Origin Energy Limited · ASX:ORG
Origin Energy — Investor Presentation (September 2015)
57 slides from Origin Energy's investor presentation, Sep 30, 2015
Slide 1: ASX announcement cover note
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 30 September 2015 From Helen Hardy Pages 57 Subject Presentation - Origin launches $2.5 billion entitlement offer Please find attached a presentation to be made to investors. Regards Helen Hardy Com
Slide 2: Origin Energy: Focused, fitter, stronger
For personal use only ORIGIN ENERGY Focused, fitter, stronger 30 September 2015
Slide 3: Important Notices
Important Notices Summary information The material that follows is a Presentation of general background information about Origin's activities current at the date of the Presentation, 30 September 2015. It is information given in For personal use only summary form and does not purport to be complete.
Slide 4: Important Notices (cont.)
Important Notices (cont.) No offer of securities This Presentation does not constitute investment, legal, tax or other advice, or an inducement or recommendation to acquire or dispose of any securities in Origin, in any jurisdiction. Not for release or distribution in the United States of America Fo
Slide 5: Outline
Outline For personal use only 1. Overview page 5 2. Initiatives page 9 3. Outlook page 15 4 4. B i Business Hi Highlights hli ht page 19 5. Offer Details page 28 6 6. Financials page 31 7. Key Risks page 33 8. 8 Appendices ppe d ces page 43 3 • APLNG Accounting • Forward Looking Assumptions • Glossa
Slide 6: 1. Overview
5 For personal use only 1. Overview
Slide 7: Origin announces $4.7 billion of capital initiatives to strengthen its balance sheet
Origin announces $4.7 billion of capital initiatives to strengthen its balance sheet For personal use only • $2.5 billion fully underwritten pro rata renounceable accelerated entitlement offer • $2.2 billion of planned cash preservation initiatives over and above those previously announced • $1 bill
Slide 8: Capital initiatives lower debt, strengthen balance sheet and reduce reliance on APLNG distributions
Capital initiatives lower debt, strengthen balance sheet and reduce reliance on distributions from APLNG For personal use only • Expected reduction in FY2017 Net Debt to below $9 billion • Sustainable credit metrics • Capital initiatives, excluding planned asset sales, provide headroom to the invest
Slide 9: These initiatives result in a focused, fitter, stronger Origin
These initiatives result in a focused, fitter, stronger Origin For personal use only FOCUSED FITTER STRONGER Track record of strong and stable ENERGY cash flows Strengthened Balance MARKETS Diversity and duration of gas portfolio Sheet to benefit from growing gas demand Strong g and stable Fle
Slide 10: 2. Initiatives
9 For personal use only 2. Initiatives
Slide 11: Up to $6.9 billion of initiatives to strengthen the balance sheet
Origin has announced and begun to implement up to $6.9 billion of initiatives to strengthen the balance sheet For personal use only Realised Target in Target in Cumulative I iti ti Initiatives in FY2015 FY2016 FY2017 Total Previously announced initiatives June Energy Markets – reduction in operating
Slide 12: $2.5 billion equity raising to pay down debt
$2.5 billion equity raising to pay down debt For personal use only Offer Size and • $2.5 billion 4 for 7 fully underwritten pro rata renounceable entitlement offer Structure • Institutional component of the entitlement offer accelerated • Retail entitlements may be traded on ASX • All new shares ran
Slide 13: FY2016 and FY2017 dividends reduced to sustainable level
FY2016 and FY2017 dividends reduced to sustainable level through period of low oil prices For personal use only • Reduced dividend guidance to 20 cents per share on expanded capital base in FY2016 and FY2017 • Preserves $420 million of cash flow • Dividends will be supported by strength of cash flow
Slide 14: Further reductions in capital expenditure and working capital
Further reductions in capital expenditure and working capital, completion of funding of APLNG For personal use only • $730 million (40%) further reduction on previous capital expenditure guidance, primarily in E&P • 70% of remaining growth capital expenditure is in E&P, confined to: • Completing pro
