Slide 1: Results for the half year ended 31 December 2008 transmittal
For personal use only To Company Announcements Office Facsimile 1300 300 021 Company ASX Limited Date 26 February 2009 From Bill Hundy Pages 69 Subject RESULTS FOR THE HALF YEAR ENDED 31 DECEMBER 2008 This Transmittal is confidential. If you have received this document in error, please contact Origi
Slide 2: Interim Results Announcement, Half Year Ended 31 December 2008
For personal use only Interim Results Announcement Half Year Ended 31 December 2008 26 February 2009 1
Slide 3: Important Notice
Important Notice This presentation does not constitute investment advice, or an inducement or recommendation to acquire or dispose of any securities in Origin, in any jurisdiction (including the USA). This presentation is for information purposes only, is in a For personal use only summary form, and
Slide 4: Outline
Outline For personal use only • Performance Highlights • Financial Review • Operational Review • Outlook 3 3
Slide 5: Performance Highlights
For personal use only Performance Highlights 4
Slide 6: ConocoPhillips' investment for a 50% interest in Origin's CSG assets
ConocoPhillips’ investment for a 50% interest in Origin’s CSG assets has driven a Statutory Profit of $6.7 billion for the half year… For personal use only • Rejected BG Group’s takeover offer • Conducted CSG monetisation process • Established Australia Pacific LNG (APLNG) with ConocoPhillips to dev
Slide 7: Underlying Profit up 38% to $277 million
Origin has continued to build its existing energy business during the first half with Underlying Profit up 38% to $277 million… For personal use only Revenue $4,216 million up 10% EBITDAF $686 million up 12% Statutory Profit $6,663 million up 1891% Underlying Profit $277 million up 38% EPS – Statuto
Slide 8: Origin continues to grow its existing business
As the operating and economic environment for businesses becomes more challenging, Origin has been able to continue to For personal use only grow its existing business… • Full half year contribution from Otway Gas Project • Continued development of New Zealand business with full half year contributi
Slide 9: Unparalleled position with $6.4 billion of cash and undrawn facilities
Origin is now in an unparalleled position to continue to grow and develop its business with access to $6.4 billion of cash and undrawn committed debt facilities and substantial additional For personal use only balance sheet capacity… Source: Origin Source: Origin Note: Excluding Contact • Conservati
Slide 10: Financial Review
For personal use only Financial Review 9
Slide 11: Profit & Loss - Statutory
Profit & Loss - Statutory ($ million) Dec 08 Dec 07 Change For personal use only Revenue 4,216 3,817 10% EBITDAF(1) 686 614 12% EBIT 7,590 634 1098% Net financing costs(2) (95) (104) (9)% Tax expense (676) (146) 363% Minority Interests (16) (49) (68)% NPAT – Statutory 6,663 335 1891% EPS – Statutory
Slide 12: Profit & Loss - Underlying
Profit & Loss - Underlying For personal use only ($ million) Dec 08 Dec 07 Change Statutory NPAT 6,663 335 1891% Significant items Changes in fair value of financial instruments (102) Impairment of assets (217) Net Impact of APLNG Transaction 6,706 Total significant items 6,386 (134) Underlying NPAT
Slide 13: Movements in fair value of financial instruments
Movements in fair value of financial instruments Reconciliation of Balance Sheet and Income Statement items associated For personal use only with financial instruments movements ($ million) Dec 08 Change in net assets (420) Recognised in the Balance Sheet (242) Recognised in the Equity Hedge Reserve
Slide 14: Asset impairments
A review of the carrying value of assets has led to asset impairments including producing assets impacted by the decline in oil price… For personal use only Impairment ($ million) Assets Pre-tax Post-tax Cooper Basin Assets 71 50 BassGas Assets 66 46 Perth Basin Assets 16 11 Heytesbury Gas Storage 2
Slide 15: Equity accounting method for investment in APLNG
Origin will use the equity accounting method for its investment in APLNG For personal use only The equity accounting treatment to be used on the Income Statement in relation to APLNG will include: • The EBITDAF contribution of 50% interest in APLNG recorded at the EBITDAF line on consolidation withi
