Slide 1: Presentation to Analysts and Financial Markets
To Company Announcements Office Facsimile 1300 135 638 Company ASX Limited Date 20 August 2015 From Helen Hardy Pages 62 Subject Presentation to Analysts and Financial Markets Please find attached a release on the above subject. Regards Helen Hardy Company Secretary 02 8345 5000 – helen.hardy@origin
Slide 2: 2015 Full Year Results Announcement
2015 FULL YEAR RESULTS ANNOUNCEMENT Financial Year Ended 30 June 2015 Grant King, Managing Director Karen Moses, Executive Director, Finance and Strategy 20 August 2015
Slide 3: 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 4: Outline
Outline 1.Performance Highlights Grant King 2.Financial Review Karen Moses 3.Operational Review Grant King 4.Prospects Grant King 5.Appendix 3
Slide 5: 1. Performance Highlights
1. PERFORMANCE HIGHLIGHTS Grant King, Managing Director 4
Slide 6: Highlights
Highlights Total Shareholder Return2 10 Year TSR 1 Year TSR Underlying EBITDA* $2,149m up from $2,139m 20% ` 10% Underlying Profit1* $682m down 4% 0% Underlying EPS* 61.7 cps down 5% -10% -20% Origin Statutory Loss* ($658m) down from $530m S&P ASX100 -30% Brent Statutory EPS* (59.5 cps) down from 48
Slide 7: Solid operational performance and progress on 4 key priorities
Origin has delivered a solid operational performance and significant progress on implementation of its 4 key priorities Increased Natural Gas contribution 1 Managed margin and customer position 4 IMPROVING RETURNS Reduced operating costs and limit capital investments CAPITAL IN ENERGY MARKETS
Slide 8: Energy Markets delivering improved margins
Energy Markets is delivering improved margins driven by expanding Natural Gas margins, ramp gas benefits and commencement of sales to other LNG projects ... EBIT / Sales Margin • Expanded Natural Gas margins as east 15% coast gas prices rise relative to the cost of Origin’s gas portfolio • Increased
Slide 9: APLNG nearing completion
APLNG is nearing completion and expected to achieve sustained LNG production from Train 1 from Q2 FY2016 with estimated project cost not expected to be materially different from budget1 UPSTREAM 97% COMPLETE DOWNSTREAM 92% COMPLETE Investments in Bass and Otway basins and Ironbark will increase gas
Slide 10: Sale of Contact reduces net debt and increases liquidity
Sale of Contact improves flexibility by reducing net debt by $3 billion and increasing Origin’s available liquidity to $5.8 billion P/E multiple based on 30 day VWAP1 Why sell Contact? 27 Contact Peer 1 Peer 2 Peer 3 Peer 4 • Limited growth in NZ electricity demand 24 21 • Tiwai closure (~13% of tot
Slide 11: 2. Financial Review
2. FINANCIAL REVIEW Karen Moses, Executive Director, Finance and Strategy 10
Slide 12: 2015 Financial Year Highlights
2015 Financial Year Highlights ($ million) FY2015 FY2014 Change Statutory (Loss) / Profit (658) 530 (1,188) Statutory EPS (59.5 cps) 48.1 cps (107.6 cps) Underlying Revenue* 13,804 14,518 (714) Underlying EBITDA* 2,149 2,139 10 Underlying EBIT* 1,280 1,353 (73) Underlying net financing cost* (169) (
Slide 13: Underlying EBITDA and EBIT
Underlying EBITDA up $10 million to $2,149 million Underlying EBIT down $73 million to $1,280 million Underlying EBITDA Underlying EBIT ($ million) FY2015 FY2014 Change FY2015 FY2014 Change Energy Markets 1,260 1,053 20% 956 787 21% E&P 399 487 (18%) 102 210 (51%) LNG 72 83 (13%) (7) 12 (158%) Corpo
Slide 14: Reconciliation of Statutory Loss to Underlying Profit
Reconciliation of Statutory Loss to Underlying Profit ($ million) FY2015 FY2014 Change Statutory (Loss) / Profit (658) 530 (1,188) Items Excluded from Underlying Profit Decrease in fair value of financial instruments (454) (198) (256) Disposals, dilutions and impairments (303) 151 (454) LNG related
Slide 15: Group OCAT and free cash flow
Group OCAT down 23% to $1,578 million Free cash flow down 25% to $1,196 million ($ million) FY2015 FY2014 Change Underlying EBITDA 2,149 2,139 10 Net impact of carbon payments under Change in working capital (182) 163 (345) the Clean Energy Act 2011, which has now been repealed Stay-in-business cape
Slide 16: Segment Cash Flow Returns
Segment Cash Flow Returns Operating Cash Flow Productive Capital OCFR* (%) FY2015 FY2014 % FY2015 FY2014 % FY2015 FY2014 ($m) ($m) Change ($m) ($m) Change Energy Markets 930 1,035 (10%) 9,607 9,565 (0%) 9.7% 10.8% Exploration & 348 529 (34%) 2,117 2,248 (6%) 16.4% 23.5% Production Contact Energy 462