Slide 15: Planned asset sales to further strengthen the balance sheet
Planned asset sales to further strengthen the balance sheet For personal use only • Planned asset sales of up to $800 million by FY2017, such as • Non-operated interests in Cooper and Perth basins • Wind assets with power purchase agreements • Infrastructure assets including Origin owned gas pipelin
Slide 16: 3. Outlook
15 For personal use only 3. Outlook
Slide 17: FY2016 is a transformational year for Origin
FY2016 is a transformational year for Origin as APLNG commences production For personal use only FY2016 Underlying EBITDA (excluding LNG Underlying EBITDA) expected to be $1.45 - $1.55 billion 1 • Energy Markets contribution expected to be in line with the strong earnings achieved in FY2015 based on
Slide 18: FY2016: APLNG commences production
FY2016 is a transformational year for Origin as APLNG commences production For personal use only APLNG is on track to deliver first cargo from Train 1 in November and Train 2 approximately 6 months later • Origin reaffirms that earnings from LNG sales expected to commence in H2 FY2016 following the
Slide 19: FY2017 expected to provide a step change in earnings
FY2017 is expected to provide a step change in earnings FY2017 Underlying EBITDA (excluding LNG Underlying EBITDA) expected to be $1.9 - $2.1 billion 1 For personal use only • Strong growth expected in Energy Markets based on • Full year of sales to GLNG under long term contracts • Electricity margi
Slide 20: 4. Business Highlights
For personal use only 4. Business Highlights 19
Slide 21: Energy Markets Highlights
For personal use only ENERGY MARKETS HIGHLIGHTS Leading market position with 4.3 million1 Electricity, Natural Gas and LPG customer accounts and 29%2 share of NEM, with sales of 147 PJ3 of natural gas and 36 TWh3 off electricity, l t i it and d a growing i solar l b business i Track record of st
Slide 22: Energy Markets: mature and stable business with strong surplus cash flows
ENERGY MARKETS Energy Markets E M k t iis a mature t and d stable t bl business b i delivering d li i strong t surplus l cash flows as capital expenditure reduces and improved EBIT/Sales For personal use only margin driven by its gas position Energy Markets Segment Operating Cash Flow less Growth Ca
Slide 23: Energy Markets: diversity and duration of gas portfolio
ENERGY MARKETS Diversity Di it andd duration d ti off gas portfolio tf li combined bi d with ith extensive t i and d flexible gas transport creates further opportunities to benefit from growing For personal use only gas demand Sources of Energy Markets’ East Coast Gas Portfolio PJ/a 300 Other Purcha
Slide 24: Energy Markets: flexible and diverse fuel and generation portfolio
ENERGY MARKETS Flexible Fl ibl and d diverse di fuel f l and d generation ti portfolio tf li supplies li 4.3 4 3 million illi Electricity and Natural Gas customer accounts For personal use only Resources Sales Thermal Electricity y- owned Electricity FY2015 Renewable Electricity Electricity Gross Pr
Slide 25: Integrated Gas Highlights
INTEGRATED GAS HIGHLIGHTS For personal use only Benefiting from growing domestic and global gas markets APLNG 37.5% of Australia’s largest CSG to LNG project with 16,174 PJe of 3P reserves1 with a further of 5,012 5 012 PJe of 3C2 contingent resources 8.6 mtpa (510 PJe3 pa) of LNG contracts, 1
Slide 26: APLNG reserves position and production capacity
INTEGRATED GAS APLNG’s reserves position is more than sufficient to support domestic and LNG contracts, with further resource upside in low permeability areas For personal use only 100% APLNG Reserves and Resources1,3 APLNG’s Production Capacity PJ PJ/a 25,000 800 Potential sales upside As technolog
Slide 27: APLNG operating and distribution breakeven
INTEGRATED GAS APLNG is expected to have an operating breakeven of approximately $US24/bbl and distribution breakeven at approximately A$55/bbl oil on average during steady state operations from FY2017 For personal use only Cash C h costt A$ A$/boe1 US$/boe2 (targeted average steady state FY17-23) O
Slide 28: Initiatives producing a focused, fitter, stronger Origin