Slide 16: APLNG Balance Sheet
APLNG Balance Sheet ($ billion) Dec 08 For personal use only Receivables from Shareholders 0.8 Other current assets 0.2 Current Assets 1.0 Receivables from Shareholders 7.9 Property, plant & equipment(1) 1.0 Other non-current assets 0.2 Non-Current Assets 9.1 Total Assets 10.2 Total Liabilities (0.2
Slide 17: Gain on APLNG transaction
Gain on APLNG transaction ($billion) Dec 08 Pre-Completion For personal use only Increase in cash 6.9 - 50% equity accounted investment in APLNG 5.0 - Discounted payable to APLNG (3.3) 1.7 - Consolidation of APLNG (formerly known as OECSG) - 1.0 Tax payable on transaction (0.8) Total 7.8 1.0 Movemen
Slide 18: APLNG transaction has transformed Origin's Balance Sheet
APLNG transaction has transformed Origin’s Balance Sheet ($ billion) Dec 08 Jun 08 For personal use only Cash 4.1 0.1 Other Current Assets 2.1 2.4 Total Current Assets 6.2 2.5 Investment in Equity Accounted Investees 5.0 - Other Non-Current Assets 10.8 10.0 Total Non-Current Assets 15.8 10.0 Tax Pay
Slide 19: Substantial funding capacity
APLNG transaction has provided Origin with substantial funding capacity… As at 31 December 2008 For personal use only Undrawn Available Adjusted Committed Funding (1) (2) (1) Gross Debt Cash Debt Facilities Capacity Source: Origin … with cash and undrawn committed debt facilities of $6.4 billion (1)
Slide 20: EBITDAF of $686m up 12%
EBITDAF of $686m is up 12% primarily due to growth in the Retail and Exploration & Production segments For personal use only Segments ($ million) Dec 08 Dec 07 Change Exploration & Production 175 133 32% Generation 21 33 (34)% Retail 300 201 49% Contact 190 248 (24)% Total 686 614 12% Note: Corporat
Slide 21: Depreciation & Amortisation
Depreciation & Amortisation For personal use only ($ million) Dec 08 Dec 07 Generation property, plant and equipment 59 65 Non-generation property, plant and equipment 79 62 Amortisation in producing areas (1) 50 42 Other 1 2 Total 189 171 • Higher depreciation and amortisation resulting from: Otw
Slide 22: Interest
Interest ($ million) Dec 08 Dec 07 For personal use only Interest revenue 55 6 Net Financing costs 95 104 Unwinding of discount on provisions (13) (7) Unwinding of discounted liability payable to APLNG (35) - Net interest expense 48 97 Capitalised interest 60 24 Net interest expense + capitalised in
Slide 23: Tax Reconciliation
Tax Reconciliation ($ million) Dec 08 Dec 07 For personal use only Profit before tax 7,355 530 Prima facie tax 2,207 163 less non-assessable gain on APLNG transaction (1,501) - less recognition of change in net loss position (14) (2) less share of net profit after tax of associates (14) (1) less oth
Slide 24: Capital Expenditure
Capital Expenditure ($ million) Dec 08 Dec 07 For personal use only Stay-in-business 115 70 Growth Exploration & Production 286 305 Retail 59 38 Generation 556 240 Contact 129 56 Total capital expenditure 1,144 708 Acquisitions (net of cash) 131 6 Capex including acquisitions 1,275 714 • Growth cape
Slide 25: Operating Cash Flow
Operating Cash Flow ($ million) Dec 08 Dec 07 For personal use only EBITDAF 686 614 Equity Accounted Investees (EBITDAF less dividends) (14) (9) Exploration Write-Off 4 16 Change in working capital (51) (61) Stay-in-business capex(1) (115) (70) Other (29) (23) Tax paid (117) (83) OCAT 363 385 Net in
Slide 26: Segment Cash Flow & Cash Flow Returns
Segment Cash Flow & Cash Flow Returns For personal use only Operating Av. Funds OCFR (%)(2) Cash flow(2) Employed(3) ($m) ($m) Dec 08 Dec 07 Exploration & Production(1) 305 1,267 24.0 22.9 Generation 37 294 12.7 30.3 Retail 369 2,402 15.4 9.2 Contact Energy 319 3,444 9.3 11.2 • E&P: Increased operat
Slide 27: On-market share buyback
Origin announced that on completion of the APLNG transaction it would undertake an on-market buyback of shares of up to $1.275 billion For personal use only Share Buyback Activity Shares purchased to date 12.1 million Average price paid $16.11 per share Total consideration $195 million • The buyback
Slide 28: Fully franked interim dividend of 25 cps declared
