Origin Energy Limited · ASX:ORG
Origin Energy — Investor Day (June 2012)
147 slides from Origin Energy's investor day presentation, Jun 19, 2012
Slide 1: ASX announcement cover note: presentation
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 19 June 2012 From Helen Hardy Pages 147 Subject PRESENTATION Attached for your information is a presentation being made at the Origin Analyst Workshop by Karen Moses, Executive Director Finance & St
Slide 2: Origin Energy Analyst Workshop, 19 June 2012
For personal use only Origin Energy Analyst Workshop, 19 June 2012
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 summary form, and does not purport to b
Slide 4: Important Notice (continued)
Important Notice (continued) A reference to FID 1 is a reference to the Final Investment Decision on the first phase of APLNG’s two train CSG to LNG project taken on 28 July 2011. A reference to FID 2 is a reference to a Final Investment Decision on the second phase of APLNG’s two train CSG to LNG p
Slide 5: Introduction and safety procedures
For personal use only Introduction and safety procedures Karen Moses, Executive Director Finance & Strategy 4|
Slide 6: Agenda
Agenda For personal use only 1. Financial overview 2. Energy Markets 3. Australia Pacific LNG Accounting 4. Australia Pacific LNG Operations 5. Exploration and Production (ex-CSG) 5|
Slide 7: Financial overview
For personal use only Financial overview Presenter: Gary Mallett, Group Financial Controller 6|
Slide 8: Agenda
Agenda For personal use only 1. Segment reporting 2. Revenue and EBITDA 3. Depreciation and amortisation 4. Share of equity accounted investees 5. Net financing costs 6. Capitalised interest 7. Income tax expense 8. Non-controlling interests 9. Items excluded from segment result and underlying conso
Slide 9: Extract from December 2011 Interim Results Presentation
Extract from December 2011 Interim Results Presentation For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Statutory EPS, Underlying EBITDA , Underlying EBIT, Underlying Profit, Underlying EPS and Group OCAT. 8| Source: Page 9, Investor Presentation from Interim Resul
Slide 10: Extract from December 2011 Interim Results Presentation
Extract from December 2011 Interim Results Presentation For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Underlying Profit. Source: Page 10, Investor Presentation from Interim Results for the half year ended 31 December 2011. 9|
Slide 11: Extract from December 2011 Interim Results Presentation
Extract from December 2011 Interim Results Presentation For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Underlying EBITDA. 10 | Source: Page 14, Investor Presentation from Interim Results for the half year ended 31 December 2011.
Slide 12: Segment reporting
Segment reporting • Origin announced revised reporting segments in February 2012 For personal use only • The new segment reporting format was used for the presentation of Origin’s interim financial results for the six months ended 31 December 2011 and will be used for the presentation of Origin’s fu
Slide 13: December 2011 segment report – segment results
December 2011 segment report – segment results December 2011 segment disclosure (note 2a) For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Segment Result, Underlying EBITDA, Underlying EBIT and Underlying Profit. 12 | Source: Page 14, December 2011 Interim Financial
Slide 14: December 2011 segment report – segment assets and liabilities
December 2011 segment report – segment assets and liabilities For personal use only December 2011 segment disclosure (note 2a) Source: Page 15, December 2011 Interim Financial Statements. 13 |
Slide 15: Restatement of June 2011 segment underlying EBITDA and EBIT
Restatement of June 2011 segment underlying EBITDA and EBIT The reported segment earnings before interest, tax, depreciation and amortisation (EBITDA), For personal use only and segment earnings before interest and tax (EBIT) for the 12 months ended 30 June 2011 were restated as presented below As p
Slide 16: Reconciliation of June 2011 segment underlying EBITDA and EBIT
Reconciliation of June 2011 segment underlying EBITDA and EBIT For personal use only Restated June 2011 segment Earnings before interest, tax, depreciation and amortisation (EBITDA) and Earnings before interest and tax (EBIT) Refer to Appendix 1 Glossary on page 49 for a description of Underlying EB
Slide 17: Revenue and EBITDA
Revenue and EBITDA For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Underlying EBITDA. Source: Page 14, December 2011 Interim Financial Statements. . • No revenue is reported for Australia Pacific LNG as the investment is equity accounted • Sales between segments ar
Slide 18: Items between EBITDA and Segment Result
Items between EBITDA and Segment Result December 2011 segment disclosure (note 2a) For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Segment Result, Underlying EBITDA, Underlying EBIT and Underlying Profit. 17 | Source: Page 14, December 2011 Interim Financial Statem
Slide 19: Depreciation and amortisation
Depreciation and amortisation For personal use only • Depreciation and amortisation is charged on: - Property, plant and equipment - Software and acquired customer contracts (included within intangible assets) • Depreciation and amortisation is charged over the useful economic life of the asset • As
Slide 20: Assets subject to depreciation and amortisation at June 2011
