Origin Energy Limited · ASX:ORG
Origin Energy — Credit Suisse Asian Investment Conference 2010
73 slides from Origin Energy's conference presentation, Mar 24, 2010
Slide 1: ASX announcement cover fax
For personal use only To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 24 March 2010 From Bill Hundy Pages 73 Subject PRESENTATION Attached for your information is a presentation being made at the Credit Suisse Asian Investment Conference in Hong Kong by Karen Moses, E
Slide 2: Origin Energy: A Decade of Growth
24-26 March 2010 Credit Suisse Asian Investment Conference Hong Kong For personal use only Celebrating a decade of growth Origin Energy A Decade of Growth
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: Outline
Outline For personal use only 1. Performance Highlights 2. Business Overview 3. Australia Pacific LNG 4. Exploration 5. The Next Decade 6. Appendix 3
Slide 5: 1. Performance Highlights
1. Performance Highlights For personal use only
Slide 6: A decade of growth since ASX listing
On 21st February ten years ago, Origin was first listed on the ASX and so began a decade of growth For personal use only 10 Year CAGR: • Productive Capital: 16% • Underlying Profit: 24% • Earnings per Share: 18% • Dividends per Share: 27% • Total Shareholder Return: 30% Source: Origin That growth ha
Slide 7: One of the top performing listed companies over the last decade
As a result of this growth, Origin has been one of the top performing listed companies over the last decade… For personal use only Origin TSR 1,306% Indexed to 100 from 21 February 2000 to 19 February 2010 … and is now in the ASX top 20 companies by market capitalisation, from a low of around 125th
Slide 8: 2010 Half Year Financial Highlights
Origin enters its second decade with Underlying Profit up 28% to $355 million, continuing that record of growth For personal use only 2010 Half Year Financial Highlights Underlying Profit $355 million up 28% Underlying Earnings 40.5 cps up 28% per Share Statutory Profit(1) $371 million down 94% Stat
Slide 9: Performance driven by a clear and simple strategy
Origin’s performance has been driven by a clear and simple strategy that continues to deliver ongoing opportunities for growth • Progressed commissioning of the Kupe Project with steady production achieved For personal use only • APLNG increased production capacity and 2P reserves • Committed to acq
Slide 10: Balance sheet capacity deployed to grow the business
Origin has deployed $1.4 billion of balance sheet capacity over the period to grow and develop the business… Growth Capex For personal use only • 23% lower than the prior half year • Major expenditure included the Darling Downs and Mortlake Power Stations, Kupe Gas Project, Bass Basin exploration an
Slide 11: Forward committed growth capital program is declining
Origin’s forward committed growth capital program is declining For personal use only Source: Origin ConocoPhillips has funded $0.7 billion of APLNG’s capital spend to date with another $1.6 billion to be spent. Origin is not required to contribute any funding until this amount has been spent 10
Slide 12: Significant financial capacity to support the business
Origin has significant financial capacity to support its business… For personal use only • Strong expressions of interest have been received from a number of lending banks in regards to refinancing the majority of the 2010 and 2011 maturing debt • Origin expects to refinance this debt prior to the e
Slide 13: Productive capital and earnings contribution by segment
Completion of current development projects will result in the Exploration & Production and Generation segments increasing their share of productive capital and contribution to earnings EBITDAF by Underlying business EBITDA type by Segment 1400 For personal use only 1200 1000 Productive Capital by Se
Slide 14: Full Year Outlook
Full Year Outlook For personal use only While results for the first half were up 28 per cent compared with the prior half year, Origin still expects, based on current market conditions, that the full year result will be around 15 per cent higher than the prior year. 13
Slide 15: Guidance for 2010 full year profit
Previous guidance given was that the 2010 full year profit would be around 15% higher than the prior year. Excluded from that guidance was any expense arising from this year’s greenfield exploration program • In respect of this exploration program, Bass Basin wells found oil and gas and the For pers