These initiatives are producing a focused, fitter, stronger Origin For personal use only FOCUSED FITTER STRONGER Track record of strong and stable ENERGY cash flows Strengthened Balance MARKETS Diversity and duration of gas portfolio Sheet to benefit from growing gas demand Strong g and stable
Slide 29: 5. Offer Details
28 For personal use only 5. Offer Details
Slide 30: Origin is raising $2.5 billion to strengthen its balance sheet
Origin is raising $2.5 billion to strengthen its balance sheet position in a low oil p price environment For personal use only Offer Size and • $2.5 billion 4 for 7 fully underwritten1 pro rata renounceable entitlement offer (PAITREO) Structure • Institutional component of the entitlement offer acce
Slide 31: Offer Timetable
Offer Timetable For personal use only Event Date Trading halt and announcement of the Offer Wednesday, 30 September 2015 Wednesday, 30 September 2015 to Institutional Entitlement Offer Thursday 1 October 2015 Thursday, Institutional shortfall bookbuild Friday, 2 October 2015 Trading halt lift and Re
Slide 32: 6. Financials
31 For personal use only 6. Financials
Slide 33: Pro forma Statement of Financial Position
Pro forma Statement of Financial Position The table below presents the pro forma impact of the proposed equity raising as if it had occurred on 30 June 2015 For personal use only Origin Pro Forma Sale of Contact Equity Raising Pro combined A$ million 30 June 20151 Energy Pro Forma2 Forma3 30 June 20
Slide 34: 7. Key Risks
33 For personal use only 7. Key Risks
Slide 35: Key Risks
Key Risks An investment in Origin has risk attached to it and neither Origin nor its Directors, management and any related entities, nor any party associated with the preparation of this Presentation, is able to guarantee that any specific objectives of Origin or any particular performance of shares
Slide 36: Key Risks (cont.)
Key Risks (cont.) P j t delivery Project d li and d reserves Project delivery - Origin undertakes investments in a variety of major projects including gas, oil, electricity generation and operational systems. There For personal use only is a risk that major projects, including Australia Pacific LNG’
Slide 37: Key Risks (cont.)
Key Risks (cont.) Demand D d for f energy - The Th volume l off electricity, l t i it gas and d LPG the th Company C sells ll iis d dependent d t on our customers’ t ’ energy usage. RReductions d ti iin energy demand from price changes, consumer perception of energy affordability, operational closur
Slide 38: Key Risks (cont.)
Key Risks (cont.) Joint venture relations - Origin’s joint venture partners may have economic or other business interests or goals that are inconsistent with Origin’s and For personal use only may take actions contrary to the objectives or interests of Origin. There is also the risk that joint ventu
Slide 39: Key Risks (cont.)
Key Risks (cont.) For personal use only Australia Pacific LNG project finance facility – Australia Pacific LNG has a US$8.5 billion project finance facility fully drawn and utilised to fund the downstream parts of the project. Each shareholder has provided a several guarantee of its shareholding per
Slide 40: Key Risks (cont.)
Key Risks (cont.) Tri-Star Claim – On 24 October 2014, Tri-Star filed proceedings against Australia Pacific LNG (the “Tri-Star Claim”) claiming that reversion has occurred. Tri-Star alleges that the subscription amounts received by Australia Pacific LNG from ConocoPhillips in 2008 and Sinopec in 201
Slide 41: Key Risks (cont.)
Key Risks (cont.) In Australia Origin is required to comply with a range of regulations intended to reduce carbon emissions and increase the proportion of renewable electricity generation. There is a cost of complying with these regulations which may increase if these regulations are amended and new
Slide 42: Key Risks (cont.)
Key Risks (cont.) Environmental and Social For personal use only Environment - The complexity, scale and geography of Origin’s projects and operations, including gas and oil exploration and production, give rise to a range of environmental risks including carbon emissions, water and brine management
Slide 43: Key Risks (cont.)
