Origin Energy Limited · ASX:ORG
Origin Energy — Investor Day (November 2019)
105 slides from Origin Energy's investor day presentation, Nov 20, 2019
Slide 1: 2019 Investor Day Briefing
To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 20 November 2019 From Helen Hardy Pages 105 Subject 2019 Investor Day Briefing Please find attached a release on the above subject. Regards Helen Hardy Company Secretary 02 8345 5000 Origin Energy Limited ABN 30 000 051
Slide 2: 2019 Investor Briefing Day
2019 Investor Briefing Day 20 November 2019 Sydney, Australia
Slide 3: Acknowledgement of Country
Acknowledgement of Country We acknowledge the Gadigal People of the Eora Nation as the traditional custodians of the land on which we gather today, and pay our respects to their Elders - past, present and emerging
Slide 4: Safety Moment
Safety Moment Alert tone “beep, beep, beep” • Follow instructions of Wardens • Be ready to evacuate Evacuation tone “whoop, whoop, whoop” • Leave now via nearest exit • Proceed calmly to assembly area 3 20 November 2019 2019 Investor Briefing Day
Slide 5: Today's presenters
Today’s presenters Frank Calabria, CEO Sharon Ridgway Samantha Stevens Lawrie Tremaine, CFO EGM, People & Culture EGM, Corporate Affairs Mark Schubert Greg Jarvis Jon Briskin Anthony Lucas EGM, Integrated Gas EGM, Energy Supply EGM, Origin Retail EGM, Future Energy & & Operations Business Developmen
Slide 6: Agenda
Agenda Time Duration Topic Presenter 9:30 5 mins Introduction Liam Barry, Investor Relations 9:35 15 mins Strategic overview Frank Calabria, CEO 9:50 10 mins People & Culture Sharon Ridgway, People & Culture 10:00 10 mins Social purpose Samantha Stevens, Corporate Affairs 10:10 15 mins Capital manag
Slide 7: Strategic Overview
Strategic Overview Frank Calabria (CEO) 6 20 November 2019 2019 Investor Briefing Day
Slide 8: Building a track record
Building a track record ✓ Building an inclusive and achievement focused culture Transforming culture ✓ Customer and digital first mindset ✓ Simplified processes, leaner corporate function, asset sales Simplified portfolio ✓ Leaner, asset-led model in APLNG upstream ✓ Reliable, low cost operator Oper
Slide 9: External environment changing rapidly
External environment changing rapidly Core beliefs • Renewables the lowest cost form of new build Australian context Fuels of the generation future • Gas to grow in the Asia Pacific under all IEA • Government intervention scenarios1 and shift to central planning has created uncertainty • Renewables
Slide 10: Strategy to deliver value in a future energy world
Strategy to deliver value in a future energy world Connecting customers to the energy and technologies of the future • Accelerate towards clean energy The right • Low cost operator developing & growing gas energy resources • Embracing decentralised and digital future The right technologies • Opportu
Slide 11: We are committed to delivering for all stakeholders
We are committed to delivering for all stakeholders • Focused on keeping our people safe Our people • Changing the way we work • Transforming customer experience Our customers • Addressing energy affordability and reliability • Contributing to communities in which we operate Communities • Leading po
Slide 12: Our Purpose
Our Purpose underpins everything we do Our Purpose Getting energy right for our customers, communities and planet 11 20 November 2019 2019 Investor Briefing Day
Slide 13: Safety remains a key priority
Safety remains a key priority TRIFR 5 • FY2019 TRIFR performance disappointing following improvements in prior years 4 3 • Targeted programs to reduce specific risks 2 – Partnering with contractors to improve 1 personal safety during shutdowns and drilling - FY15 FY16 FY17 FY18 FY19 – Review of site
Slide 14: Our capabilities and strengths
Our capabilities and strengths Flexible electricity position Value Competitive management Digital and gas supply across a large analytics (length, cost platforms customer and flexibility) base Well positioned for renewables + firming Ability to Low cost scale low cost operator upstream model Potenti