Slide 16: 2. Business Overview
For personal use only 2. Business Overview
Slide 17: Financial objectives and business strategies
Origin’s financial objectives and business strategies have been established to respond to changes in the energy industry Strategy For personal use only • Positioned in the competitive segments of the energy chain • Integrated across these segments to better manage risk and enhance the range of growt
Slide 18: Core business built around a fuel position
Origin has built its core Australian business around a fuel position which allows it to manage wholesale risks in both supply and generation more effectively than its competitors… Fuel Retailer For personal use only Generator Origin’s long gas position Origin’s comprehensive physical and contracted
Slide 19: Exploration & Production
Exploration & Production For personal use only
Slide 20: Find and develop resources near markets with increasing gas demand
Origin seeks to find and develop resources near markets with increasing demand for gas For personal use only 19
Slide 21: Gas production continues to increase
Gas production continues to increase as CSG production grows to meet domestic contracts… For personal use only • APLNG’s CSG production continues to grow strongly and is up 24% on the Dec 08 half. Coal Seam Gas APLNG’s production capacity now at more than 240 TJ/day • Gas production commenced at the
Slide 22: Kupe and Otway to boost liquids production
Contribution from Kupe and increased share of Otway will boost liquids production going forward… • Liquids production commenced at the Kupe For personal use only Project during December with LPG and light crude produced as part of the commissioning Kupe Project process • Cooper Basin production was
Slide 23: Increased interest in the Otway Gas Project
Origin increased its interest in the Otway Gas Project… Otway Gas Project • Origin’s interest in the Otway Gas Project increased to 67% For personal use only following completion of acquisition of part of Woodside’s interest for around $520 million • Origin to be appointed as project operator, subje
Slide 24: Kupe Project complete in New Zealand
In New Zealand, the Kupe Project is now complete… Kupe Project • Kupe Project is now fully operational and is For personal use only one of New Zealand’s most important new infrastructure developments • Origin holds a 50% interest and is project operator • The Kupe field is expected to provide approx
Slide 25: Generation
For personal use only Generation
Slide 26: Developing the power generation portfolio
Origin continues to develop its power generation portfolio both to support its Retail business and to respond to carbon policies For personal use only • Operating capacity increased to 1,620 MW following acquisition of Uranquinty, completion of Mt Stuart and Quarantine expansions and Cullerin Range
Slide 27: Mt Stuart expansion and Cullerin Range Wind Farm
Peaking capacity at Mt Stuart has been increased… For personal use only Mt Stuart Power Station Expansion Cullerin Range Wind Farm • Located in Townsville, Queensland • Located near Goulburn, New South Wales • 126 MW expansion • 30 MW across 15 turbines • 45% increase in plant capacity to 414 MW • $
Slide 28: Darling Downs commissioning and Mortlake construction
Commissioning of Darling Downs is now underway… For personal use only Darling Downs PS Gas Turbine Hall Mortlake PS Darling Downs Power Station Mortlake Power Station • 630 MW Base Load plant • 550 MW Peaking plant • Largest CCGT plant in Australia • Expected to be completed in late 2010 • Commissio
Slide 29: Retail
For personal use only Retail
Slide 30: Australia's second largest energy retailer
Origin is Australia’s second largest energy retailer in both Electricity and Gas, with around 2.6 million customers providing scale and geographic diversity For personal use only Electricity Market Share Gas Market Share Retail Customer Numbers (1), (2) Retail Customer Numbers (1), (2) NSW Governmen
Slide 31: Retail tariff deregulation progressing by State
Retail tariff deregulation is progressing in each State. In respect of those States that continue to have a form of regulation, the regulatory regime is stable and transparent and has an appropriate risk management margin embedded For personal use only State Current Regulatory Regime Comment / Outlo