Assets subject to depreciation and amortisation at 30 June 2011 For personal use only The ‘At cost’ line includes certain assets that are not yet ready for use and therefore not being depreciated/ amortised e.g. Mortlake power station assets and Retail Transformation assets as at 30 June 2011 ‘Goodw
Slide 21: Depreciation and amortisation disclosure within the financial statement notes
Depreciation and amortisation disclosure within the financial statement notes For personal use only Source: Pages 39 and 41, June 2011 Financial Statements. 20 |
Slide 22: Depreciation and amortisation disclosure (continued)
Depreciation and amortisation disclosure within the financial statement notes (continued) For personal use only Profit (note 3) at 30 June 2011 Source: Page 29, June 2011 Financial Statements. 21 |
Slide 23: Depreciation and amortisation within the segment note
Depreciation and amortisation within the segment note for December 2011 31 December 2011 segment disclosure (note 2a) For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Segment Result, Underlying EBITDA, Underlying EBIT and Underlying Consolidated Profit. 22 | Source:
Slide 24: Segment assets at December 2011
For personal use only Segment assets at December 2011 December 2011 segment disclosure (note 2a) Source: Page 15, December 2011 Interim Financial Statements. 23 |
Slide 25: Share of equity accounted investees
Share of equity accounted investees For personal use only For accounting purposes: • Associates are those entities over which the consolidated entity exercises significant influence, but not control over the financial and operating policies • Joint ventures are those entities over whose activities t
Slide 26: Extract of equity accounted investees from the Financial Statements
Extract of equity accounted investees from the Financial Statements For personal use only $million Share of Investment Place of Share of net carrying Equity accounted investment Activity incorporation EBITDA ITDA profit amount Australia Pacific LNG CSG Australia 11 (4) 7 5,736 Oakey Generation Austr
Slide 27: Specific APLNG disclosure
Specific APLNG disclosure Further detail of Australia Pacific LNG is provided in note 6(b) of the 31 December For personal use only 2011 Interim Financial Statements Refer to Appendix 1 Glossary on page 49 for a description of Segment Result and Underlying EBITDA. Source: Page 22, December 2011 Inte
Slide 28: Equity accounted investees – Income Statement Disclosure
Equity accounted investees – Income Statement Disclosure For personal use only Origin's share of the results of equity accounted investees are presented in one line - ‘Share of results of equity accounted investees’ Represents Origin’s share of the net profit after tax of equity accounted investees
Slide 29: Equity accounted investees – Statement of Financial Position disclosure
Equity accounted investees – Statement of Financial Position disclosure For personal use only Origin's share of the net assets of equity accounted investees, acquisition costs and related own costs are presented in one line ‘Investments accounted for using the equity method’ Statement of financial p
Slide 30: Equity accounted investees – Segment note disclosure
Equity accounted investees – Segment note disclosure For personal use only Origin’s share of the results of equity accounted investees are presented in two lines - ‘Underlying EBITDA’ and ‘Share of interest, tax, depreciation and amortisation of equity accounted investees’ (ITDA) in the segment note
Slide 31: Equity accounted investees – Segment note asset disclosure
Equity accounted investees – Segment note asset disclosure For personal use only Origin’s equity accounted investees carrying value is presented in one line ‘Investments accounted for using the equity method’. This reconciles to the Statement of Financial Position disclosure. Source: Page 15, Decemb
Slide 32: Equity accounted investees – Cash Flow disclosure
Equity accounted investees – Cash Flow disclosure For personal use only Origin’s cash payments to equity accounted investees Cash calls resulting in an increased investment included here Origin’s cash contribution to APLNG. Source: Page 11, December 2011 Interim Financial Statements. 31 |
Slide 33: Net financing costs disclosure
Net financing costs disclosure For personal use only Source: Page 17, December 2011 Interim Financial Statements. 32 |
Slide 34: Net financing costs
Net financing costs For personal use only • Net interest expense includes: • Interest income • Interest on drawn debt • Commitment fees on committed undrawn facilities • Upfront establishment fees and transaction costs • Interest on effective hedging instruments (interest rate swaps) • Interest expe
Slide 35: Capitalised Interest
Capitalised Interest For personal use only • Interest is capitalised for the funding of qualifying assets • Qualifying assets are those assets being developed or constructed which take longer than 6 months to complete • Examples of qualifying assets for which interest has been capitalised in the rec
Slide 36: Capitalised Interest (continued)
Capitalised Interest (continued) For personal use only • Origin operates a centralised group debt portfolio to fund the majority of wholly- owned assets • The debt and related interest expense that is used for capitalised interest is determined as follows: 1. Debt facilities, and the related interes
Slide 37: Income tax expense
Income tax expense For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Underlying profit and Statutory profit. Source: Page 12, Management Discussion and Analysis – December 2011. • Statutory effective tax rate was 18 per cent mainly due to the non assessable gain aris
