Origin Energy Limited · ASX:ORG
Origin Energy — Non-Deal Roadshow (May 2015)
41 slides from Origin Energy's roadshow presentation, May 2015
Slide 1: Origin Energy International Roadshow
ORIGIN ENERGY INTERNATIONAL ROADSHOW Grant King, Managing Director Karen Moses, Executive Director, Finance and Strategy May 2015
Slide 2: Forward looking statements
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 relation to the matt
Slide 3: Origin's strategy of connecting resources to markets: at a glance
Origin’s strategy of connecting resources to markets is pursued through a clear focus on its 3 businesses and 4 priorities designed to drive continued improvement in Origin’s performance A regionally A growing A regional leader significant position position in in energy markets in natural gas and re
Slide 4: Origin's strategy pursued through its 3 businesses
Origin’s strategy of connecting resources to markets is pursued through its 3 businesses FY20 14 FY2014 ENERGY MARKETS EBITDA1 Net Assets1,2 • Australia’s leading integrated energy retailer • 29% of electricity and gas NEM market share3 • 4.3 million electricity, natural gas and LPG customer account
Slide 5: Delivering 4 key priorities within the businesses
Within the 3 businesses Origin is focused on delivering 4 key priorities • Build customer loyalty and trust to mitigate market 1 competition 4 IMPROVING RETURNS • Capture value of a strong gas position in a rising CAPITAL IN ENERGY MARKETS domestic gas market MANAGEMENT BUSINESSES AND FUNDING • Main
Slide 6: 1. Improving returns in energy markets businesses
1.Improving Improving returns in energy markets businesses 6
Slide 7: Building customer loyalty and trust
Building customer loyalty and trust is the most powerful mitigant to the impacts of a highly competitive market Digital Transformation Customer Communication 34 point 5% improvement in improvement in Net on time payment Promoter Score for behaviour new connections Origin is now leveraging its invest
Slide 8: New technology improved customer communication and retention
Implementation of new technology has improved communication with customers, allowing greater focus on retention activities through use of internal channels, resulting in improved service to customers and cost to serve benefits Operational Metrics Customer Wins and Retains Sales Channels Jun 13 Mar 1
Slide 9: Retail environment remains challenging with elevated discounting
The retail environment remains challenging with elevated levels of discounting Electricity and Natural Gas Churn Rates Origin’s Average Signed Discount Offers for Electricity and Natural Gas (%) VIC 25% 20% NSW SA 15% 10% QLD Origin Churn Market Churn 5% 0% Jul-13 Jul-14 Aug-13 Sep-13 Nov-13 Dec-13
Slide 10: Competitive cost of gas through diverse gas portfolio
Origin has a competitive cost of gas through its diverse and flexible gas portfolio and continues to capture benefits of rising gas prices, near term ramp gas opportunities, increasing sales volumes and market share ... Natural Gas Gross Margin 400 Continued rising domestic gas prices and cost of
Slide 11: Competitive cost of electricity through flexible generation
Origin has a competitive cost of electricity through its flexible generation portfolio with a short position to the pool Average 6 monthly Queensland Pool Prices Price Volatility and Wind Generation in South Australia 14,000 900 120 800 12,000 Average NEM Pool Price ($/MWh) Average Prices <$300/MWh
Slide 12: Renewables increase to meet 2020 renewable energy target
Increases in renewables to achieve a 2020 renewable energy target1 will extend the supply curve and limit increases in wholesale prices ... NEM Supply Bidstack - 2015 vs 20202 Impacts of Solar Generation on an High Solar Day Limited increase in net demand of around 8 TWh Marginal price of generation
Slide 13: Trends hollow out the load duration curve
These trends will “hollow out” the load duration curve, lowering prices for baseload generation and increasing volatility and peak prices Origin’s Generation Flexibility Change in NEM Load Duration Curve Capacity Energy 9,000 40 As more renewables 8,000 35 are installed there is a 7,000 Hedge reduce
Slide 14: Delivering growth in Natural Gas and LNG
1. Improving Delivering growth in Natural Gas and LNG 14