Slide 15: Executing on our strategy – making good progress
Executing on our strategy – making good progress e Accelerate Low cost operator Embracing Customer-centric towards developing & growing gas a decentralised & retailer clean energy resources digital future • > 25% renewables + • Increasing production • Digital analytics improving • Transforming custo
Slide 16: Where we are going
Where we are going • Growing production at APLNG – strong medium term outlook • Investing in exploration to grow new resources – at APLNG, Beetaloo and Cooper-Eromanga • Targeting >$150 million Origin-wide cost out by FY2021 ‒ >$100 million from Energy Markets cost to serve • Improving customer expe
Slide 17: People & Culture
People & Culture Sharon Ridgway (EGM, People & Culture)
Slide 18: People and culture are critical to our success
People and culture are critical to our success • Key enablers of business performance are: ‒ Effective ways of working ‒ Strong people performance ‒ Strong inclusive & achievement focused culture • A strong culture: ✓ Attracts the right people ✓ Empowers and motivates ✓ Unlocks great customer experi
Slide 19: We're changing the way we work
We’re changing the way we work • Increased ownership & autonomy: ‒ Reduced organisational layers ‒ Reduced team sizes ‒ Leaner management structures ‒ Business & system simplification The right customer solutions ‒ Integrated Gas asset-led organisation • Focused on capabilities: ‒ Customer & digital
Slide 20: Our people performance
Our people performance Engagement Equal Pay Gender Diversity Staff engagement Equal Pay for Equal Work Women in Senior Roles % 62 Pay Gap (% points) 1.5 40 60 1.2 30 58 56 0.9 20 54 0.6 10 52 0.3 50 - - FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 • Engagement & Diversi
Slide 21: Culture is underpinned by our Purpose & Values
Culture is underpinned by our Purpose & Values Getting energy right for our customers, communities and planet Work as one Be the Care about Find a better Being team, one customer our impact way accountable Origin champion 20 20 November 2019 2019 Investor Briefing Day
Slide 22: Building an inclusive & achievement focused culture
Building an inclusive & achievement focused culture • Embedded Values into: – Staff incentive arrangements – Recruitment – Employee communications • Introduced People Leadership Programme The right customer solutions • Targeting to attract and retain more senior females • Introduced ‘All Roles Flex’
Slide 23: Social Purpose
Social Purpose Samantha Stevens (EGM, Corporate Affairs)
Slide 24: Getting energy right…
Getting energy right… … for our Customers … for our Communities … for our Planet • Addressing affordability • Supporting education • Leading position on and reliability through our Origin climate change Foundation • Advocating for sound • Accelerating towards energy and climate • Contributing to our
Slide 25: Getting energy right for our Planet
Getting energy right for our Planet • Believe electricity sector should deliver more than its proportional share of emissions reduction – Support national goal of net zero emissions in the electricity Leading position on sector by 2050 or earlier climate change • First Australian company to set scie
Slide 26: Getting energy right for our Customers
Getting energy right for our Customers • Reduced prices for > 520,000 customers Addressing • Record Eraring output putting downward pressure on prices affordability and • Market leading program to protect hardship customers reliability • APLNG supplied ~30% of east coast domestic gas in FY2019 • Co-
Slide 27: Getting energy right for our Communities
Getting energy right for our Communities • > $25 million distributed by Origin Foundation since inception Supporting education – includes $3 million of employee matched donations through our Origin Foundation – 60,000 volunteer hours by our people • #1 in GoodCompany’s Top 40 Workplace to Give Back
Slide 28: Origin Foundation
