 FY20 FY21 FY22 FY20 FY21 FY22
Slide 33: Lower development activity enabled by strong field performance
Lower development activity enabled by strong field performance Reduced activity and costs # of wells $m • Strong field performance shifts focus from drilling to 180 300 optimising existing operations: 160 – $63m reduction in Sustain capital costs versus HY2021 250 140 – Implementation of digital too
Slide 34: Record high revenue on rebound of global commodity prices
Record high revenue on rebound of global commodity prices Record high revenue Supported by strong commodity prices A$m PJ A$/GJ 5,000 350 30 4,000 25 300 20 3,000 15 2,000 250 10 1,000 5 - 200 - H1 H2 H1 H2 H1 H1 H1 H2 H2 H2 H1 H1 H2 H2 H2 H1 H1 H1 H1 H1 FY20 FY21 FY22 FY20 FY21 FY22 LNG revenue Dom
Slide 35: ~US$2.5 project debt repaid and 91% of 2P reserves replaced
~US$2.5 project debt repaid and 91% of 2P operated reserves replaced APLNG debt and gearing APLNG 2P reserves replacement (operated) US$bn 8.5 45% 140% Thousands 8.0 120% 40% 7.5 100% 35% 7.0 80% 6.5 30% 60% 6.0 25% 5.5 40% 5.0 20% 20% - FY18 FY19 FY20 FY21 Project finance debt (LHS) Gearing (RHS)1
Slide 36: Prospective acreage
Prospective acreage Beetaloo • Velkerri dry gas play: Amungee NW 1H production test indicates normalised production results comparable with other commercial shale plays globally – The CY2022 work programme includes the drilling, fracture stimulation and production test of two horizontal wells • Velk
Slide 37: Outlook
Outlook Frank Calabria, CEO 36 17 February 2022 2022 Half Year Results Announcement
Slide 38: FY2022 Guidance up on higher commodity prices
FY2022 Guidance up on higher commodity prices Provided on the basis that market conditions and the regulatory environment do not materially change, adversely impacting operations. Considerable uncertainty exists relating to potential ongoing impacts of COVID-19 and this guidance is subject to any fu
Slide 39: FY2022 and FY2023 Updated Guidance continued
FY2022 and FY2023 Updated Guidance continued Origin - consolidated Energy Markets Integrated Gas (APLNG) • Underlying FY2022 EBITDA guidance • Overall guidance unchanged, FY2022 EBITDA • Continued stable production higher reflecting improved outlook for of $450-$600m, driven by: • APLNG costs reflec
Slide 40: Questions
Questions 39 17 February 2022 2022 Half Year Results Announcement
Slide 41: Appendix
Appendix 40 17 February 2022 2022 Half Year Results Announcement
Slide 42: Items excluded from Underlying Profit
Items excluded from Underlying Profit Non-cash charges 53 91 • $195 million impairment relating primarily to the sale of 36 10 268 10% interest in APLNG ($193 million). On completion of the transaction this charge will be partially offset via release of $105 million benefit from the foreign 173 curr
Slide 43: Large-scale Generation Certificates (LGC) strategy
Large-scale Generation Certificates (LGC) strategy LGC Adjustments to statutory profit Statutory Reversal of shortfall Estimated CY20 Estimated CY21 Underlying Profit charge/ (refund) surrender cost surrender cost Profit ($m) ($m) ($m) ($m) ($m) FY2021 impact: CY2020 and CY2021 certificate shortfall
Slide 44: Electricity forward price by state
Electricity forward price by state (A$/MWh) NSW 100 QLD 100 80 80 60 60 40 40 20 20 - - Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Jul-19 Oct-19 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 VIC 100 SA 100 80 80 60 60 40 40 20 20 - - Jul-19 Oct-19 J
Slide 45: Debt maturity profile
Debt maturity profile Debt maturity as at 31 Dec -2021 - excluding lease liabilities (A$b) • Average term to maturity increased to 4.8 years at 31 2.5 December 2021 from 3.4 years at 30 June 2021 • The rolling 12-month average interest rate decreased to 2.0 4.2% in HY2022 from 4.3% in HY2021 • Estim
Slide 46: Capex summary