Slide 15: Recombined Exploration & Production and LNG businesses along gas value chain
Origin has recombined our Exploration & Production and LNG businesses to integrate all our activities along the gas value chain Beetaloo Basin • Origin’s first shale play APLNG (Downstream) • 2-3 ships for loading per week Browse & Bonaparte Basins • Offshore discoveries • Targeting new resources AP
Slide 16: Reserves almost entirely gas, exposed to export gas prices
Origin’s reserves are almost entirely gas, exposed to export gas prices Origin Reserves Australian domestic gas prices PJe are moving towards export parity 7,000 14.00 6,000 12.00 2014 prices 10.00 unusually low due A$/GJ 5,000 8.00 to ramp gas in QLD 6.00 4,000 4.00 3,000 2.00 - 2,000 2011 2012 201
Slide 17: Sustained production from Train 1 expected Q2 FY2016
Sustained production from Train 1 expected in Q2 FY2016 and from Train 2 approximately 6 months later APLNG’s UPSTREAM PROJECT IS 93% COMPLETE APLNG’s DOWNSTREAM PROJECT IS 89% COMPLETE 17
Slide 18: Expected distributable cash flow from APLNG
At A$100/bbl oil, Origin expects its share of distributable cash flow from APLNG to be around A$900 million per annum on average from FY2017 Brent Forward and Spot Curves (A$/bbl) 140 120 100 Every A$10/bbl movement results in approximately 80 A$200 million change in FID 1 FID 2 expected distributab
Slide 19: Prioritising capital spend on upstream projects with highest returns
Origin is prioritising capital spend on upstream projects with the highest returns and shortest payback periods BASS BASIN OTWAY BASIN PERTH BASIN Sapura 3000 heavy lift vessel with Compressor Ensign 931 rig Module suspended • Senecio-3 exploration well • Successful lift of condensate • Speculant-1
Slide 20: Growing capabilities and increasing investment in renewables
1. Improving Growing capabilities and increasing investment in renewables 20
Slide 21: Securing utility scale renewables opportunities
Origin will continue to secure opportunities in utility scale renewables where it is economic to do so Cuervo Dam, Chile Sorik Marapi, Indonesia Javiera Solar Project Northern Chile Sorik Marapi, Indonesia 21
Slide 22: Capital management and funding
1. Improving Capital management and funding 22
Slide 23: Capital management remains a focus as APLNG progresses
As the APLNG project progresses to completion, capital management remains a focus ... • Maintaining sufficient funding capacity to meet committed LIQUIDITY capital and funding requirements SERVICEABILITY • Ability to service debt irrespective of oil prices FLEXIBILITY • Ability to take advantage of
Slide 24: Sufficient liquidity to fund APLNG contributions
Origin has more than sufficient liquidity to fund its expected remaining contributions to APLNG with maturities extending beyond FY2018 Origin Debt & Bank Guarantee Maturity Profile as at 31 December 20141 6,000 Loans & Bank Guarantees - Undrawn Loans & Bank Guarantees - Drawn 5,000 Capital Markets
Slide 25: Cash flow sufficient to service interest, capex and dividends
Cash flow from existing businesses has been more than sufficient to service all interest payments, stay-in-business capex and dividends Cash Flow Sources and Uses (ex Growth Capex) Brent Forward and Spot Curves (A$/bbl) 2,500 140 120 2,000 100 1,500 $ million 80 FID 1 FID 2 1,000 60 40 500 20 FY17 S
Slide 26: Less flexibility to improve shareholder returns at low oil price
In a sustained period of low oil price Origin has less flexibility to improve returns to shareholders ... Commitments Loss of Flexibility Actions No equity raising to fund APLNG Ability to increase dividends Reduce capital and above the current dividend operating costs Maintain dividend poli
Slide 27: 3 businesses, 4 priorities and 5 measures
Origin’s strategy of connecting resources to markets is pursued through its 3 businesses, 4 priorities and 5 measures that drive continued improvement in Origin’s performance A regionally A growing A regional leader significant position position in in energy markets in natural gas and renewable ener
Slide 28: Appendix
O origin Appendix
Slide 29: 2014 Full Year Financial Highlights
