Slide 1: ASX announcement fax cover: Origin announces $2.3 billion entitlement offer
To Company Announcements Office Facsimile 1300 135 638 For personal use only Company ASX Limited Date 15 March 2011 From Helen Hardy Pages 60 ORIGIN ANNOUNCES $2.3 BILLION PRO RATA RENOUNCEABLE ENTITLEMENT Subject OFFER Please find attached a presentation to be made to Investors. Regards Helen Hardy
Slide 2: $2.3 billion pro rata renounceable Entitlement Offer
15 March 2011 For personal use only Origin Energy Limited $2.3 billion pro rata renounceable Entitlement Offer NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 3: Important Notices
Important Notices Important Notice This presentation ("Presentation") has been prepared by Origin Energy Limited, ABN 30 000 051 696 ("Origin"). This Presentation has been prepared in relation to a pro rata renounceable entitlement offer of new Origin ordinary shares ("New Shares"), to be made to: •
Slide 4: Important Notices (cont.)
Important Notices (cont.) Financial amounts All dollar values are in Australian dollars (A$) and financial data is presented as at the date stated. The pro forma financial information and past information provided in this Presentation is for illustrative purposes only and is not represented as being
Slide 5: Outline
Outline 1) Overview page 5 For personal use only 2) Acquisition of the NSW Energy Assets page 10 3) Outlook and Business Update page 17 4) Equity Raising page 22 5) Key Risks page 27 Appendix A. Forward Looking Assumptions B. Foreign Jurisdictions C. Definition of Key Terms 4
Slide 6: 1) Overview
For personal use only 1) Overview
Slide 7: Origin is raising $2.3 billion to refinance part of the acquisition debt and strengthen its balance sheet
Origin is raising $2.3 billion to refinance part of the debt funding for the acquisition of the NSW Energy Assets and to strengthen its balance sheet Purpose • Refinance part of the debt used to fund the $3.26 billion1 acquisition For personal use only of the Integral Energy and Country Energy retai
Slide 8: Origin is Australia's leading integrated energy company
Origin is Australia’s leading integrated energy company… • Listed in the S&P/ASX 20 index with a market capitalisation of over $13.8 For personal use only billion1 and approximately 4,400 employees • Australia’s largest energy retailer servicing 4.6 million electricity, natural gas and LPG customer
Slide 9: Business built around a fuel position managing wholesale risk, with retail revenue stability
Origin has built its business around a fuel position which allows it to manage risks in wholesale energy markets, with retail customers providing revenue stability For personal use only Fuel Generator Retailer Extensive thermal and One of Australia’s largest Australia’s largest energy renewable fuel
Slide 10: Strategy has delivered growth in underlying earnings through capital deployment
The implementation of Origin’s strategy has delivered growth in underlying earnings through the deployment of capital Total Shareholder Return – Listing to March 2011 Underlying Profit1 Origin Underlying Profit 1,600 700 Underlying Profit CAGR 23%1,2 For personal use only 1,400 600 Origin Energy (Un
Slide 11: 2) Acquisition of the NSW Energy Assets
2) Acquisition of the NSW Energy Assets For personal use only
Slide 12: Origin acquired Integral Energy and Country Energy retail businesses and Eraring GenTrader for $3.26 billion
On 1 March 2011 Origin acquired the Integral Energy and Country Energy retail businesses, and entered into the Eraring GenTrader arrangements for $3.26 billion1,2 Integral Energy + Country Energy retail businesses For personal use only Acquisition Price: $2,300 million1 Customer Accounts as at Elect
Slide 13: Acquisition increased Origin's customer accounts by over 50% to 4.6 million
The acquisition of the Integral Energy and Country Energy retail businesses increased Origin’s customer accounts by over 50% to 4.6 million … Electricity and Natural Gas Market For personal use only Customer Accounts – 30 June 2010 („000) Share in the NEM Regions1 Integral Country Origin COMBINED En
Slide 14: Integral Energy holds NSW's second largest electricity customer base
Integral Energy holds NSW’s second largest electricity customer base with an incumbent position in NSW growth corridors … For personal use only Customer Accounts – 30 June 2010 („000) Electricity – Mass Market 840 Electricity – Commercial and Industrial 8 Total 848 Energy Consumption FY ended 30 Jun
Slide 15: Country Energy is the incumbent retailer in regional NSW
Country Energy is the incumbent retailer in regional NSW and has a stable customer base with a large portion of customers having not chosen to switch retailer … For personal use only Customer Accounts – 30 June 2010 („000) Electricity – Mass Market 749 Electricity – Commercial and Industrial 6 Natur