• Founded in 2010 • Focus on education to break the cycle of disadvantage • Since 2010, supported > 60 non-profit organisations, including: – SolarBuddy – The Big Issue – Big Picture Education Australia – Gawura school • Matched employee donations to more than 250 Australian charities in FY2019 Clic
Slide 29: Capital Management
Capital Management Lawrie Tremaine (CFO) 28 20 November 2019 2019 Investor Briefing Day
Slide 30: Improved financial position & performance
Improved financial position & performance Maximise cash & Resilient capital Disciplined capital Portfolio returns through structure allocation management cycles ✓ Two strong cash ✓ Target capital ✓ Capex and opex ✓ Leaner, simplified engines structure and credit tightly managed organisation rating a
Slide 31: Two strong cash & earnings generating businesses
Two strong cash & earnings generating businesses Underlying EBITDA ($m) Underlying ROCE 4,000 CAGR 14% 20% 3,500 12% 3,000 10% 2,500 8% 2,000 6% 1,500 4% 1,000 2% 500 - -- (500) (2%) FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 Energy Markets Integrated Gas ex APLNG Origin Energy Markets Integr
Slide 32: Maximising cash generation from APLNG
Maximising cash generation from APLNG APLNG estimated distribution and Origin oil/LNG hedging and trading (A$m) 981m Effective Oil Effective Oil Net Cash Actual FY2020 Scenarios Price Price 1,400 A$m US$/boe A$/boe 1,200 FY2019 73 101 943 1,000 FY2020 1H 69 ~100 ~520 800 600 • FY2020 full year cash
Slide 33: Potential to grow distribution to shareholders
Potential to grow distribution to shareholders Free cash flow yield1,2 Origin uses of proportionate FCF2 ($m) Origin – APLNG reflected on proportionate consolidation basis 2,000 981m Origin Potential to reallocate 1,500 FCF to fund Peer 5 growth and shareholder Peer 4 distributions 1,000 Peer 3 500
Slide 34: Leaner, Simpler operating model
Leaner, Simpler operating model Origin-wide operating cost excluding Number of permanent employees APLNG ($m) (excluding contractors) 1,400 >$150m cost 7,000 out target ~1,700 1,200 6,000 reduction 1,000 5,000 800 4,000 600 3,000 400 2,000 200 1,000 - - FY15 FY16 FY17 FY18 FY19 FY21 FY15 FY16 FY17 F
Slide 35: Optimising our debt book
Optimising our debt book Debt Maturity Profile as at Interest paid and average interest rate November 2019 (A$m) 2,500 700 7% 600 6% 2,000 500 5% 1,500 400 4% A$m 1,000 300 3% 200 2% 500 100 1% - - - 0% FY15 FY16 FY17 FY18 FY19 FY20 estimate Loans and Bank Guarantees - Undrawn Loans and Bank Guarant
Slide 36: Capital discipline
Capital discipline Capex1 ($m) 3,500 • Capex constrained at ~$400 million over time, excluding E&A 3,000 • Beetaloo E&A driving the increase 2,500 in FY2020 outlook 2,000 • Mature capital governance 1,500 process in place 1,000 • Origin wide allocation based on greatest need or highest return 500 -
Slide 37: Disciplined capital allocation framework
Disciplined capital allocation framework Cash from Cash from • Strong cash generation, a stable Interest sustaining capex operating investing paid activities activities1 • Potential for distributions at high end of payout range Free cash flow • Franking limitations expected 30-50% distributed to sha
Slide 38: Accounting Update
Accounting Update AASB 16 Leases (effective prospectively from July 2019) • Required to account for all leases on-balance sheet Origin excluding share of APLNG Predominant lease types Commercial offices, LPG terminals, power stations and fleet vehicles Estimated balance sheet impact Lease liability
Slide 39: Questions
Questions Morning tea break 38 20 November 2019 2019 Investor Briefing Day
Slide 40: Integrated Gas
Integrated Gas Mark Schubert (EGM, Integrated Gas) 39 20 November 2019 2019 Investor Briefing Day
Slide 41: Track record of transformation and performance
Track record of transformation and performance Distribution breakeven and PRODUCTION 2X 2015 - 2020 effective oil price (US$/boe) 73 FY2020 breakeven guidance upgrade from US$33-361/boe WELL COSTS 50% 2017 - 2019 56 to US$31-341/boe OPERATED 39 36 20% 31-341 OPEX / GJ 18 2017 - 2019 15 LAYERS IN THE
Slide 42: Focused on getting energy right