A fully franked interim dividend of 25 cps (up 108%) has been declared… Dividends History For personal use only 50 • Ex-dividend date 3 March 2009 • Date of record 10 March 2009 40 25 • Payable 25 March 2009 cents per share • Dividend payout ratio of 79% of 30 Underlying EPS, or 3% of Statutory EPS
Slide 29: Operational Review
For personal use only Operational Review 28
Slide 30: Executive Management Team reorganised
The Executive Management Team of Origin has been reorganised to best reflect the challenges and opportunities for our existing business… For personal use only … and to continue the development of a stable and effective management team and to target new opportunities for growth 29 29
Slide 31: Exploration & Production
For personal use only Exploration & Production 30
Slide 32: Exploration & Production: Record Production, Sales and Revenue
Exploration & Production: Record Production, Sales and Revenue reflect contributions from new assets… For personal use only • EBITDAF of $175m up 32% with increased 400 400 production from Otway Gas Project, Taranaki Dec-08 assets and CSG partially offset by lower 350 Dec-07 350 Total Revenue & EBIT
Slide 33: Gas production increased
Gas production increased on contributions from the Otway Gas Project and Taranaki Basin… For personal use only • Otway Gas Project provided first full half year of production, operating reliably at or around peak design rates during high winter seasonal demand • Taranaki assets provided first full h
Slide 34: Liquids production grew significantly
Liquids production grew significantly during the half with contributions from new projects and the Cooper oil program… For personal use only • The Cooper Oil Program has delivered incremental growth to Cooper oil production • Perth Basin production continues to decline • First full six month contrib
Slide 35: Oil to condensate price spread widened
The oil to condensate price spread widened abruptly in the December half coinciding with both the decline in oil price… For personal use only • Residual exposure to benchmark spreads impacted H1 realised prices due to extreme oil price volatility and shifts in supply/demand patterns • The average pr
Slide 36: Establishment of APLNG is progressing well
Establishment of APLNG is progressing well For personal use only APLNG Established • Origin & ConocoPhillips senior executives appointed to APLNG Board • Board has appointed Project Director, Chief Financial Officer, Commercial Manager and LNG Marketing Manager • Initial Advice Statement seeking sig
Slide 37: APLNG continues strong growth in CSG production and reserves
APLNG continues strong growth in CSG production and reserves… For personal use only Source: Origin APLNG’s CSG Interests(1) (PJ) 30 Jun 2008 31 Dec 2008 Change(2) Increase 1P Reserves 1,375 1,527 + 152 + 11% 2P Reserves 4,751 5,482 + 731 + 15% 3P Reserves 10,138 11,110 + 972 + 10% Contingent Resourc
Slide 38: APLNG has a leading CSG reserves position
APLNG has a leading CSG reserves position… For personal use only Eastern Australia 2P CSG Reserves by Company Eastern Australia 3P CSG Reserves by Company Source: RLMS Eastern Australia CSG Reserves 19/2/09, updated for APLNG’s reserves position announced on 26/2/09 … both on a 2P and 3P basis 37 37
Slide 39: Kupe Gas Project and Ahuroa Gas Storage update
With the next phase of APLNG’s CSG development to be funded by ConocoPhillips, and a number of development projects nearing completion… For personal use only Kupe Gas Project • Offshore operations were successfully completed early in the half year • Project is 90% complete with commercial operations
Slide 40: Exploration program reviewed, low prospectivity areas surrendered
Origin has reviewed its exploration program and reduced exposure by surrendering areas assessed to have low prospectivity… For personal use only Kenya Origin surrendered one permit and renegotiated work program on Block L8 to acquire 300 sq km of 3D seismic instead of a drilling a well. Farminees wi
Slide 41: Significant exploration opportunities to be drilled
Notwithstanding the review of exploration opportunities and expenditure… For personal use only An active seismic exploration program is being undertaken in New Zealand, including 2D surveys in the Northland and Canterbury basins, and a large 3D survey over the prospective Carrack and Caravel prospec