Key Risks (cont.) Risks Associated with Renouncing Rights under the Offer For personal use only Prices obtainable for retail Entitlements may rise and fall over the Entitlement trading period. If you sell your Entitlements at one stage in the retail Entitlement trading period, you may receive a high
Slide 44: 8. Appendices
43 For personal use only 8. Appendices
Slide 45: APLNG accounting
APLNG accounting Estimated E ti t d steady t d state Considerations Estimated FY16 (average FY17-FY23) For personal use only Volumes recognised in earnings Domestic – existing 120 PJ 130 PJ Domestic – QGC 25 PJ 100 PJ LNG – 8.6 mtpa contracted 470PJ Higher if plants operate at nameplate or above 60
Slide 46: Forward Looking Assumptions – Earnings Guidance and Credit Metrics
Forward Looking Assumptions – Earnings Guidance and Credit Metrics APLNG • LNG Train Start Date: Train 1, November 2015; Train 2, approximately six months after Train 1 For personal use only • LNG sales contract start date: Sinopec December 2015 • Gas production - management expectation based on obs
Slide 47: Glossary
Glossary Term Meaning For personal use only Proved Reserves are those reserves which analysis of geological and engineering data can be estimated with reasonable certainty to be commercially 1P reserves recoverable. There should be at least a 90% probability that the quantities actually recovered wi
Slide 48: Glossary
Glossary Term Meaning For personal use only MW Megawatt = 106 watts MWh Megawatt hour = 103 kilowatt hours Net Debt Total current and non-current interest bearing liabilities only less cash and cash equivalents. NEM National Electricity Market which operates across the states of Queensland, New Sout
Slide 49: Selling restrictions
Selling restrictions International Offer Restrictions This document does not constitute an offer of entitlements ("Entitlements") or new ordinary shares ("New Shares") of the Company in any For personal use only jurisdiction in which it would be unlawful. In particular, this document may not be dist
Slide 50: Selling restrictions (cont.)
Selling restrictions (cont.) Canada (British Columbia, Ontario and Quebec provinces) (cont.) The following is a summary of the statutory rights of rescission or to damages, or both, available to purchasers in Ontario. In Ontario, every For personal use only purchaser of the Entitlements or the New S
Slide 51: Selling restrictions (cont.)
Selling restrictions (cont.) European Economic Area – Belgium, Denmark, Germany, Luxembourg and Netherlands The information in this document has been prepared on the basis that all offers of Entitlements and New Shares will be made pursuant to an For personal use only exemption under the Directive 2
Slide 52: Selling restrictions (cont.)
Selling restrictions (cont.) Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous For personal use only Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commi
Slide 53: Selling restrictions (cont.)
Selling restrictions (cont.) Italy The offering of the Entitlements and the New Shares in the Republic of Italy has not been authorized by the Italian Securities and Exchange For personal use only Commission (Commissione Nazionale per le Società e la Borsa, "CONSOB") pursuant to the Italian securiti
Slide 54: Selling restrictions (cont.)
Selling restrictions (cont.) Korea The Company is not making any representation with respect to the eligibility of any recipients of this document to acquire the Entitlements or For personal use only the New Shares under the laws of Korea, including, without limitation, the Foreign Exchange Transact
Slide 55: Selling restrictions (cont.)
Selling restrictions (cont.) Singapore This document and any other materials relating to the Entitlements and the New Shares have not been, and will not be, lodged or registered as a For personal use only prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document an
Slide 56: Selling restrictions (cont.)
Selling restrictions (cont.) United Arab Emirates Neither this document nor the Entitlements and the New Shares have been approved, disapproved or passed on in any way by the Central For personal use only Bank of the United Arab Emirates, the Emirates Securities and Commodities Authority or any othe
Slide 57: Thank you
For personal use only THANK YOU For more information Chau Le Group Manager Manager, Investor Relations Email: chau.le@originenergy.com.au Office: +61 2 9375 5816 Mobile: + 61 467 799 642 www.originenergy.com.au 56
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