Focused on getting energy right APLNG supplied ~30% of east APLNG regional spend of A$198m coast domestic demand in FY2019 in FY2019 Security of supply for Queensland gazettal China and Japan with 20 supply keeps 450 Incitec year contracts Pivot workers employed Customers Communities Net cash from A
Slide 43: Asset led model creates ownership, alignment and results
Asset led model creates ownership, alignment and results Avg GPF Production # GPFs2 reliability3 TJ/day1 Reedy Creek, Combabula & 445 2 99.6% Peat Condabri, 757 4 100% Talinga & Orana Spring Gully & 284 1 100% Denison Non operated 441 5 n/a • Completed major maintenance on 15 GPF trains • Record bre
Slide 44: Built a business which is competitive with US Shale into Asia
Built a business which is competitive with US Shale into Asia Short-run Marginal Cost (SRMC) of US Shale into Asia & APLNG (US$/mmbtu) 5.0 APLNG SRMC lower 0.8 than US Benchmark 4.0 1.9 3.0 0.4 US$4.2/ 2.0 US$3.0/ mmbtu mmbtu 2.7 (A$4.0/ 1.0 GJ) - Henry Variable Shipping Shipping US Benchmark APLNG
Slide 45: Production up, strong performance to continue
Production up, strong performance to continue APLNG asset production (PJ) 800 700 • Strong field performance and completion of Eurombah to Reedy Creek Interconnect 600 pipeline has led to increased FY2020 500 production 400 • FY2020 production guidance increased 300 from 680 - 700 PJ to 690 – 710 PJ
Slide 46: Steady cost performance to continue
Steady cost performance to continue APLNG Production (100%) (PJ) 690-710 710 FY20 APLNG (100%) FY17 FY18 FY19 Guidance 680 676 679 Production (PJ) 610 676 679 690 – 710 650 620 Capex + opex, excl. 2.7 2.6 2.7 2.8 – 3.0 purchases1 (A$bn) 590 610 560 A$/GJ 4.4 3.8 4.0 3.9 – 4.3 530 500 FY17 FY18 FY19
Slide 47: Resource base performing well
Resource base performing well APLNG reserves position1,2 (PJ) Solid reserves 18,000 • Reserves converging towards 3P since FID 15,000 • Field performing in line with expectations 12,000 • Approximately half of 2P reserves yet to be developed 9,000 Expanding the resource base in FY20 6,000 • Murrunga
Slide 48: Exploration program underway and remains on track
Exploration program underway and remains on track Westgrove 9 (deep conventional play) • Drilling complete • Fracture stimulation planning underway Reid’s Dome Denison • Awaiting Westgrove 9 results Peat Flank – profiled on the following slide South Burunga 2 (deep conventional play) • Drilling comp
Slide 49: Peat Flank profile
Peat Flank profile • 20 year old CSG field located on crest of geological structure, current production 10TJ/day • Appraisal programme testing if field can be expanded to 60-100 TJ/day • 2 pilot wells online indicate commercial viability (each average ~1 TJ/day), 3rd well ready to start • High quali
Slide 50: APLNG commercial update
APLNG commercial update • Supporting the domestic market - multiple supply contracts signed – 61 PJ to Origin Energy over 2020 and 2021 – > 50 PJ to manufacturers including Incitec Pivot, Orica and Orora • LNG contract Downward Quantity Tolerance (DQT) declared for CY2020 • Cash flow from cargo defe
Slide 51: Beetaloo Stage 2 appraisal underway
Beetaloo Stage 2 appraisal underway • Kyalla shale liquids rich gas play: – Well spudded 9 October, preparing to drill the horizontal section – 90-day extended production test (EPT) to commence in Q3 FY2020 – Results expected in Q4 FY2020 • Velkerri shale liquids rich gas play: – Well pad civils nea
Slide 52: Beetaloo timeline
Beetaloo timeline CY2019 CY2020 CY2021 Stage 2 E&A Liquids rich plays KYALLA Site & drilling Drilling Stimulation Results prep & EPT & analysis VELKERRI Site & drilling prep Drilling & EPT, results stimulation & analysis Stage 3 E&A Two horizontal Preparation Drilling, stimulation wells, target (lon
Slide 53: Engaging with Beetaloo Traditional Owners
Engaging with Beetaloo Traditional Owners • We have the support of our Traditional Owners (TOs) who are Native Title holders for where we are working • We provide them with forward work plans, including any hydraulic fracture stimulation, prior to activity commencing • We continuously engage with ou