Slide 17: Debt maturity profile and liquidity
Following funding initiatives to extend debt maturities and improve liquidity position Origin has $4.4 billion1 of committed and undrawn debt facilities and cash as at 30 June 2015 ... Origin Origin DebtDebt & Bank&Guarantee Bank Guarantee Pro-forma Maturity Profile as at 30 June 2015 - Post Maturit
Slide 18: Final dividend determined
An unfranked1 final dividend of 25 cps has been determined, representing a payout ratio of 81% of Underlying EPS Dividends and Underlying EPS Dividends and Free Cash Flow per share 150 150 125 125 100 100 cents per share cents per share 75 75 145 130 50 50 108 108* 25 83 25 25 25 70 25 25 25 25 65 6
Slide 19: 3. Operational Review
3. OPERATIONAL REVIEW Grant King, Managing Director 18
Slide 20: Energy Markets
Energy Markets Underlying EBITDA Operating Cash Flow $m $m 1,500 1,500 1,200 1,260 1,200 1,053 900 900 1,035 930 600 600 300 300 - - FY2014 FY2015 FY2014 FY2015 Underlying EBITDA up 20% to $1,260 million due to margin expansion and increased sales volumes in Natural Gas Underlying EBIT margin up
Slide 21: Energy Markets EBITDA bridge
Energy Markets EBITDA up $207 million to $1,260 million primarily due to margin expansion and increased sales in Natural Gas • Natural Gas Gross Profit up $247m due to: Energy Markets Underlying EBITDA Bridge • Expansion in Retail unit margins (+$70m) 1,400 • Higher Retail sales (+$45m) • Ramp gas b
Slide 22: Natural Gas unit gross profit up 44%
Natural Gas Unit Gross Profit up 44% ($1.10/GJ) as tariffs increased in line with rising east coast market prices while energy procurement costs decreased reflecting the benefits of ramp gas External Volumes Sold (PJ) FY2015 FY2014 Change Retail (Consumer & SME) 41.7 37.1 4.6 Business 104.9 71.1 33.
Slide 23: Flexible portfolio monetises ramp gas
Origin’s flexible portfolio and gas transportation arrangements have allowed Origin to monetise available ramp gas in Queensland, preserving E&P production for future periods Energy Markets Sources and PJ Uses of Gas 250 Sources Uses +63 PJ of ramp 200 +6 PJ into gas generation -19 PJ of internal 15
Slide 24: Electricity unit gross profit per customer
Electricity unit Gross Profit per customer down $4 due to Retail margin compression Flat Retail volumes with return to more normal Volumes Sold (TWh) FY2015 FY2014 Change winter weather offset by customer losses, and Retail (Consumer & SME) 17.9 18.0 (0.1) moderating impact of solar and energy effic
Slide 25: Black cost of energy remained stable
20 Origin’s10black cost of energy remained stable despite an 8% increase in forward10contract prices and 13% increase in pool prices ... 0 FY14Average FY15Annual NEMFY14 Prices FY15 Origin’s Electricity Portfolio 0 FY14 Pool FY15 Contract FY14 FY15 $/MWh TWh 50 PoolEnergy FY2014 Contract 50 Gas Gene
Slide 26: Customer account movements and discounts
Origin delivered a net gain in customer accounts in the second half with the offering of competitive discounts following first half losses amid strong competition in VIC and increasing competition in NSW Origin’s Average Signed Discount Offers for Electricity and Natural Gas Customer Average Weighte
Slide 27: Natural Gas penetration and margin per customer
Origin has continued to increase its Natural Gas penetration to benefit from expanding Natural Gas Gross Profit per Retail customer ... Electricity and Natural Gas Customer Electricity and Natural Gas Gross Account Movements in FY2015 Margins per Retail Customer 60 Electricity 40 Natural Gas 20 0 El
Slide 28: Cash operating costs continue to fall
Natural Gas & Electricity cash operating costs continue to fall, by $7 per customer or 4%, reflecting improved operational efficiency and customer experience ... Operating costs FY2015 FY2014 Change Cash cost to serve ($ per average customer account) (159) (167) 7 Cash cost to maintain ($ per averag
Slide 29: Lower cost to maintain customers
Lower cost to maintain with continued operational improvements ... Cost to Maintain Metrics Cost to Acquire and Retain Metrics Jun 13 Jun 14 Jun 15 Customer Wins and Retains Sales Channels Customer registered on 183k 568k 972k 2,000 2,000 MyAccount Customer wins and retains ('000) Customer wins and