Slide 42: Generation
For personal use only Generation 41
Slide 43: Generation: EBITDAF lower due to Worsley plant outage
Generation: EBITDAF was lower primarily due to the Worsley plant outage… For personal use only 50 600 • EBITDAF was $21 million, $11 million lower Dec-08 than the prior half year 45 Dec-07 540 • The Worsley cogeneration plant in WA had Total Revenue & EBITDAF ($m) 40 480 an extended outage after a p
Slide 44: Plant Performance
Plant Performance For personal use only Generation Plant Type Availability Ladbroke Merchant 86% Quarantine Merchant 79% Roma Merchant 60% Mt Stuart Merchant 98% Bulwer Island Contract 98% Osborne Contract 97% Worsley Contract 30% • Earnings impacted mainly by major turbine failure at Worsley. An in
Slide 45: Gas-fired power stations well placed in a carbon-constrained environment
Origin’s fleet of gas-fired power stations is well placed to benefit in a carbon-constrained environment… For personal use only • Addition of Uranquinty and Quarantine expansion has more than doubled Origin’s generation equity interests to 1,465 MW • Origin has committed to build an additional 1,340
Slide 46: Doubling generation capacity as price volatility increases
Origin is doubling the capacity of its generation fleet at a time when electricity price volatility is increasing… For personal use only … and higher forward prices provide significant 45 opportunities Source: NEMMCO, AFMA & Origin 45
Slide 47: Uranquinty Power Station completed; Quarantine expansion
Uranquinty Power Station is now completed and fully operational… For personal use only All 4 completed Uranquinty PS turbines New unit at Quarantine PS Uranquinty Power Station Quarantine Power Station Expansion • 640 MW Peaking Plant (4 x 160 MW OCGT) • 120 MW expansion (1 x 120 MW OCGT) • Located
Slide 48: Darling Downs and Mortlake power stations
Darling Downs Power Station is progressing well… For personal use only Darling Downs PS Turbine Building steel erection Impression of Mortlake PS once constructed Darling Downs Power Station Mortlake Power Station • 630 MW Base Load plant • 550 MW Peaking plant • Largest CCGT plant in Australia • Ex
Slide 49: Renewable energy options
Origin also continues to develop a number of renewable energy options… Wind For personal use only • Construction of the 30 MW wind farm at Cullerin Range is well progressed with commissioning expected in mid-2009 • Origin has development sites for another 58 MW and an option over up to 500 MW of win
Slide 50: Retail
For personal use only Retail 49
Slide 51: Retail: EBITDAF grew by $99 million to $300 million
Retail: EBITDAF grew by $99 million to $300 million. Higher gas and electricity revenues were realised following tariff increases in the prior period leading to a very strong first half… For personal use only 3,500 350 • EBITDAF grew by $99 million or 49% from $201 Dec-08 million to $300 million 3,0
Slide 52: Tariff increases led to increased revenues
Tariff increases in the prior period led to increased revenues for gas and electricity… For personal use only Performance Metrics and % Natural Gas Electricity LPG change from Dec 07 (1) Product Revenue ($m) 539 +12% 1,972 +12% 353 +22% Gross Profit ($m) 89 +46% 377 +46% 73 +18% EBITDAF ($m) 291 +64
Slide 53: Higher tariffs and lower purchasing costs expanded margins
Tariffs were higher and purchasing costs of electricity were lower than in the prior corresponding period resulting in significant margin expansion… For personal use only Source Electricity Chart: NEMMCO, AFMA & Origin Source Gas Chart: Origin and VENCorp … however the wholesale cost of energy is ex
Slide 54: Gross margin and EBITDAF per customer up significantly
Gross margin and EBITDAF per customer up significantly as tariff increases from prior period flow through… For personal use only Gas & Electricity Customers Dec 08 Dec 07 Customer numbers (’000) 2,613 2,678 EBITDAF / Sales 11.6 % 7.9 % Underlying EBIT / Sales 10.9 % 7.3 % $ Per Customer (Half Year):
Slide 55: Over 238k new accounts acquired to maintain customer numbers