Slide 54: Other Australian exploration opportunities
Other Australian exploration opportunities Cooper-Eromanga Basin • 75% equity and Origin operatorship, Bridgeport 25% • Staged farm in – drilling up to 5 exploration wells by 2024. Origin will carry Bridgeport’s cost up to $12 million • Planning underway for Stage 1a vertical well • Targeting unconv
Slide 55: Looking to the Future
Looking to the Future • FY2020 production guidance increased to 690 – 710 PJ due to strong field performance • Targeting to maintain current strong production performance over the next 3-5 years with potential to increase production further by utilising APLNG spare upstream capacity • Total capex +
Slide 56: Energy Markets – Supply & Operations
Energy Markets – Supply & Operations Greg Jarvis (EGM, Energy Supply & Operations) 55 20 November 2019 2019 Investor Briefing Day
Slide 57: Track record of performance
Track record of performance • Record output at Eraring over the last two years Owned Generation Output (TWh) − Capable of 880 MW to 2,880 MW in 1-1.5 93.2% 91.9% 96.0% 95.6% hours − Fuel flexibility with minimal long term take- 5.6 3.6 6.3 6.3 or-pay coal and enhanced rail unloading capability 15.9
Slide 58: Wholesale energy earnings drivers
Wholesale energy earnings drivers Key Drivers Earnings Considerations • 15-20 TWh of relatively fixed cost generation Wholesale • Covered for peak demand – fast start generation allows us to generate electricity prices more in higher price periods and be short in lower price periods allowing us to l
Slide 59: Ageing NEM coal fleet, high wholesale prices
Ageing NEM coal fleet, high wholesale prices NEM forward prices stubbornly high Expected coal retirements (GW) ($/MWh) 25 NSW 140 >8GW by 2032 20 120 100 15 80 60 10 40 5 20 - - Jul-15 Jul-18 Jul-19 Oct-15 Jul-16 Oct-16 Jul-17 Oct-17 Jan-18 Oct-18 Jan-16 Jan-17 Jan-19 Oct-19 Apr-16 Apr-17 Apr-18 Apr
Slide 60: Increasing renewables driving intra-day volatility
Increasing renewables driving intra-day volatility NEM Renewable Generation (TWh) Average NEM demand July- Sep (GWh) 70 30 60 28 50 26 40 24 30 22 20 20 10 18 Opportunity for flexible capacity - 16 0:00 6:00 12:00 18:00 2010 2014 2018 Wind Utility Solar Rooftop PV Current 2022 Source: AEMO, ISP 2018
Slide 61: Well positioned in an increasingly volatile market
Well positioned in an increasingly volatile market Origin’s Fast Start Generation Portfolio (MW) 2,500 2,000 Potential to invest in 1,500 fast-start gas, pumped hydro and batteries 1,000 500 - 10 15 20 25 30 SA VIC NSW QLD minutes • Largest non Government owned portfolio of fast start generation (<3
Slide 62: Our flexible portfolio in action today
Our flexible portfolio in action today 1,200 Generation in VIC and SA, June 25-30 2019 $300 1,000 $250 Primarily supplied by renewables with short-run gas to complement variability and solar shape 800 $200 Spot Price ($/MWh) Generation (MW) 600 $150 400 $100 200 $50 Fast-start peaking gas plants pro
Slide 63: Firming requires a range of technologies
Firming requires a range of technologies Cost of firmed renewables with different technologies • OCGT (Gas) and hydro will continue Battery (2030) to play an essential role in longer duration firming (particularly for evening and seasonal peaks) Li-ion Battery (Today) • Batteries expected to be comp
Slide 64: Progressing opportunities in a disciplined way
Progressing opportunities in a disciplined way Stockyard Hill (contracted PPA) 476 MW 530 MW planned to be new renewable Morgan online in 2020 supply online Option for solar FY2019 plus battery (up Darling Downs to 300 MW) Option for site expansion – battery and fast start gas Pelican Point Agreemen
Slide 65: Competitive gas supply
Competitive gas supply JKM Netback (A$/GJ) Energy Markets East Coast Gas Supply (PJ) 300 14 Short term volumes purchased to match duration 12 250 of C&I sales contracts 10 200 8 150 6 100 4 50 2 - - Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 FY19 FY20 FY21 FY22 FY23 FY24 JKM Netback - Wallumbilla (AC