Slide 32: Higher margin markets have higher churn
Markets with more attractive margins tend to have higher levels of churn Market Churn: 6 Month Average Account Numbers State Fuel Dec 08 Change Dec 09 (000’s) Natural Gas Electricity Total For personal use only Vic Electricity 26% + 2% 28% Jun 2009 867 1,743 2,610 Vic Gas 24% + 6% 30% Change +1 -5 -
Slide 33: Leading retailer of green energy
Origin is the leading retailer of green energy with over 15% of its electricity and gas customers electing to purchase green energy products For personal use only Market Share of GreenPower® Customers • Accredited green energy customer base grew to 516,000 Market Share of GreenPower Customers accoun
Slide 34: Retail transformation progressing well
Retail transformation is progressing well with key milestones met to date For personal use only • Origin is transforming its Retail business to improve business process efficiency, optimise cost to serve and further enhance customer service • Origin’s transformation includes the implementation of ne
Slide 35: Contact Energy
For personal use only Contact Energy
Slide 36: Contact is New Zealand's leading fuel integrated energy company
Contact is New Zealand’s leading fuel integrated energy company… For personal use only • 600,000 gas, electricity and LPG customers • Generates approximately 10 TWh - 26% of New Zealand’s electricity annually • Mix of renewable and lower emissions generation – 15% geothermal, 35% hydro and 50% natur
Slide 37: Contact generation development opportunities
Contact continues to pursue the development of a number of opportunities to expand its generation interests… For personal use only Geothermal • Tauhara 1 (23 MW) – Expected to be operational in mid 2010 • Te Mihi (220 MW) – FEED being updated • Tauhara 2 (250 MW) – Consent application lodged • Tahek
Slide 38: 3. Australia Pacific LNG
3. Australia Pacific LNG For personal use only 37
Slide 39: APLNG: Origin and ConocoPhillips joint venture
APLNG brings together Origin’s leading position in Australian CSG development and ConocoPhillips’ proven LNG and CSG capabilities… • Australia Pacific LNG is a 50:50 incorporated joint venture formed in October 2008 between Origin For personal use only and ConocoPhillips to develop a fully-integrate
Slide 40: APLNG prime acreage in CSG sweet spots
APLNG is uniquely positioned with prime acreage in both of the known CSG sweet spots and along the known CSG fairway… • Current production capacity now exceeds For personal use only 240 TJ/day (up to 87 PJ/year) • Key upstream design, engineering and construction contracts awarded • McConnell Dowell
Slide 41: APLNG grows its reserves position
APLNG continues to grow its reserves position and remains the largest holder of CSG reserves in Australia For personal use only • Reserves maturation program on track to meet FID requirements at the end of 2010 • APLNG participated in the drilling of 177 wells in the December half and expects to hav
Slide 42: APLNG and QGC agreements
APLNG and QGC agreements evidence the value of project cooperation… Field Development Framework For personal use only • APLNG and QGC have agreed to work together to develop these jointly owned resources • Covers permits ATP 648P (APLNG interest 31.25%) and ATP 620P (APLNG interest 40.625%) • Provid
Slide 43: Downstream facilities planning and final investment decision
Planning of downstream facilities is progressing well… For personal use only • ConocoPhillips is the downstream LNG operator • Optimised LNG train design now at 4.5 MTPA, with each train expected to require 270 PJ/year of gas • Project using ConocoPhillips Optimized Cascade® technology • 230 hectare
Slide 44: 4. Exploration
For personal use only 4. Exploration
Slide 45: Find resources near markets with increasing gas demand
Origin seeks to find and develop resources near markets with increasing demand for gas For personal use only LNG is opening a significant channel to export markets 44 for gas which Origin will access through APLNG
Slide 46: Offshore exploration results in the Bass Basin
Offshore exploration program has yielded positive results in the Bass Basin… For personal use only Northland Basin Origin, as operator of permit PEP 38619, plans to drill the exploration wells Korimako 1 and Tarapunga 1. Drilling operations are expected to commence in Q2 2010. Otway Basin Woodside d
