Origin Energy Limited · ASX:ORG
Origin Energy — Non-Deal Roadshow (September 2014)
42 slides from Origin Energy's roadshow presentation, September 2014
Slide 1: Origin Energy International Roadshow
Origin Energy International Roadshow Grant King, Managing Director Karen Moses, Executive Director, Finance and Strategy September, October 2014
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: A regional leader in energy markets
Since Origin was established in 2000 it has pursued a strategy of connecting resources to markets. Over that time it has become … A regional leader in energy markets Leading integrated energy markets businesses in Australia and NZ At a glance: Flexible and diverse fuel portfolio Listed in S&P/
Slide 4: Origin's businesses: Energy Markets, Contact, E&P, APLNG
Through a decade of consolidation Origin invested in the energy markets businesses, and in recent years has focused its investment on APLNG Regionally significant position in Regional Leader in Energy Markets Natural Gas and LNG production CONTACT ENERGY EXPLORATION & ENERGY MARKETS LNG (NEW ZEALAND
Slide 5: Changing priorities to deliver Origin's strategy
As APLNG delivers first LNG in mid-2015, and the energy markets businesses mature, priorities to deliver Origin’s strategy are changing … Improving returns in energy markets businesses Deregulation of retail Improving customer Regional leader markets experience in energy Capital Margin managem
Slide 6: Improving returns in energy markets businesses
Improving 1. returns in energy Improving markets businesses 6|
Slide 7: Wholesale electricity prices suppressed by generation oversupply
In Australia, wholesale electricity prices are currently suppressed by generation over supply, driving generators into retail markets and intensifying competition • LNG production in Gladstone will help NEM Net Supply and Demand1 to alleviate the generation over supply 16,000 through additional load
Slide 8: Per capita consumption decline expected to moderate
Rate of decline in per capita consumption expected to moderate however this trend will require review of policy and regulatory settings NEM Mass Market Electricity Review policy and regulatory settings 8.00 Consumption per Capita1 7.50 Usage trend includes energy Retail price deregulation - NSW, V
Slide 9: Stabilised net customer accounts and increased gas penetration
While discounting has continued to impact margins, Origin has stabilised net customer accounts and is increasing its Natural Gas penetration … Origin’s Average Signed Discount Offers for FY2014 Electricity and Natural Gas Electricity and Natural Gas (%)1 Customer Account Movements by State 25 20 Ele
Slide 10: Retail Transformation to manage costs and customer experience
With completion of Retail Transformation Origin is well positioned to manage costs and improve customer experience Cost to Serve Electricity and Natural Gas 800 Cash Cost Cost incl. TSA Lower cash 40% Churn Rates 700 cost to Origin, FY2013 Origin, FY2014 serve offset 35% Market, FY2013 Market, FY201
Slide 11: Capturing benefits of rising gas prices via oil-linked agreements
In Australia, Origin has captured the benefits of rising gas prices through oil-linked gas sale agreements and increasing penetration of Mass Market customers Sources of Origin Energy Markets’ Retail market PJ/a East Coast Contracted Gas Portfolio 300 Ironbark (new equity gas) 2 Other purchases NS
Slide 12: Contact Energy's 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 port
Slide 13: Investment focused on retail systems and flexible generation
Investment in the energy markets businesses has been focused on retail systems to improve operational efficiency and customer experience and in flexible, low cost generation Segment Operating Cash Flow less Segment Growth Capital Expenditure Growth Capital Expenditure 1,200 1,200 1,000 1,000 800 800
Slide 14: Delivering growth in Natural Gas and LNG
Delivering 1. growth in Natural Gas Improving and LNG 14 |