Slide 66: Mortlake on schedule
Mortlake on schedule Old rotor being removed at Mortlake New stator on-site at Mortlake Replacement rotor unloaded at Avalon airport, and transported to site Unit expected Rectification online Mortlake Outage scope works commence New stator arrived New rotor arrived New generator 20 Dec generator fa
Slide 67: Energy Markets – Retail
Energy Markets – Retail Jon Briskin (EGM, Origin Retail) 66 20 November 2019 2019 Investor Briefing Day
Slide 68: On track to deliver our strategy in changing market
On track to deliver our strategy in changing market • Market dynamics have changed post implementation of VDO/DMO − Reduced dispersion in market offers − In situ churn reducing • We continue to manage customer numbers and Customer Lifetime Value, with more emphasis on holding or growing share over t
Slide 69: Price dispersion reduced, transparency improved
Price dispersion reduced, transparency improved Market dynamics have changed post implementation of VDO/DMO Market offers dispersion Victoria (CitiPower) NSW (Endeavour) $2,800 $2,800 • Discounts quoted off DMO/VDO reference bill $2,300 $2,300 going forward $1,800 $1,800 $1,300 $1,300 • AER has guid
Slide 70: Customer activity reduced
Customer activity reduced Customer churn (Monthly) In Situ vs moves churn (Monthly) 30% 25% 20% 25% 15% 20% 10% 15% 5% Origin moves NPS +47 10% - Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Market Origin (Residential) Moves In Situ Source: AEMO/AER • Reduced i
Slide 71: Customer numbers and value remain a key priority
Customer numbers and value remain a key priority Wins/Retains (’000s) 700 • Despite lower market activity, >2 million customers per annum are still being managed through a retention or win event 600 • We take a careful commercial approach, considering 500 customer numbers and value 400 • Leading wit
Slide 72: Considering share and value
Considering share and value We seek to win share, but are mindful of Customer Lifetime Value Customer accounts (’000) Headline vs Origin discount – NSW (Full bill %) 4,000 Nov-18 Nov-19 25% 25% 3,000 20% 20% 15% 15% 2,000 10% 10% 1,000 5% 5% - - - Jun-16 Jun-17 Jun-18 Jun-19 Oct-19 Market Origin Mar
Slide 73: Focused on customers, cost and growth
Focused on customers, cost and growth • Effortless digital experience Transform customer experience • Simpler offers and streamlined customer journeys • Leading brand awareness and consideration • Simplified organisation driven by a customer and digital first mindset Target step change in cost posit
Slide 74: Moving to a simpler, digitised customer experience
Moving to a simpler, digitised customer experience Good Energy brand Streamlined customer Personalised, effortless Simpler offers journeys digital experiences Digitally-led customer journeys Helping customers stay in control Analytics-driven personalised solutions Basic Set and Max Flexi forget Save
Slide 75: >$100m cost out on track
>$100m cost out on track Cost to serve ($m) Digitisation, automation and simplified organisation 12 months to Oct 19 >100m 624 610 Retail headcount1 ↓ 21% 560-570 Service call volumes ↓ 16% <524 eBilling accounts ↑ 10% to 64% Direct debit accounts ↑ 7% to 32% 1) Onshore • Simpler products and custom
Slide 76: Grow revenue streams
Grow revenue streams Community Energy Solar Broadband and Services and Storage Adjacencies CES Gross Profit ($m) Solar installs (MW) Broadband Customers (‘000) 13 18 20 57 12 12 44 35 38 8 23 27 18 Jun-17 Jun-18 Jun-19 FY17 FY18 LTM LTM FY18 FY19 Oct-19 (Oct-18) (Oct-19) Residential SME • CES allows
Slide 77: Next wave of transformation
Next wave of transformation • Built capability to transform customer experience and cost − A customer-centric culture − Simplified ways of working − A leading digital platform with automated processes − Growing sophistication of data and analytics • This capability allows us to move to the next wave
Slide 78: Future Energy
Future Energy Anthony Lucas (EGM, Future Energy & Business Development) 77 20 November 2019 2019 Investor Briefing Day