Slide 38: Fundamentals of Petroleum Resource Rent Tax (PRRT)
Fundamentals of Petroleum Resource Rent Tax (PRRT) For personal use only • PRRT is a project-based tax applied at the rate of 40%, and is payable only when a project’s Cumulative PRRT Assessable Receipts are greater than Cumulative Allowable Expenditures. • Each year any un-deducted Expenditures are
Slide 39: PRRT Projects and Starting Base
PRRT Projects and Starting Base For personal use only • A ‘petroleum project’ under PRRT comprises: - Production licence area; and - Operations and facilities for the recovery and processing of petroleum from the production licence area, and adjacent storage • Both Origin and Australia Pacific LNG h
Slide 40: Financial Statement impact of PRRT
Financial Statement impact of PRRT For personal use only • PRRT is required to be accounted for as an income tax • Any deferred tax impact arising on inception of the PRRT legislation for Origin’s projects will be recognised through income tax expense as a benefit in the Income Statement with a corr
Slide 41: Non-controlling interests
Non-controlling interests For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Underlying Profit. Source: Page 13, Management Discussion and Analysis - December 2011. • Origin’s non-controlling interests are listed in Note 29 of the financial statements for the 12 month
Slide 42: Non-controlling interests – Income Statement Disclosure
Non-controlling interests – Income Statement Disclosure For personal use only 100% of results are included in Origin’s Income Statement, with the non-controlling interest recorded in the ‘Non-controlling interests’ line Source: Page 7, December 2011 Interim Financial Statements. 41 |
Slide 43: Non-controlling interests – Statement of Financial Position and Cash Flow
Non-controlling interests – Statement of Financial Position and Statement of Cash Flow Disclosure For personal use only Disclosure in Statement of Financial Position: 100% of the entity’s Statement of Financial Position is included in Origin’s Statement of Financial Position. The non-controlling int
Slide 44: Items excluded from segment result and underlying consolidated profit
Items excluded from segment result and underlying consolidated profit December 2011 segment disclosure (note 2a) For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Segment Result, Underlying EBITDA, Underlying EBIT and Underlying profit. 43 | Source: Page 14, December
Slide 45: Basis of Preparation
Basis of Preparation For personal use only • Origin’s Financial Statements are prepared in Accordance with Australian Accounting Standards • Origin’s Income Statement records Statutory Profit representing net profit after tax • The segment note included in the Financial Statements includes a “Segmen
Slide 46: Description of items excluded from segment result
Description of items excluded from segment result and underlying consolidated profit For personal use only Item excluded from Description underlying consolidated profit Australia Pacific LNG related - Net gain on dilution of Origin’s investment in Australia Pacific items LNG - Net financing costs in
Slide 47: Description of items excluded (continued)
Description of items excluded from segment result and underlying consolidated profit (continued) For personal use only Item excluded from Description underlying consolidated profit Other A number of items do not fit into the previous categories and are included in an ‘other’ category. Other items ma
Slide 48: Group operating cash flow after tax (OCAT)
Group operating cash flow after tax (OCAT) For personal use only Refer to Appendix 1 Glossary on page 49 for a description of Underlying EBITDA, Capital Expenditure, Group OCAT, Group OCAT Ratio, Free cash flow and Productive Capital. 47 | Source: Page 12, Investor Presentation from Interim Results
Slide 49: Group OCAT and Group OCAT Ratio
Group OCAT and Group OCAT Ratio • Origin uses Group OCAT and Group OCAT Ratio as an internal measure of the cash For personal use only generating performance of the business • Key differences between Group OCAT and statutory cash flows from operating activities is Group OCAT includes stay in busines
Slide 50: Productive Capital
Productive Capital • Measures funds employed by Origin in the operating assets of the business, including Origin’s share of Australia Pacific LNG productive capital, excluding capital work in For personal use only progress for exploration expenditure and projects under development, which are not yet
Slide 51: Operating Cash Flow (OCF)
Operating Cash Flow (OCF) For personal use only • Segment returns are calculated on a pre tax basis and are measured using operating cash flow (OCF) as opposed to Group OCAT. • Calculated on a 12 month weighted average basis OCFR ratio • Measures Origin’s segment cash flow returns generated from pro
Slide 52: Reconciliation to Return On Assets
Reconciliation to Return On Assets A performance measure used in the market is Return on Assets For personal use only Return on Assets = Net profit/Total assets Group OCAT return = Group OCAT/Productive capital The below table reconciles both the numerator and denominator of the Return on Assets per
Slide 53: Energy Markets
For personal use only Energy Markets Presenters: Frank Calabria, Chief Executive Officer, Energy Markets Kim Josling, General Manager - Commercial 52 |
Slide 54: Agenda