Capex summary Origin capex ($m) 600 500 • Managing sustaining capex on key assets: major outage at Eraring and other maintenance activities 400 • Other sustaining capital: regulatory market reforms (5 minute settlement), LPG 300 • Productivity/growth: Octopus Energy licensing, Kraken implementation
Slide 47: Customer movements
Customer movements (‘000) 31-Dec-21 30-Jun-21 Change Electricity ('000)1 Electricity 5 Business 30 30 0 - Retail – Residential 2,232 2,246 (14) (5) 1 Retail – SME 255 259 (4) (10) Retail – Community Energy Services 96 90 7 (15) NSW QLD VIC SA Total 2,614 2,625 (11) Retail - residential Retail - SME
Slide 48: Managing oil price exposure
Managing oil price exposure Oil hedging program designed to protect capital structure through commodity cycles 90 FY22 Full Year Oil Price Sensitivity FY2022 80 Effective Oil Price (US$/bbl) 70 • Origin share of APLNG JCC oil price exposure is ~201 mmboe 60 • As at 31 January 2022, ~19 mmboe priced
Slide 49: APLNG sales mix and legacy domestic contracts
APLNG sales mix and legacy domestic contracts Legacy domestic contracts HY2022 HY2021 • ~40 PJ p.a. to Origin ending 2034 Sales mix (100%) PJ % PJ % • 472 PJ over 21 years to Rio Tinto ending 2031 1 • ~16 PJ p.a. to QAL ending 2041 Contract LNG 231 68% 208 64% • 155 PJs over the remaining life of th
Slide 50: Segment summary
Segment summary Energy Markets Integrated Gas Integrated Corporate Total ($m) - Share of APLNG Gas - Other HY22 HY21 HY22 HY21 HY22 HY21 HY22 HY21 HY22 HY21 Underlying EBITDA 268 635 1,039 513 (169) 53 (39) (47) 1,099 1,154 Underlying EBIT 38 355 465 57 (181) 38 (34) (48) 288 402 Underlying Profit/(
Slide 51: Underlying ROCE – 12 month rolling
Underlying ROCE – 12 month rolling 31 Dec-21 31-Dec-20 Change As at Change ($m) ($m) ($m) (%) Capital Employed Net Assets 10,049 11,830 (1,781) (15%) Adjusted Net Debt 5,133 4,698 435 9% Net derivative liabilities 384 529 (145) (27%) Origin's share of APLNG net debt (project finance less cash) 1,687
Slide 52: Proportionate Free Cash Flow
Proportionate Free Cash Flow Free cash flow prepared on the basis of proportionate consolidation of APLNG. Energy Markets Integrated Gas Integrated Corporate Proportionate Total ($m) - Share of APLNG Gas - Other HY22 HY21 HY22 HY21 HY22 HY21 HY22 HY21 HY22 HY21 Underlying EBITDA 268 635 1,039 513 (1
Slide 53: Reconciliation of Adjusted Net Debt
Reconciliation of Adjusted Net Debt Issue Issue Hedged Hedged AUD $m AUD $m AUD $m Currency Notional Currency Notional $m $m Dec-21 Dec-21 Dec-21 Interest bearing Debt & CCIRS FV Adjusted net debt liabilities2 adjustments AUD debt AUD 2,267 AUD 2,267 2,244 2,244 USD Debt left in USD USD 1,008 USD 1,
Slide 54: Energy Markets segment revenue reconciliation
Energy Markets segment revenue reconciliation The table below reconciles the difference between segment revenue and customer revenue disclosed in the Electricity, Natural Gas, LPG and Solar & Energy Services tables. HY22 HY21 Change Change ($m) ($m) ($m) (%) Energy Markets segment revenue 6,086 6,00
Slide 55: Financial Instruments and fair value adjustments
Financial Instruments and fair value adjustments Balance Sheet Impact Income Statement Impact Financial asset/(liability) Pre-tax Post-tax Gain/(loss) Inc/(dec) in Inc/(dec) in Gain/(loss) Gain/(loss) Total inc/(dec) included in financial other net excluded from excluded from ($m) 31-Dec-21 30-Jun-2
Slide 56: 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 57: Important notices
Important notices 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 reporting period ended 31 December 2021 (the period) compared with the reporting period ended 31 December 2020
Slide 58: For more information
For more information Peter Rice General Manager, Capital Markets Email: peter.rice@originenergy.com.au Office: +61 2 8345 5308 Mobile: + 61 417 230 306 originenergy.com.au 57 17 February 2022 2022 Half Year Results Announcement