Slide 79: Energy and Data are converging
Energy and Data are converging We are experts at Energy, and now we have to be experts at Data • Every time someone consumes an electron, data is generated • Distributed assets are democratising energy and climate change challenges the traditional supply model • Our customers expect more insights an
Slide 80: Decentralisation & digitisation changing the energy landscape
Decentralisation & digitisation changing the energy landscape THE GRID IS CHANGING THE CUSTOMER IS CHANGING Centralised grid with increasing Decentralised energy assets and renewables IoT devices Historically … • Many distributed assets & IoT devices • Few large & reliable generation assets • Disagg
Slide 81: Building blocks for the future
Building blocks for the future Evaluated > 2,000 companies, deciding on where to procure, partner, invest or build capability Distributed Digital Security Data & Analytics Generation & Connected Assets Orchestration & Distributed Storage Transactions ONGOING ONGOING Data is at the core Providing the
Slide 82: Built a world class Data & Analytics capability
Built a world class Data & Analytics capability Artificial Intelligence & Machine Learning • Redesign of business processes based on predictive analytics • Personalised customer experiences Industry Leading • Targeted marketing and customer interventions “ …of 10,000 global customers we consider Ori
Slide 83: Data & Analytics capability is a business enabler
Data & Analytics capability is a business enabler RETAIL AND BUSINESS ENERGY DIGITAL IoT RETAIL & Business simplification and WHOLESALE CAPABILITY leading customer experience Data & Analytics Churn Renewal Demand AI orchestration platform propensity propensity forecasting Move Call Solar Data Collec
Slide 84: Case Study: Call Optimisation
Case Study: Call Optimisation Customer A: Frequent Encourage customer to calls go Digital, avoiding need regarding for call product information and switching Customer B: AI used to predict likelihood of a Send customer insights Quarterly customer calling, and the reason around bills and usage, calls
Slide 85: Built AI orchestration platform for distributed assets
Built AI orchestration platform for distributed assets • Combines use of machine learning and algorithms to optimise across the grid for a number of variables, including − supply/demand balance − wholesale price − customer tariffs • Platform live and orchestrating 15 MW of distributed assets − Load
Slide 86: Strategic investments in Intertrust and Cryptowerk
Strategic investments in Intertrust and Cryptowerk • Management and security of data critical • Blockchain technology can provide a cyber- in distributed and digitised energy world resilient solution for data verification • Global pioneer in Digital Rights • Traditional blockchain has limited Manage
Slide 87: Deeply imbedded in the global innovation ecosystem
Deeply imbedded in the global innovation ecosystem Co-founder of Free Electrons, a global open Principal sponsor of EnergyLab, Australia’s innovation program largest cleantech start-up accelerator • Over 1,500 applications • 42 clean tech energy start-up graduates • Now taking applications for the 4
Slide 88: Wrap up
Wrap up Frank Calabria 87 20 November 2019 2019 Investor Briefing Day
Slide 89: FY2020 Guidance update
FY2020 Guidance update Provided on the basis that market conditions do not materially change and the regulatory and political environment does not result in further adverse impacts on operations FY2019 FY2020 FY2020 previous guidance updated guidance Energy Markets Underlying EBITDA A$m 1,574 1,350
Slide 90: Wrap up
Wrap up • Two strong and diversified cash generating businesses – APLNG increasing production, capex + opex1 per gigajoule not expected to increase materially over the next 3-5 years – Wholesale portfolio well suited for renewables + firming – Retail cost out on track • Capabilities to enhance value
Slide 91: Questions
Questions Lunch 90 20 November 2019 2019 Investor Briefing Day
Slide 92: Appendix