Agenda For personal use only 1. Energy Markets Segment 2. Revenue 3. Cost of Energy 4. Cost to Serve 5. Capital 53 |
Slide 55: The Energy Markets segment reflects the supply chain
The Energy Markets segment and Management Discussion and Analysis reporting now reflects how Origin considers the supply chain For personal use only Cost of Revenue Cost to Serve Capital Energy Includes • External • Network costs • Servicing and • Depreciation customer • Wholesale maintaining • Amor
Slide 56: Energy Markets optimises its portfolio of customers, energy purchases and generation assets
Energy Markets optimises its portfolio of customers, energy purchases and generation assets For personal use only 2011 2010 Change Half year ended 31 Non- Half year ended 31 December 2011 ($'m) ($'m) (%) December 2011 Natural Gas Electricity Commodity LPG Total revenue 5,207 3,400 53 Revenue ($m) 62
Slide 57: Revenue
For personal use only Cost of Revenue Cost to Serve Capital Energy Includes • External customer revenue 56 |
Slide 58: Revenue by commodity type
Revenue by commodity type For personal use only Natural Non- HY12 Gas Electricity commodity LPG Total Revenue ($m) 624 3,827 136 350 4,937 External customer revenue COGS ($m) (498) (2,897) (120) (256) (3,771) Cost of energy by commodity Gross Profit ($m) 126 930 18 94 1,168 Reconciliation to Energy
Slide 59: Retail Price Tariffs
Retail Price Tariffs • The determination of electricity and gas retail price tariffs varies between states and fuels For personal use only Price Origin an State Fuel Price Path Comments Regulator incumbent? Each retailer is required to publish a standing offer Vic Elec. Deregulated Yes N/A for every
Slide 60: Cost of Energy
For personal use only Cost of Revenue Cost to Serve Capital Energy Includes • Network costs • Wholesale energy costs • Generation operating costs • Green compliance costs 59 |
Slide 61: Risk management is a key factor in managing our cost of energy
Risk management is a key factor in managing our cost of energy For personal use only • The Commodity Risk Management System (CRMS) provides the framework for identifying, monitoring and responsibly managing the commodity exposures of Origin • Commodity Risk refers to the uncertainty of future value
Slide 62: CRMS - Exposures
CRMS - Exposures Some specific examples of CRMS commodity exposures across Origin’s portfolio: For personal use only Commodity Description Electricity • Electricity purchases or sales • Hedge and derivative arrangements • Power generation • Power purchase agreements Gas & LNG • Gas purchase or sale
Slide 63: CRMS – Sources of Commodity Risks
CRMS – Sources of Commodity Risks For personal use only Sources of Commodity Risks Price Risk Adverse movements in the price of a commodity Volume Risk Supply or demand differs from forecast Market Structure Risk Change in the operation of either the physical or financial markets Availability Risk U
Slide 64: CRMS – Risk Capacity and Risk Tests
CRMS – Risk Capacity and Risk Tests Corporate Risk Capacity For personal use only • Establishes the organisational “risk appetite” - how much risk Origin is willing to accept for a given return • Risk limits are allocated to overall and individual commodities, tests and time frames • The CRMS define
Slide 65: Gas cost of goods sold
Gas cost of goods sold provides analysis on unit gas gross profit and performance of portfolio management For personal use only Gas HY12 $/GJ Network costs Revenue ($m) 624 9.2 • Charges for the transportation and C&I 249 5.4 distribution of gas to the customer Mass Markets 375 17.4 Energy purchase
Slide 66: Electricity cost of goods sold
Electricity cost of goods sold is a portfolio view of the cost of energy that includes cost of purchased load and generation operating and fuel costs For personal use only Network costs • Charges for the transportation and Electricity HY12 $/MWh distribution of electricity to the customer Revenue ($
Slide 67: Acquired PPAs and Derivatives
Acquired PPAs and Derivatives For personal use only Acquisition Accounting • Acquisition accounting requires all acquired instruments and contractual arrangements to be measured at fair value • Process results in the recognition of assets and liabilities on acquisition which are unwound / released o
Slide 68: Environmental Schemes – Scheme Characteristics Overview
Environmental Schemes – Scheme Characteristics Overview For personal use only Acquittal Scheme Certificates States Commodity period Acquittal Date Comments Large-scale Renewable Energy Large-scale Generation Electricity All Yearly 14th Feb Target (LRET) Certificates (LGC) (Purchase Load) Small-scale
Slide 69: Environmental schemes – RET (Renewable Energy Target)
Environmental schemes – RET (Renewable Energy Target) The purpose of the RET scheme was to encourage the additional generation of electricity from renewable For personal use only • sources and reduce emissions of greenhouse gases in the electricity sector • From 1 Jan 2011, the RET was split into 2
Slide 70: Carbon - Natural Gas Supply Chain
Carbon - Natural Gas Supply Chain Upstream Retailer Customer For personal use only Incur direct liability for customer emissions Operators incur carbon cost for upstream field emissions Carbon costs recovered Operators recover under through operating agreements from contracts or Natural Gas owners (
Slide 71: Carbon - Electricity Supply Chain