Slide 16: Eraring GenTrader arrangements provide rights over significant power generation
The Eraring GenTrader arrangements provide Origin with contractual rights over a significant portfolio of power generation … Under the GenTrader arrangements, Origin supplies the fuel, pays the agreed charges, including operating and maintenance charges, and has the contractual right to the electric
Slide 17: NSW acquisition value reflects expected Retail segment margins of 8% to 9%
The value of the NSW acquisition reflects an expectation that it will make a contribution to the Retail segment in line with the current EBIT to sales margins of 8% to 9% in Origin’s existing Retail business1 For personal use only • The Eraring GenTrader arrangements support margins in the retail bu
Slide 18: 3) Outlook and Business Update
3) Outlook and Business Update For personal use only
Slide 19: FY11 Underlying EBITDA expected to increase by around 35 per cent
Based on prevailing market conditions and taking into account the factors below, Origin expects full year Underlying EBITDA to increase by around 35 per cent1 for FY11 compared with the prior financial year … For personal use only • Origin expects the trend in operational performance observed in the
Slide 20: Substantial progress by Australia Pacific LNG across the CSG to LNG project
Substantial progress continues to be made by Australia Pacific LNG across all areas of the CSG to LNG project Timing Milestone (Calendar For personal use only Years) Initial Advice Statement (IAS) submitted Q1 2009 Project declared as Significant by the Queensland Government Q2 2009 Curtis Isl
Slide 21: Progress converting the non-binding Heads of Agreement with Sinopec
Progress is being made on converting the non-binding Heads of Agreement with Sinopec to binding agreements For personal use only • On 25 February 2011, Australia Pacific LNG and Sinopec signed a non-binding Heads of Agreement establishing terms for Sinopec to purchase LNG and to subscribe for equity
Slide 22: Other significant growth opportunities beyond Australia Pacific LNG
In addition to Australia Pacific LNG’s export project, Origin continues to develop a number of significant growth opportunities For personal use only • Completion of Mortlake Power Station • Implementation of the Retail transformation program • BassGas mid-life enhancement project • Australia Pacifi
Slide 23: 4) Equity Raising
For personal use only 4) Equity Raising
Slide 24: Overview of Entitlement Offer
Overview of Entitlement Offer Entitlement • 1 for 5 fully underwritten Pro rata Accelerated Institutional, Tradeable Retail Offer Entitlement Offer (PAITREO) to raise approximately $2.3 billion, comprised of: For personal use only Structure ‐ Institutional Entitlement Offer to raise approximately $1
Slide 25: Raising $2.3 billion to refinance acquisition debt and strengthen balance sheet
Origin is raising $2.3 billion to refinance part of the debt funding for the acquisition of the NSW Energy Assets and to strengthen its balance sheet For personal use only • Proceeds from the equity raising will be used to reduce debt, including the refinancing of part of the debt used to fund the $
Slide 26: Pro forma Statement of Financial Position
Pro forma Statement of Financial Position The table below presents the pro forma impact of the acquisition of the NSW Energy Assets, the acquisition funding and the proposed equity raising as if they had occurred on 31 December 2010 For personal use only NSW Energy Asset Acquisition Origin Pro Forma
Slide 27: Entitlement Offer timetable
Entitlement Offer timetable Event Date (2011) Trading halt, Institutional Entitlement Offer opens Tuesday 15 March For personal use only Institutional Entitlement Offer closes Wednesday 16 March Institutional shortfall bookbuild Thursday 17 March Existing shares recommence trading on ASX Friday 18 M
Slide 28: 5) Key Risks
For personal use only 5) Key Risks
Slide 29: 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 30: Key Risks (cont.): Competition
Key Risks (cont.) Competition in energy retailing, power generation and oil and gas exploration and production Origin’s revenues are primarily derived from the sales of electricity, gas and LPG to customers across Australia, New Zealand and the Pacific. The For personal use only markets in which Ori
Slide 31: Key Risks (cont.): Fuel Supply Risk
Key Risks (cont.) Fuel Supply Risk Origin secures gas from a number of sources in order to fulfil retail demand and to supply gas fired generators. This includes gas which is sourced For personal use only from reserves owned by Origin, gas purchased under contract from joint venture partners where O
Slide 32: Key Risks (cont.): Reserves Risks
Key Risks (cont.) Reserves Risks There are numerous uncertainties inherent in estimating quantities of oil and gas reserves, including factors that are beyond Origin’s control. In For personal use only general, estimates of economically recoverable oil and gas reserves are based upon a number of fac