Slide 47: Working with Anadarko in the Canterbury Basin
Origin is working with Anadarko to explore in the highly prospective Canterbury Basin in New Zealand… • Origin has attracted Anadarko Petroleum For personal use only Corporation to farm in for a 50% interest in exploration permit PEP 38262 • Prior to agreement to farm in, Anadarko completed speciali
Slide 48: Exploration opportunities in Asia
Exploration opportunities in the fast growing energy markets of Asia are being pursued… • Origin to farm in to portfolio of five exploration blocks For personal use only operated by Salamander Energy across north east Thailand, Lao PDR and Vietnam • Salamander will also have the option to acquire an
Slide 49: 5. The Next Decade
For personal use only 5. The Next Decade
Slide 50: Strategy of being a fuel integrated generator retailer
Origin will continue to pursue a clear and simple strategy of being a fuel integrated generator retailer For personal use only Electrification Continued economic growth, efficiency improvements and industrialisation in Asia are likely to increase electricity’s share of final energy consumption Decar
Slide 51: Retail business has grown market share over the last decade
In Australia, Origin’s retail business has grown its market share substantially over the last decade and this growth has been a key driver of Origin’s growth Pre Demerger Retail Market Share(1) For personal use only Origin: 4% Retail Market Share 2010(1) Origin: 21% Source: AEMO’s 2009 SOO Medium Ec
Slide 52: Renewable energy target to drive investment
Whilst it remains unclear how the world will respond to climate change, in Australia the renewable energy target has been set and will drive significant investment in renewable energy… For personal use only • Origin’s modelling suggests over 6,000 MW Represents mandated 2020 of new wind capacity to
Slide 53: Portfolio of wind generation development options
Origin has a portfolio of high quality wind generation development options that provide the flexibility to address long term requirements… • Origin has secured sufficient RECs to meet its mass market customer requirements for For personal use only the medium term • Development of a number of Origin’
Slide 54: Development of geothermal power
Origin continues to pursue the development of geothermal power which could provide a long term base load solution to meeting renewable targets For personal use only • Origin considers the Innamincka Joint Venture to have the most prospective acreage of its kind in Australia • Origin holds a 30% non-
Slide 55: Joint venture with Micron on solar photovoltaics
Joint venture with Micron seeks to build on Origin’s photovoltaic development opportunities… For personal use only • Transform Solar is a 50:50 joint venture between Origin and Micron Technology Inc to focus on the development of photovoltaic technologies • Micron is a US listed company and one of t
Slide 56: Pipeline of generation opportunities
Origin has developed a substantial pipeline of generation opportunities to support a growing retail business • Baseload and peaking portfolio with a For personal use only lower average emissions intensity than the market • Gas fired generation development options, provide Origin with opportunities m
Slide 57: World energy demand projected to increase
World demand for energy is projected to increase by 1.4% a year on average, with electricity demand projected to grow more quickly at 2.5% a year… For personal use only • World demand for gas is projected to grow by around 1.5% a year (BAU) • Asian electricity consumption is projected to grow at 4.7
Slide 58: World LNG trade tripling by 2030
This increasing demand for gas is projected to result in world LNG trade tripling by 2030 as LNG is favoured over pipeline solutions due to supply security concerns Estimated Interregional Gas Flows 2030 For personal use only (billion cubic metres) Gas will play an increasing role in providing the f
Slide 59: Resources near markets with increasing gas demand
In this context, Origin seeks to find and develop resources near markets with increasing demand for gas For personal use only LNG is opening a significant channel to export markets 58 for gas which Origin will access through APLNG
Slide 60: Responding to demand for renewable energy