Carbon - Electricity Supply Chain Upstream Generator Retailer Customer For personal use only Retailers do not incur direct liability under the CEP Fuel Producers pass through carbon cost for field/mine emissions Carbon costs recovered Eg Coal Mine or Gas through Producer Retailer contracts or Genera
Slide 72: Carbon - LPG Supply Chain
Carbon - LPG Supply Chain Upstream Downstream For personal use only Customers Retailers incur effective carbon liability through excise at 3.68 cpl Producers pass through carbon costs from production of LPG. Amount is Producer dependent LPG Rate recovered varies Retailers by location Customer rates
Slide 73: Working Capital Impact of Carbon
Working Capital Impact of Carbon For personal use only Electricity Retail • Generally higher working capital required for indirect emissions • Trade receivables will contain approximately three months of the pass through of carbon in retail billings and unbilled accounts (mass market customers bille
Slide 74: Working Capital Impact of Carbon continued
Working Capital Impact of Carbon continued Gas For personal use only Retail • Generally lower working capital required for direct emissions • Mass Market Customers - Trade receivables for billed and unbilled amounts from customers are generally settled quarterly. The carbon liability for direct emis
Slide 75: Non commodity portfolio develops new retail products and business lines
Origin’s non commodity portfolio develops new retail products and business lines to deliver innovative solutions to customers For personal use only Consumer Products Product Solar PV Heating & Cooling Hot Water E-mobility Smart Solutions Descriptio Providing charging Simple, cost-efficient solution
Slide 76: Cost to Serve
For personal use only Cost of Revenue Cost to Serve Capital Energy Includes • Servicing and maintaining customers • Customer acquisition and retention costs • Delivering new product lines 75 |
Slide 77: Cost to serve
Cost to serve For personal use only Half year ended 31 December 2011 2010 Change • The total cost relates to ($ millions) Natural Gas, Electricity & non-commodity cost-to- operating expenditure incurred serve (excl. TSA unwind) 332 186 146 across gas, electricity and non- commodity TSA provision unw
Slide 78: Transitional Services Agreement (TSA)
Transitional Services Agreement (TSA) For personal use only • Transitional Services Agreements (TSAs) were a mandatory requirement of the recent acquisition of the retail businesses from state governments (Sun Retail, Country Energy and Integral Energy) • The TSAs obliged Origin to make payment to t
Slide 79: Energy Markets Underlying EBIT/Sales margins for FY11
Energy Markets Underlying EBIT/Sales margins for FY11 are higher than previously reported in the Retail segment For personal use only % margin 16 0.8% (0.5%) 14 3.1% (0.8%) 12.8% 12 10.1% 10 8 6 4 2 0 Reported Retail Generation Corporate Allocation Non-commodity LPG Restated Energy Underlying EBIT/S
Slide 80: HY2012 Underlying EBIT/Sales margin reconciliation
HY2012 Underlying EBIT/Sales margin reconciliation For personal use only 18 16 1.0% (0.6%) 3.1% (0.8%) 13.8% 14.1% 14 12 11.1% % margin 10 8 6 4 2 0 Reported Generation Corporate Non- LPG Restated Energy Retail Allocation Commodity Energy Markets Underlying Markets Underlying EBIT/Sales Underlying E
Slide 81: Capital
For personal use only Cost of Revenue Cost to Serve Capital Energy Includes • Depreciation • Amortisation 80 |
Slide 82: Performance of internal generation portfolio and externally contracted plant
Performance of internal generation portfolio and externally contracted plant Nameplate Equivalent Electricity Half year ended Plant Capacity Pool Revenue Reliability Output 31 December 2011 Capacity Factor ($m) For personal use only Factor (GWh) (MW) Base Load Eraring (Contracted) 2,730 85.5% 48% 5,
Slide 83: Australia Pacific LNG Accounting
For personal use only Australia Pacific LNG Accounting Presenter: Vaughn Campbell, Manager – Group Financial Instruments 82 |
Slide 84: Agenda
Agenda For personal use only 1. APLNG Related Disclosures in Origin 31 December 2011 Interim Financial Statements 2. Original Joint Venture Establishment 3. APLNG Shareholder Receivables 4. APLNG Equity Dilution Transactions • Origin Level Impacts • Dilution Transaction Mechanics within APLNG 5. APL
Slide 85: APLNG Related Disclosures in Origin December 2011 Interim Financial Statements
For personal use only 1. APLNG Related Disclosures in Origin 31 December 2011 Interim Financial Statements 84 |
Slide 86: Income Statement and Statement of Financial Position
Income Statement and Statement of Financial Position For personal use only Origin’s share of APLNG’s Income Statement is Disclosed in the Income Statement Source: Page 7, December 2011 Interim Financial Statements The carrying value of Origin’s Investment in APLNG and Origin’s Interest Free Payable
Slide 87: Statement of Cash Flows
Statement of Cash Flows For personal use only Source: Page 11, December 2011 Interim Financial Statements Represents the value of funds contributed by Origin to APLNG during the reporting period 86 |
Slide 88: Note - Segments
Note 2 - Segments For personal use only APLNG is a separate Segment for which appropriate segment financial data is disclosed Source: Page 14, December 2011 Interim Financial Statements 87 |
Slide 89: Note - Segments
Note 2 - Segments For personal use only Specific explanations are provided of all APLNG related items which are excluded from Underlying Profit Source: Page 16, December 2011 Interim Financial Statements 88 |
Slide 90: Note - Segments
Note 2 - Segments For personal use only Source: Page 15, December 2011 Interim Financial Statements 89 |