Slide 33: Key Risks (cont.): Climate Change Regulations
Key Risks (cont.) Climate Change Regulations In Australia and New Zealand, Origin is required to comply with a range of regulations intended to reduce carbon emissions and increase the For personal use only proportion of renewable electricity generation. There is a cost of complying with these regul
Slide 34: Key Risks (cont.): Operational Risks
Key Risks (cont.) Operational Risks Origin undertakes complex and large scale operating activities including offshore and onshore exploration activities and drilling for gas and oil, For personal use only construction and operation of hydrocarbon production facilities, transportation activities incl
Slide 35: Key Risks (cont.): Environmental Risks
Key Risks (cont.) Environmental Risks Origin's activities including power generation and oil and gas exploration and production must be operated within strict controls and processes to For personal use only ensure compliance with various regulations, licenses and standards so that these activities a
Slide 36: Key Risks (cont.): Construction and Project Delivery
Key Risks (cont.) Construction and Project Delivery Origin undertakes investments in a variety of projects for the construction or expansion of plant, facilities, infrastructure, IT platforms and For personal use only projects such as Origin’s Retail Transformation project to develop new customer se
Slide 37: Key Risks (cont.): Technology Risks
Key Risks (cont.) Technology Risks The energy industry generally is the subject of considerable research and development in respect of electricity generation technologies, delivery For personal use only of energy and electricity to homes and businesses, and management of energy usage throughout buil
Slide 38: Key Risks (cont.): Retail businesses and GenTrader
Key Risks (cont.) RISKS ASSOCIATED WITH THE RETAIL BUSINESSES OF INTEGRAL ENERGY AND COUNTRY ENERGY AND THE ERARING ENERGY GENTRADER ARRANGEMENTS For personal use only The recently acquired retail businesses of Integral Energy and Country Energy and the recent entry into the Eraring Energy GenTrader
Slide 39: Key Risks (cont.): Structure of the GenTrader Arrangements
Key Risks (cont.) Structure of the GenTrader Arrangements Under the GenTrader arrangements with Eraring Energy Origin has acquired contractual rights rather than ownership. This is similar to long term For personal use only Power Purchase Agreements which Origin already has with numerous counterpart
Slide 40: Key Risks (cont.): Financial Risks
Key Risks (cont.) FINANCIAL RISKS Access to Capital in the Financial Markets For personal use only Origin’s activities require Origin to obtain significant funding from domestic and international bank, capital and equity markets. In addition, Origin is required to refinance existing debt facilities
Slide 41: Key Risks (cont.): Interest Rate and Liquidity Risk
Key Risks (cont.) Interest Rate Risk Origin’s interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose Origin to cash flow interest rate risk. For personal use only Borrowings issued at fixed rates expose Origin to fair value interest rate risk. Exposure limits
Slide 42: Key Risks (cont.): Investment in Equity Capital
Key Risks (cont.) Investment in Equity Capital There are general risks associated with investments in equity capital. The trading price of shares in Origin may fluctuate with movements in For personal use only equity capital markets in Australia and internationally. This may result in the market pri
Slide 43: Key Risks (cont.): Renouncing Rights under the Offer
Key Risks (cont.) Risks Associated with Renouncing Rights under the Offer Prices obtainable for retail Entitlements may rise and fall over the Entitlement trading period. If you sell your Entitlements at one stage in the For personal use only retail Entitlement trading period, you may receive a high
Slide 44: Appendix A: Forward Looking Assumptions
Appendix A Forward Looking Assumptions For personal use only
Slide 45: Forward Looking Assumptions – FY11 Earnings Guidance
Forward Looking Assumptions – FY11 Earnings Guidance In addition to the information in this Presentation, key assumptions in relation to earnings guidance set out on page 18 include the following: For personal use only • Guidance is based on third party analysis of expected energy demand and Origin’
Slide 46: Forward Looking Assumptions – NSW Energy Assets
Forward Looking Assumptions – NSW Energy Assets The forward looking statements in this Presentation relating to the NSW Energy Assets include the following key assumptions in relation to revenues: For personal use only • Average mass market energy consumption levels consistent with average levels in
Slide 47: Forward Looking Assumptions – NSW Energy Assets (cont.)