Origin acquired over 238k new accounts to maintain customer numbers December 2008 Origin Customer Numbers(1) For personal use only Natural (000’s) Electricity Total Gas Jun 2008 880 1,729 2,609 Change -2 +7 +4 Dec 2008 878 1,735 2,613 • Opening customer numbers revised (-45k) following customer data
Slide 56: Wipro Technologies and SAP selected as partners
Origin has selected Wipro Technologies and SAP as its preferred partners for the next step in evolution of the Retail business… For personal use only • Wipro Technologies, the global IT services business of Wipro Limited (NYSE:WIT) and global software vendor SAP have been selected as the preferred p
Slide 57: Active margin management strengthened customer margins (LPG)
Active margin management has strengthened underlying customer margins… For personal use only Average Australian Dollar Propane Price • EBITDAF down 65% to $8m as the 1200 rapid depreciation of the Jan to Jun 08 Jul to Dec 07 A$921 Jul to Dec 08 Australian dollar resulted in the A$759 A$823 booking o
Slide 58: Contact Energy
For personal use only Contact Energy 57
Slide 59: Contact Energy: earnings reduced by weather and transmission constraints
Contact Energy: While earnings were significantly reduced due to the combined impact of weather conditions and transmission constraints… For personal use only • EBITDAF was $190m, 24% lower than the prior half 3000 300 year primarily due to an unusual combination of Dec-08 weather events and transmi
Slide 60: Overview of transmission constraints
Overview of transmission Transmission constraints affecting half year constraints performance For personal use only • Two high voltage DC cables (Poles 1 & 2) connect the North and South Islands • Pole 1 was unexpectedly removed from Transmission service in Nov 07 resulting in the islands constraint
Slide 61: South Island drought conditions and wholesale prices
Early in the half year South Island drought conditions constrained Contact’s ability to generate electricity and resulted in Contact paying more for its purchases of energy for its retail customer base than it was earning for its generation… For personal use only Wholesale prices South Island Source
Slide 62: Contact projects committed for development
Contact has a number of projects committed for development with substantial additional opportunities, particularly in geothermal generation • Gas-fired peaking plant For personal use only Construction of 200 MW of peaking capacity at Stratford, Taranaki well advanced. Operational in 2010 • Gas sto
Slide 63: Outlook
For personal use only Outlook 62
Slide 64: Second half expected to be more challenging
The second half of the financial year is expected to be more challenging than the first half For personal use only • Lower margins in the Retail business due to higher wholesale electricity costs, although margins for the full year are expected to be consistent with the prior year • Future well comm
Slide 65: Major projects expected to contribute after year end
Origin will continue to progress the development of several major projects which are expected to make contributions For personal use only following the end of the current financial year… • Construction of the 30 MW Cullerin Range wind farm in New South Wales which is due for completion in mid 2009 •
Slide 66: Fuel-integrated generator retailer strategy and APLNG growth
Origin’s strategy as a fuel-integrated generator retailer will continue to create opportunities for the existing business and APLNG creates a major opportunity for growth and access to For personal use only international markets Source: Origin Source: Origin Note: Excluding Contact With access to $6
Slide 67: Further Information
Further Information For personal use only Investors Angus Guthrie Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61-2-8345 5558 Mobile: + 61-4-1786 4255 Website www.originenergy.com.au 66 66
Slide 68: Appendix
For personal use only Appendix 67
Slide 69: Reserves Statements
Reserves Statements • The information in this Reserves Statement has been compiled by Tim Scholefield, a For personal use only full-time employee of the Company. Tim Scholefield is qualified in accordance with ASX listing rule 5.11 and has consented to the form and context in which this statement ap