Slide 91: Note - Profit
Note 3 - Profit For personal use only Source: Page 17, December 2011 Interim Financial Statements Note 6 – Investments accounted for using the equity method Source: Page 19, December 2011 Interim Financial Statements 90 |
Slide 92: Note – Investments accounted for using the equity method
Note 6 – Investments accounted for using the equity method For personal use only Source: Page 21, December 2011 Interim Financial Statements 91 |
Slide 93: Note – Investments accounted for using the equity method
Note 6 – Investments accounted for using the equity method For personal use only Source: Page 22, December 2011 Interim Financial Statements 92 |
Slide 94: Note – Commitments
Note 10 – Commitments For personal use only Source: Page 27, December 2011 Interim Financial Statements 93 |
Slide 95: Note – Other financial liabilities
Note 12 – Other financial liabilities For personal use only Source: Page 27, December 2011 Interim Financial Statements Origin’s interest free loan payable to APLNG in this Note, with the appropriate classifications between current and non-current at the reporting date 94 |
Slide 96: Management Discussion and Analysis
Management Discussion and Analysis For personal use only Source: Page 49, Management Discussion and Analysis - December 2011 There are a range of items related to APLNG which are excluded from Underlying Profit. The items in the table above are discussed in more detail in the pages which follow 95 |
Slide 97: Original APLNG Joint Venture Establishment
For personal use only 2. Original APLNG Joint Venture Establishment 96 |
Slide 98: Original APLNG Joint Venture Establishment - Summary
Original APLNG Joint Venture Establishment - Summary • Prior to the transaction with ConocoPhillips in October 2008, APLNG was a 100% owned For personal use only subsidiary of Origin • On 29 October 2008, APLNG issued new shares to ConocoPhillips, giving ConocoPhillips 50% of the equity in APLNG • T
Slide 99: Original APLNG Joint Venture Establishment
Original APLNG Joint Venture Establishment For personal use only Full details of the original transaction that created the APLNG joint venture are contained in the following publicly available documents: • ASX Release 8 September 2008 – “Origin selects ConocoPhillips in CSG to LNG JV” • ASX Release
Slide 100: APLNG Shareholder Receivables
For personal use only 3. APLNG Shareholder Receivables 99 |
Slide 101: APLNG records receivables from Shareholders
APLNG records receivables from Shareholders For personal use only Source: Note 6(b), Page 22, December 2011 Interim Financial Statements • APLNG shareholders have made legally binding commitments to APLNG in proportion to their equity interest • The shareholder receivables established at inception o
Slide 102: Origin’s Shareholder Loan from APLNG
For personal use only Origin’s Shareholder Loan from APLNG Source: Page 27, December 2011 Interim Financial Statements • The shareholder loan (ie payable by Origin to APLNG) is interest free • The loan was established in October 2008 at the inception of the joint venture • The loan was required to b
Slide 103: Origin’s Shareholder Loan from APLNG
For personal use only Origin’s Shareholder Loan from APLNG Source: Page 11, December 2011 Interim Financial Statements • Repayments by Origin are disclosed in Origin’s Consolidated Statement of Cash Flows • Repayments are also disclosed in the Quarterly Production Report, as illustrated below: Sourc
Slide 104: APLNG Equity Dilution Transactions
For personal use only 4. APLNG Equity Dilution Transactions 103 |
Slide 105: APLNG Dilution Transactions – Origin Level Impacts
APLNG Dilution Transactions – Origin Level Impacts For personal use only • The dilution from the issue of new shares within APLNG, results in gains or losses for Origin on its investment in APLNG which is accounted for using the equity method • The gain (or loss) for each separate dilution is calcul
Slide 106: Dilution Transactions Mechanics within APLNG
Dilution Transactions Mechanics within APLNG For personal use only • New shares have been issued in APLNG for all equity transactions to date (ConocoPhillips and Sinopec transactions) • All proceeds are received by APLNG and have been used to fund the project expenditure • Sinopec upfront proceeds f
Slide 107: Dilution Mechanics – 2nd Sinopec Equity Transaction
Dilution Transactions Mechanics within APLNG – 2nd Sinopec Equity Transaction For personal use only • New shares are expected to be issued by APLNG • Sinopec’s equity interest in APLNG increased from 15% to 25% • Sinopec actually acquired 13.33% of pre transaction equity, as shown in the table below
Slide 108: Dilution Mechanics – 2nd Sinopec Equity Transaction
Dilution Transactions Mechanics within APLNG – 2nd Sinopec Equity Transaction Upfront Cash Proceeds – Example only to demonstrate the mechanism For personal use only This slide contains hypothetical values that are for illustrative purposes only Equity Element Subscription: 13.33% x US$110m = US$1,4
Slide 109: APLNG Funding
For personal use only 5. APLNG Funding 108 |
Slide 110: APLNG Project Level Funding
APLNG Project Level Funding For personal use only • APLNG has been funded entirely by its own operating cash flows and equity from shareholders to date • APLNG has recently secured project level financing for the Downstream Liquefaction Plant and Facilities of US$8.5bn (inclusive of interest and fee
Slide 111: APLNG Project Level Funding