Forward Looking Assumptions – NSW Energy Assets (cont.) The forward looking statements in this Presentation relating to the NSW Energy Assets include the following key assumptions in relation to costs: • Electricity costs are based on Origin’s forward view of the spot and contract markets including
Slide 48: Appendix B: Foreign Jurisdictions
Appendix B Foreign Jurisdictions For personal use only
Slide 49: Foreign Jurisdictions
Foreign Jurisdictions This document and any accompanying documents do not constitute an offer or invitation in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or invitation. The distribution of this document and any accompanying documents in jurisdic
Slide 50: Foreign Jurisdictions (cont.): Canada
Foreign Jurisdictions (cont.) Canada (British Columbia, Ontario and Quebec provinces) This document constitutes an offering of New Shares only in the Provinces of British Columbia, Ontario and Quebec (the "Provinces") and to those persons to For personal use only whom they may be lawfully distribute
Slide 51: Foreign Jurisdictions (cont.)
Foreign Jurisdictions (cont.) Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than (a) in the case of any action for rescission, 180 days after the date of the transaction that gave rise to the cause of action or (b) in the case of
Slide 52: Foreign Jurisdictions (cont.): France
Foreign Jurisdictions (cont.) France This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and A
Slide 53: Foreign Jurisdictions (cont.): India, Ireland
Foreign Jurisdictions (cont.) India This document is neither a prospectus nor a statement in lieu of a prospectus under the Companies Act, 1956 (India). The offer of New Shares is being made strictly on a private placement basis. This document may not be circulated to more than 49 persons and does n
Slide 54: Foreign Jurisdictions (cont.): Japan
Foreign Jurisdictions (cont.) Japan The New Shares have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the "FIEL") pursuant to an exemption from the registration requirements applicable to a pr
Slide 55: Foreign Jurisdictions (cont.): New Zealand
Foreign Jurisdictions (cont.) New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978 (New Zealand). For personal use only The New Shares in the entitlement offer are not being offered or sold to the public in Ne
Slide 56: Foreign Jurisdictions (cont.): Sweden, Switzerland
Foreign Jurisdictions (cont.) Sweden This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this For personal use only document may not be made available, nor may the New Shares be offered for sale in
Slide 57: Foreign Jurisdictions (cont.): United Kingdom
Foreign Jurisdictions (cont.) United Kingdom Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the For personal use only United Kingdom and no prospectus (within the meaning of section 85 of th
Slide 58: Appendix C: Definition of Key Terms
Appendix C Definition of Key Terms For personal use only
Slide 59: Definition of Key Terms
Definition of Key Terms • AEMO Australian Energy Market Operator For personal use only • CSG Coal Seam Gas • FEED Front End Engineering and Design • FID Final Investment Decision • GLNG The Gladstone LNG project owned by Total, Petronas, Kogas and Santos • HoA Heads of Agreement • MW, MWh Megawatt,
Slide 60: $2.3 billion pro rata renounceable entitlement offer March 2011
$2.3 billion pro rata renounceable entitlement offer 15 March 2011 For personal use only Origin Energy Limited