Origin is also responding to the increasing demand for renewable energy both locally and globally… Geothermal For personal use only • Conventional – Contact is pursuing the development of a number of geothermal opportunities • Shallows – Origin is seeking to develop shallow geothermal resources • De
Slide 61: Strong joint venture partners
Strong joint venture partners reflect the quality and potential of these new opportunities and complement Origin’s development capability For personal use only Australia Pacific LNG – CSG to LNG joint venture with ConocoPhillips Transform Solar – Joint venture with Micron to focus on the development
Slide 62: Opportunities to grow over the next decade
Looking further ahead Origin has many opportunities to continue to grow and develop its business over the next decade For personal use only • Increased share of growing energy markets in Australia and New Zealand • Continued development by APLNG of its CSG to LNG project which is a primary focus for
Slide 63: 6. Appendix
For personal use only 6. Appendix
Slide 64: 2010 Half Year Financial Highlights
2010 Half Year Financial Highlights Revenue $4,300 million up 2% For personal use only Underlying EBITDA $706 million up 3% Underlying EBIT $489 million up 1% Underlying Profit $355 million up 28% EPS – Underlying 40.5 cps up 28% Statutory Profit $371 million down 94% EPS – Statutory 42.3 cps down 9
Slide 65: Profit & Loss
Profit & Loss ($ million) Dec 09 Dec 08 Change Revenue 4,300 4,216 2% For personal use only Underlying EBITDA 706 686 3% Underlying EBIT 489 485 1% Underlying net financing income/(costs) 12 (60) 72m Underlying tax expense (110) (110) - Minority interests share of Underlying Profit (36) (38) 5% Unde
Slide 66: Underlying EBITDA by segment
Underlying EBITDA by segment Segment ($ million) Dec 09 Dec 08 Change Exploration & Production 104 174 (40%) For personal use only Generation 98 22 345% Retail 320 300 7% Contact Energy 184 190 (3%) Total 706 686 3% • Exploration & Production: Impact of the dilution of Origin’s interest in APLNG ($1
Slide 67: Underlying Financing Income/Costs
Underlying Financing Income/Costs ($ million) Dec 09 Dec 08 Interest Revenue 74 55 For personal use only Interest Expense (62) (115) Underlying Net Financing Income/(Costs) 12 (60) Financing Costs Capitalised 78 60 Weighted average interest rate on borrowings 5.9% 7.5% • Increase in interest revenue
Slide 68: Tax Reconciliation
Tax Reconciliation ($ million) Dec 09 Dec 08 Underlying Profit before Tax 501 425 For personal use only Prima facie tax on underlying profit 150 128 Recognition of tax benefits not previously brought to account (21) (14) Over provision in prior period (14) (1) Share of net profit of equity accounted
Slide 69: Operating Cash Flow
Operating Cash Flow ($ million) Dec 09 Dec 08 Underlying EBITDA 706 686 For personal use only Change in working capital (162) (73) Stay-in-business capex (85) (115) Share of APLNG OCAT net of EBITDA(4) 7 (4) Other 10 (12) Tax paid (51) (117) Group OCAT(1)(4) 425 365 Net interest paid (65) (147) Free
Slide 70: Segment Cash Flow Returns
Segment Cash Flow Returns Operating Cash Flow Productive Capital OCFR (%) For personal use only ($m) % Change ($m) % Change Dec 09 Dec 08 Exploration & Production 184 (40%) 1,410 2% 13.0 22.0 Generation 142 280% 1,087 270% 13.1 12.7 Retail 315 (15%) 2,517 5% 12.5 15.4 Contact Energy 270 (15%) 3,410
Slide 71: Balance sheet capacity and available funding
Origin has deployed $1.4 billion of balance sheet capacity over the period to grow and develop the business… For personal use only Balance Sheet Capacity as at 31 December 2009 $ billion Cash 2.8 Adjusted Gross Debt (3.5) Adjusted Net Debt(1) (0.7) Undrawn Committed Facilities 0.9 Available Funding
Slide 72: Fully franked interim dividend declared
A fully franked interim dividend of 25 cps, in line with the prior year, has been declared… For personal use only • Ex-dividend date 2 March 2010 • Date of record 9 March 2010 • Payment Date 1 April 2010 • Dividend payout ratio of 62% of Underlying EPS • Dividend Reinvestment Plan will apply to this
Slide 73: Origin Assets and Further Information
Origin Assets – Australia & New Zealand For personal use only Further Information Angus Guthrie Group Manager, Investor Relations Email: angus.guthrie@originenergy.com.au Office: +61 2 8345 5558 Mobile: + 61 417 864 255 Website 72 www.originenergy.com.au
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