APLNG Project Level Funding For personal use only • Upon commencement of the Project Finance Facilities, APLNG will be funded with a mix of both debt from the Project Finance Facilities and equity from shareholders • The project financing will be progressively drawn up to the time of first LNG with
Slide 112: APLNG Project Level Funding – Disclosure in Origin Financial Statements
APLNG Project Level Funding – Disclosure in Origin Financial Statements For personal use only • Project Finance will be accounted for by APLNG and the interest and fees will be capitalised in the APLNG Financial Statements • Because Origin accounts for its investment in APLNG using the equity method
Slide 113: Funding - Origin Level
Funding - Origin Level For personal use only • Origin has significant committed undrawn facilities in place to draw upon to meet future APLNG cash calls • The interest Origin pays attributable to funding its share of APLNG shareholder cash calls is disclosed as an Item Excluded from Underlying Profi
Slide 114: Foreign Exchange Impacts
For personal use only 6. Foreign Exchange Impacts 113 |
Slide 115: Foreign Exchange – APLNG Project Level
Foreign Exchange – APLNG Project Level For personal use only Construction Period • Two thirds of the project capital expenditure is expected to be denominated in AUD with the balance predominantly USD LNG Operations Period • LNG revenues are denominated in USD • Operating costs are a mix of AUD and
Slide 116: Foreign Exchange – Origin Level
Foreign Exchange – Origin Level For personal use only Construction Period • Origin is required to fund shareholder cash calls (in proportion to its % equity) in both AUD and USD based on the currency required by APLNG to meet its capital expenditure commitments LNG Operations Period • Expected retur
Slide 117: Foreign Exchange Gains and Losses – Origin Level Disclosures
Foreign Exchange Gains and Losses – Origin Level Disclosures For personal use only Source: Page 49, Management Discussion and Analysis - December 2011 Source: Page 16, Note 2(b), December 2011 Interim Financial Statements • Foreign exchange gains and losses associated with Origin’s share of APLNG Pr
Slide 118: APLNG Accounting During the Project Construction Period
For personal use only 7. APLNG Accounting During the Project Construction Period 117 |
Slide 119: APLNG Accounting During the Project Construction Period
APLNG Accounting During the Project Construction Period For personal use only • APLNG’s existing domestic business will continue to produce CSG and supply to customers in the domestic market under existing contractual arrangements • Costs directly attributable to the CSG to LNG development project w
Slide 120: Australia Pacific LNG Operations
For personal use only Australia Pacific LNG Operations Presenter: David Baldwin, Chief Development Officer 119 |
Slide 121: Australia Pacific LNG Rig Fleet Operation
Australia Pacific LNG Rig Fleet Operation APLNG Rig Fleet Drilling Activity For personal use only Exploration & Appraisal Rigs E&A Wells (Drilling E&A Rig 1 provide versatility for varied & Completion) drilling needs E&A Rig 2 Monitoring Bores E&A drilling Rigs can also be used for Development drill
Slide 122: CSG Well Construction
CSG Well Construction For personal use only • Many stages involved in the construction and operation of CSG wells. Drilling is just one of the steps required to bring a well on-line. Construction Operation Workovers / Land Access Well Drilling Completion Connection Production well and approvals aban
Slide 123: Land Access and Approvals & Drilling
Land Access and Approvals & Drilling For personal use only Workovers / Land Access Well Drilling Completion Connection Production well and approvals abandonment interventions Land Access & Approvals Drilling • Build relationship with landowner and The well is created using a agree compensation drill
Slide 124: Completion & Connection
Completion & Connection For personal use only Workovers / Land Access and Well Drilling Completion Connection Production well approvals abandonment interventions Completion Connection Once the well is drilled, the Once the well is completed it requires drilling rig demobilises and connection to the
Slide 125: Well Productivity
Well Productivity For personal use only Workovers / Land Access and Well Drilling Completion Connection Production well approvals abandonment interventions • All components of capacity are closely tracked to maximise asset utilisation • Wellhead capacity is the best indicator of potential productivi
Slide 126: APLNG Operated Drilling Activity
APLNG Operated Drilling Activity 120 use only Exploration & Appraisal Talinga Development 100 Phase 1 Development 4 Rigs + TopSet Spring Gully Development 3.5 days/well 80 4 Rigs + TopSet Note: Includes 4.6 days/well Wells/Quarter commissioning of the 2nd hybrid coil rig. For personal 60 4 Drilling
Slide 127: Gas Field Development during construction phase
Gas Field Development during construction phase For personal use only Land Access Wells Drilled Wells Completed Wells Producing 126 |
Slide 128: Infrastructure required for gas ramp
Infrastructure required for gas ramp: For personal use only • Gas Plant Facilities (GPFs) to compress gas in to a pipeline • 15 new sets of compressors (trains) located in 7 plants • 1st set of compressors in Australia, construction awarded, contractor mobilising • Water Treatment Facilities (WTFs)
Slide 129: Exploration and Production (ex CSG)