2014 Full Year Financial Highlights ($ million) FY2014 FY2013 Change Statutory Profit 530 378 152 Statutory EPS 48.1 cps 34.6 cps 13.5 Revenue 14,518 14,747 (229) Underlying EBITDA 2,139 2,181 (42) Underlying EBIT 1,353 1,438 (85) Underlying net financing cost (192) (255) 63 Underlying income tax ex
Slide 30: 2015 Half Year Financial Highlights
2015 Half Year Financial Highlights ($ million) HY2015 HY2014 Change Statutory (Loss) / Profit (25) 322 (347) Statutory EPS (2.3 cps) 29.3 cps (31.6 cps) Revenue 6,950 7,238 (288) Underlying EBITDA 1,080 1,082 (2) Underlying EBIT 659 694 (35) Underlying net financing cost (105) (108) 3 Underlying in
Slide 31: Natural Gas Unit Gross Profit up 15%
Natural Gas Unit Gross Profit up 15% ($0.40/GJ) as tariffs increase in line with rising East Coast market prices while underlying energy procurement costs remain flat External Volumes Sold (PJ) HY2015 HY2014 Change Retail (Consumer & SME) 22.5 22.4 0.1 Business 47.5 34.4 13.1 Business sales volumes
Slide 32: Electricity Gross Profit up 13%
Electricity Gross Profit up 13% ($4.10/MWh) primarily due to higher retail tariffs and stable black energy procurement costs Volumes Sold (TWh) HY2015 HY2014 Change Retail (Consumer & SME) 9.1 9.1 (0.0) Business 9.6 10.4 (0.8) Total 18.7 19.5 (0.8) Electricity Performance ($/MWh) HY2015 HY20141 Chan
Slide 33: Integrated Energy Markets business
Origin’s integrated Energy Markets business continues to be Australia’s leading provider of energy products Upstream FuelFuel Generation Wholesale/Retail Retailer Generator Flexible and diverse fuel Flexible generation Leading retail portfolio portfolio customer base • Strong domestic gas supply • 6
Slide 34: Contact operates a similar integrated business model
Contact operates a similar integrated business model to Origin however Contact’s primary fuels are renewables which are not subsidised by government regulation Upstream FuelFuel Generation Wholesale/Retail Retailer Generator Flexible and diverse fuel Flexible generation Leading retail customer portf
Slide 35: APLNG reserves base in Queensland
APLNG’s reserves base includes prime acreage in both known and industry accepted “sweet spots” in Queensland PJ 100% APLNG Reserves and Resources1 20,000 15,000 10,000 5,000 - Estimated Requirements APLNG tenure in the Surat and Bowen basins at 3P 2P 1P 30 April 2014 Ramp and Tail Gas Train 2 2 Trai
Slide 36: Typical Phase 1 Well Forecast
Typical Phase 1 Well Forecast Dewatering Stable Production Stage Decline Stage • Typical phase 1 well forecast to Stage have: – peak gas rate 1-2 TJ/d Production Rate – peak water rate 500-1000 Gas bbl/d – approx 50-70% of well’s reserves produced within first 5 years Water – average well life is 30
Slide 37: APLNG economics remain robust in current oil price environment
APLNG economics remain robust in current oil price environment Consistent with prior guidance, APLNG’s underlying economics are based on the following assumptions on project cash costs during steady state operations: • Volumes • 8.6 mtpa contracted at JCC linked prices – around 470 PJ pa of sales ga
Slide 38: APLNG capital expenditure and Origin's cash contribution
APLNG capital expenditure for the period was $3.9 billion, with Origin’s cash contribution $1.4 billion Cumulative 6 months to (A$m) from FID1 to 31 31 Dec 2014 Dec 2014 Estimated costs to complete are not Project Capex 2,8021 23,8062 expected to be materially different from budget3 Non-Project Cape
Slide 39: Origin will lower capex spend relative to prior plans
Origin will lower capex spend relative to prior plans, limiting investments to higher returning projects Growth Capital Expenditure by Segment and Origin’s Cash Contribution to APLNG1,2 5,000 • E&P capex focused on increasing gas production into growing Australian gas demand, predominantly in Cooper
Slide 40: Important Information
Important Information A reference to Contact Energy is a reference to Origin’s controlled entity (53.1% ownership) Contact Energy Limited in New Zealand. In accordance with Australian Accounting Standards, Origin consolidates Contact Energy within its result. A reference to Australia Pacific LNG or
Slide 41: Thank You
THANK YOU For more information Chau Le Group Manager, Investor Relations Email: chau.le@originenergy.com.au Office: +61 2 9375 5816 Mobile: + 61 467 799 642 www.originenergy.com.au 41