Slide 15: Australia forecast to be world's largest LNG exporter
Australia is forecast to emerge as the world’s largest LNG exporter with around 85 mtpa1 directed to offshore markets by 2017, four times domestic gas demand Darwin LNG Ichthys Exporting to Asia Pacific ~12 mtpa markets where demand is set to almost double from 175 mtpa in 2013 Prelude ~ 3.5 mtpa to
Slide 16: APLNG joint venture with ConocoPhillips and Sinopec
APLNG is a strong and aligned incorporated joint venture, combining Origin’s Australian CSG experience with ConocoPhillips’ extensive LNG and CSG capabilities … • One of Australia’s leading • Global independent exploration and • Integrated energy and chemical integrated energy companies production c
Slide 17: APLNG reserves base in Surat and Bowen basins
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 3P 2P 1P basins at 30 April 2014 2 Ramp and Tail Gas Train 2 Trai
Slide 18: APLNG on track to deliver first LNG in mid-2015
At around 75% complete1 APLNG is on track to deliver first LNG in mid-2015 … Timing Milestones (year ended 30 June) Origin and ConocoPhillips form Australia Pacific LNG Incorporated JV Q2 FY2009 Environmental approvals Q3 FY2011 Sinopec - 4.3 mtpa foundation customer Q4 FY2011 FID1 announced
Slide 19: Upstream gas and water processing facilities completion
Upstream Gas and Water Processing Facilities completion is a key priority … Condabri Central Gas Processing Facility, February 2014 Orana Gas Processing Facility, July 2014 Reedy Creek Gas Processing Facility, July 2014 Reedy Creek Water Processing Facility, July 2014 … with facilities on track to m
Slide 20: Drilling and gathering progressing in line with plan
Drilling and gathering is progressing in line with plan Coil-tubing drill rig Gathering works in Condabri Wandoan Interconnect, July 2014 Talinga Pipeline Compression Facility, July 2014 Construction of the main gas pipeline is complete with gas delivery to Curtis Island timed to optimise the transi
Slide 21: Downstream project progress at Curtis Island
The Downstream Project is progressing with all Train 1 and Outside Battery Limit modules in place APLNG Curtis Island site, February 2013 aerial view APLNG Curtis Island Site, July 2014 APLNG Curtis Island site, aerial view, July 2014 APLNG Curtis Island Site, July 2014 21 |
Slide 22: Upstream investments increased availability and production
Investments in upstream assets have delivered increased availability and production Origin Gas and Liquids Production1 Origin 2P Reserves1,2 PJe mmboe PJe 120 20.6 1,200 Production up 17% 100 17.2 1,000 800 80 13.7 600 60 10.3 400 40 6.9 Total Liquids SA Cooper & SWQ 200 Perth 20 3.4 Surat Bass - Ta
Slide 23: Offsetting field decline in Otway, Bass and Cooper basins
Origin’s short to medium term focus will be on offsetting natural field decline through in field and near field developments in Otway, Bass and Cooper basins Otway Basin • Drilling of Halladale development well expected in Q1 FY2015 and planning for drilling Geographe 3 development well is underway
Slide 24: Growth opportunities in Cooper, Beetaloo and Browse basins
Medium to longer term growth opportunities expanded through three recent transactions in Cooper, Beetaloo and Browse basins … Cooper Basin – JV with Senex and Planet Gas • Targeting tight sands, shale and deep coal • Close to existing infrastructure • Up to 50% interest in permit areas Beetaloo Basi
Slide 25: Growing capabilities and increasing investment in renewables
Growing 1. capabilities and increasing Improving investment in renewables 25 |
Slide 26: Leveraging existing renewables base of 1,213 MW
Origin is focused on leveraging its existing renewables base of 1,213 MW to increase investments in renewable energy … Portfolio of Renewable Renewable Development Opportunities Operational Generation MW 1,500 1,000 Indonesia New Zealand 47.5% interest in Sorik 250 MW geothermal Marapi geothermal po
Slide 27: Capital management and funding