Appendix 91 20 November 2019 2019 Investor Briefing Day
Slide 93: Capital investment pipeline
Capital investment pipeline Moderate medium term capex at ~$400 million, excluding E&A Estimated medium FY2020 Project examples term spend p.a. • Major inspections at Generation ~$150m Uranquinty and Eraring Sustain • Mortlake repairs • ERP upgrade over FY20-21 Other Sustain ~$125m • LPG • Solar & E
Slide 94: Regulatory summary
Regulatory summary Major regulatory themes and activities during 2019 Government Feb 19: Snowy Mar 19: Underwriting New Underwriting $1bn to CEFC to investment in 2.0 approved Generation Investment Transmission work invest in new energy ($1.4b funding) (UNGI) program pre approval energy Intrusive Ju
Slide 95: Oil price risk management
Oil price risk management FY2020 oil hedging (US$/bbl) FY2020 oil hedging 70 • $28 million1 hedge premium • Gain of $11 million based on forward market prices as at 20 November 2019 68 – 11.6 mmbbl hedged at US$48/bbl floor Effective oil price – 2.5 mmbbl capped at US$85/bbl 66 – 3 mmbbl fixed via a
Slide 96: APLNG summary
APLNG summary APLNG is underpinned by: Strong reserves1,3 3P: 12,820 PJ Quality assets P3 P2 1P Leading operators Upstream Operator Downstream Operator Aligned shareholders (SIPC)2 37.5% 37.5% 25% Strong offtake contracts ~1 mtpa ~7.6 mtpa with creditworthy contracted contracted until 2035 until 203
Slide 97: APLNG sales mix and domestic legacy contracts
APLNG sales mix and domestic legacy contracts Legacy domestic contracts: • ~40 PJ p.a. to Origin ending 2034 • 472 PJ over 21 years to Rio Tinto Sales mix FY2019 FY2018 ending 2031 (100%) PJ % PJ % • ~16 PJ p.a. to QAL ending 2041 Contract LNG 464 69% 433 64% • 25 PJ p.a. to AGL ending 2020 • ~25 PJ
Slide 98: Value drivers
Australian energy market context Retail market Wholesale market • Retail profitability on marginal supply is • Margins reflect long term investments and modest risks ‒ Competitive market ‒ Investment in generation ‒ Default tariffs act as price cap & ‒ Long term supply and transportation reference b
Slide 99: Flexibility: short energy, covered for peak
Flexibility: short energy, covered for peak Flexible energy position (TWh) Capacity position (MW) 40 10,000 Losses Losses Exposure managed Short via peakers and 35 SA position cap products Business 8,000 Hedge (recontract Hedge Hedging matching 30 Contracts VIC over 1-3 Contracts customer Business y
Slide 100: Electricity forward price by state (A$/MWh)
99 - - 80 80 160 160 20 40 20 40 60 100 120 60 100 120 140 140 Jul-15 Jul-15 Oct-15 Oct-15 Jan-16 Jan-16 Apr-16 Apr-16 Jul-16 Jul-16 Source: AEMO/Bloomberg 20 November 2019 Oct-16 Oct-16 Jan-17 Jan-17 Apr-17 Apr-17 Jul-17 Jul-17 Oct-17 Oct-17 Jan-18 Jan-18 Apr-18 Apr-18 Jul-18 Jul-18 NSW forward bas
Slide 101: Resilience to a low carbon future
Resilience to a low carbon future Climate Change Scenarios NEM Emission Scenarios (NtCO2-e) Change in NPV ($m) 600 200 400 150 200 100 - 50 (200) (400) - (600) NDC Coal value Gas and 2C Coal value Gas and 1.5C renewable renewable value value Actuals NDC 2C 1.5C • Portfolio resilience as the market t
Slide 102: Glossary
Glossary Financial Term Meaning Adjusted Net Debt Net Debt adjusted to remove fair value adjustments on hedged borrowings. Adjusted Underlying Underlying EBITDA – Share of APLNG Underlying EBITDA + net cash from APLNG EBITDA CAGR Compound Annual Growth Rate. Free Cash Flow Net cash from operating an
Slide 103: Glossary
Glossary Non-financial Term Meaning AEMO Australian Energy Market Operator AER Australian Energy Regulator AI Artificial Intelligence APLNG A reference to Australia Pacific LNG or APLNG is a reference to Australia Pacific LNG Pty Limited (and its related entities), an incorporated Joint Venture betw
Slide 104: Important Notice
Important Notice 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 rel
Slide 105: 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 Liam Barry Group Manager, Investor Relations Email: liam.barry@originenergy.com.au Office: +61 2 9375 5991 Mobile: + 61 401 710 367 www.originenergy