For personal use only Exploration and Production (ex CSG) Presenter: Stuart Hatton, General Manager, Commercial & Finance (Upstream and Development) 128 |
Slide 130: Agenda
Agenda For personal use only 1. Exploration • Exploration & Appraisal • Area of Interest and Successful Efforts 2. Depreciation and Amortisation • Depreciation: Buildings, Plant & Equipment and Producing Areas of Interest • Amortisation: Policy and worked example 3. Abandonment costs • Policy and wo
Slide 131: Document References
Document References For personal use only 1. Exploration: • Expense $118m (Note 3b, FY2011 Financial Statements) 2. Depreciation & Amortisation (including Restoration) • Expense $221m (Note 2a, FY2011 Financial Statements): Exploration & Production • Restoration, rehabilitation and dismantling Provi
Slide 132: Exploration & Appraisal - General
Exploration & Appraisal - General Exploration (pre drilling): Expense For personal use only Seismic Geological, Geophysical & Seismic Well Administration Evaluation Planning (GG&A) Drilling & Appraisal: Capitalise Purchase long lead items Drilling Appraisal Development If unsuccessful Write off to t
Slide 133: Area of Interest – Accounting Phases
Area of Interest – Accounting Phases • Determine whether to explore in an AOI, and where within the AOI For personal use only Evaluate • Complete once a target for exploration is identified with the AOI • Determine the presence of hydrocarbons within an identified target Explore • Complete once the
Slide 134: Area of Interest
Area of Interest For personal use only • Area of Interest (AOI): An individual geological area which is considered to constitute a favourable environment for the presence of a mineral deposit or an oil or natural gas field, or has been proved to contain such a deposit or field (AASB 6: Appendix A) •
Slide 135: Depreciation and Amortisation
Depreciation and Amortisation For personal use only Amortise Depreciate ABOVE GROUND Drilling Well Platforms Facilities Pipelines Heads SUBSURFACE 134 |
Slide 136: Depreciation
Depreciation For personal use only • Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant (including facilities) and equipment. Land is not depreciated. The current range of depreciation rates are: Buildin
Slide 137: Amortisation
Amortisation • The carrying values of producing areas of interest sub-surface assets are amortised on a units of production basis using the 2P reserves to which they relate, together with the For personal use only estimated future development expenditure required to develop those reserves and additi
Slide 138: Abandonment costs
Abandonment costs For personal use only • Abandonment refers to the costs relating to future restoration, rehabilitation and dismantling activities. A liability, known as a Restoration, rehabilitation and dismantling provision, is recognised based on the present value of these estimated future costs
Slide 139: Abandonment costs (continued)
Abandonment costs (continued) For personal use only • The liability element is updated for each future period as the provision tends towards its full future cost (unwind of discount rate) through the Income statement Original Estimates Original Estimated Estimated Future abandonment value Cashflow C
Slide 140: Abandonment costs (continued)
Abandonment costs (continued) For personal use only Revised Discount rates Estimated Future Cashflow Estimated abandonment CPI value If the discount rate were to reduce with a Revised asset value constant CPI rate, the asset value & amortisation Revised 10 year Original 10 year would increase, and v
Slide 141: Third Party Purchases
Third Party Purchases For personal use only • As a JV participant in the Cooper Basin, Origin along with all JV participants purchase, process and transport energy from fields which are adjacent to the Cooper Basin facilities (Moomba: Gas & Oil, Ballera: Gas, Jackson: Oil and Port Bonython: Oil & LP
Slide 142: Reconciliation of Revenue and Capex
Reconciliation of Revenue and Capex CAPEX For personal use only • Exploration and Production capital expenditure is reported in the Quarterly Production Report (QPR) and the Management Discussion and Analysis (MD&A) • The key differences between the capital expenditure numbers reported in these docu
Slide 143: Appendix
For personal use only 142 | Appendix
Slide 144: Overview of Accounting Phases
Overview of Accounting Phases For personal use only Accounting for Phase Type of Activities Costs • Geological and geophysical studies and Evaluation Expense interpretative analysis of AOI to determine target(s) • Geological and geophysical studies and Exploration – Pre Drill interpretative analysis
Slide 145: Cooper Basin
144 | Cooper Basin SACB JV parties purchase crude from here. This is trucked by Mereenie parties to Pt NT Bonython Products sold at Port Bonython ‘* Export crude including 3rd party crude (Shell) ‘Export LPG (BHP Billiton Singapore) ‘* Domestic LPG (Independent fuels, Woolworths, Shahin-Mobil, Shell
Slide 146: Glossary
Glossary Term Meaning Free Cash Flow Cash available to fund distributions to shareholders and growth capital expenditure Group OCAT Group Operating cash flow after tax Group OCAT Ratio (Group OCAT – interest tax shield)/ Productive Capital; interest tax shield represents the tax deduction for For pe
Slide 147: Thank you
For personal use only Thank you For more information Kylie Springall Group Manager, Investor Relations Email: kylie.springall@originenergy.com.au Office: +61 2 8345 5288 Mobile: + 61 400 477 393 www.originenergy.com.au 146 |