Capital 1. management and funding Improving 27 |
Slide 28: Browse acquisition financing and debt maturity profile
The Browse acquisition was initially financed by drawdown of committed undrawn bank facilities in place to fund Origin’s commitments to APLNG Origin Debt & Bank Guarantee Maturity Profile as at 30 June 20141 • The acquisition of a 40% interest 4,500 in the Poseidon exploration joint 4,000 Loans & Ba
Slide 29: Dividends and Underlying EPS
An unfranked final dividend of 25 cps1 has been determined, representing a payout ratio of 77% of annual Underlying EPS Dividends and Underlying EPS Dividends and Free Cash Flow g y per share 160 160 Dividend per share Free Cash Flow per share • First full year of 140 Underlying EPS Dividend per sha
Slide 30: APLNG creates step change in earnings and cash flow
Completion of APLNG creates a step change in Origin’s earnings and cash flow Priorities post APLNG: The first full year of contribution 1. Increase distributions to from APLNG is expected to be shareholders FY2017, with distributable cash 2. Maintain investment grade credit flow to Origin expected t
Slide 31: Outlook
‘e) origin 31|
Slide 32: FY2015 and FY2016 transitional years
Looking forward, FY2015 and FY2016 are transitional years for Origin with first contribution from LNG from mid-2015, expanding gas margins and an improving supply/demand balance in electricity markets During the next two years Origin expects: Increased contribution from the Energy Markets business
Slide 33: Appendix
‘e) origin Appendix
Slide 34: 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
Slide 35: Electricity unit gross profit
Improved margin management in second half results in year on year Electricity Unit Gross Profit down 3% ($1/MWh) compared to 9% down ($3.20/MWh) at the first half Volumes Sold (TWh) FY2014 FY2013 Change Mass Market 18.0 20.1 (2.1) C&I 20.3 22.2 (1.9) Total 38.3 42.3 (4.0) Electricity Performance ($/
Slide 36: Natural Gas unit gross profit
Natural Gas Unit Gross Profit expanded by 19% ($0.40/GJ) reflecting the benefit of Origin’s diverse gas supply portfolio … Volumes Sold (PJ) FY2014 FY2013 Change Mass Market 37.1 39.4 (2.3) C&I 71.1 87.8 (16.7) Total 108.2 127.2 (19.0) Natural Gas Performance ($/GJ) FY2014 FY2013 Change Mass Market
Slide 37: Cash cost to serve per customer
Cash cost to serve per customer $11 or 6% lower, reflecting operational improvements … Cost to serve FY2014 FY2013 Change Cost to serve ($ per average customer account) (169) (180) 11 Cost to maintain ($ per average customer account) (144) (150) 6 Cost to acquire/retain ($ per average customer accou
Slide 38: Contact's electricity unit gross profit margin
Contact’s Electricity Unit Gross Profit margin up 6% driven by lower energy costs following investments in generation and fuel flexibility Volumes Sold (GWh) FY2014 FY2013 Change Mass Market 3,852 4,067 (215) C&I 4,526 4,210 316 Total 8,378 8,277 101 Electricity Performance ($/MWh) FY2014 FY2013 Cha
Slide 39: APLNG capital expenditure and Origin cash contribution
APLNG capital expenditure for the year was $9.9 billion, with Origin’s cash contribution $2.8 billion Cumulative Estimate from FID1 to Year to 30 from FID1 to (A$m) 1st sales from Train 2 June 2014 30 June (A$b) 2014 Project Capex 8,5071 21,004 24.73 Non-Project Capex: Capitalised O&M 345 Domestic 9
Slide 40: Important Information
Important Information All figures in this presentation relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its controlled entities, for the full year ended 30 June 2014 (the period) compared with the full year ended 30 June 2013 (the prior corres
Slide 41: Important Information
Important Information Other 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 Austral
Slide 42: Thank you
Thank you For more information David Moon Group Manager, Investor Relations Email: david.moon@originenergy.com.au Office: +61 2 9375 5816 Mobile: + 61 437 039 310 www.originenergy.com.au 42 |