Slide 30: Building customer loyalty and trust
Origin continues to focus on building customer loyalty and trust, leveraging digital investments, creating simpler customer interactions and offering industry-leading hardship programs Customer Loyalty and Trust Customer centric culture New integrated digital capability Dedicated sales and ser
Slide 31: Solar as a Service and energy services
Origin launched Solar as a Service in May, initiated battery trials and grew its established Acumen metering business ... Customer Analytics and Solar Energy Services Advanced Metering • Battery trials underway and • Leveraging metering ongoing discussions with various technology and leading-edge •
Slide 32: Exploration & Production
Exploration & Production Underlying EBITDA Operating Cash Flow $m $m 600 600 529 487 400 400 399 348 200 200 - - FY2014 FY2015 FY2014 FY2015 Underlying EBITDA down 18% to $399 million primarily due to lower liquids production as Energy Markets took advantage of available ramp gas in QLD, preservin
Slide 33: E&P EBITDA bridge and production
E&P EBITDA down $88 million to $399 million primarily due to lower liquids production and prices E&P EBITDA Bridge1 Gas and Liquids Production2 PJe 600 120 37 (32) Natural Gas & Ethane (54) 500 (54) Liquids 25 2 (13) 100 400 300 80 487 (+$5m) (-$108m) 200 399 100 60 76 65 Lower gas 0 40 volumes offs
Slide 34: New discoveries and 2P reserves bridge
New discoveries in the Otway and Perth basins provide development opportunities and partly offset a decrease in 2P reserves New bookings in 2P reserves of 66 PJe E&P 2P Reserves Bridge1 PJe • 49 PJe Speculant discovery in the Otway 1,400 Basin which is being developed in conjunction with Halladale
Slide 35: Yolla 5 and 6 wells drilled and connected
The Yolla 5 and 6 development wells were successfully drilled and connected as part of Stage 2 of the Mid Life Enhancement Project ... Stage 1 - completed in October 2012 • Accommodation module installed • Safety and utility systems upgraded Lang Lang • Compression and condensate modules onshore gas
Slide 36: LNG
LNG Underlying EBITDA $m 100 75 83 72 50 25 - FY2014 FY2015 APLNG project nearing completion • Upstream 97% complete • Downstream 92% complete Sustained LNG production from Train 1 expected from Q2 FY2016 and from Train 2 approximately 6 months later Estimated project costs to complete not exp
Slide 37: Upstream Project Progress - 97% complete
Upstream Project Progress - 97% complete and on track FY2015 Upstream Operated Goals Actual Progress Plan Eurombah Creek GPF Train 1 mechanical completion Q3 Accomplished Condabri North GPF Train 2 mechanical completion Q3 Accomplished 950 wells commissioned Q4 Accomplished Spring Gully pipeline com
Slide 38: APLNG reserves sufficient for contracts
Despite a modest reduction in reserves, APLNG continues to have more than sufficient reserves to support domestic and LNG contracts 20,000 20,000 20,000 100% APLNG Reserves 1 PJ 20,000 • 1P reserves up 32% PJe to 6,059 PJe 15,000 20,000 20,00020,000 20,000 15,000 15,000 (including production) due to
Slide 39: Operated well deliverability nearing Train 1 requirements
Operated well deliverability is nearing gas requirements for Train 1, with production turned down to meet market demand and wells operationally cycled to maintain confidence in deliverability Average Maximum Well Deliverability (AMWD) Orana TJ/d • Outperformed FID expectations 3.0 • Growing strongly
Slide 40: Downstream Project Progress - 92% complete
Downstream Project Progress - 92% complete and on track Downstream Operated Goals FY2015 Plan Actual Progress Energise Gas Turbine Generators Q3 Accomplished Introduction of first gas to the facility Q3 Accomplished First fire of Gas Turbine Generators Q3 Accomplished in April Commence Train 1 refri
Slide 41: APLNG capital expenditure
APLNG capital expenditure for the period was $6 billion, with Origin’s cash contribution $2.2 billion Cumulative Year to 30 (A$m) from FID1 to 30 June 2015 June 2015 Estimated costs to complete are not Project Capex 1 3,959 24,9632 expected to be materially different from budget 3 Non-Project Capex:
Slide 42: Train 1 LNG production milestones
The project is nearing completion with achievement of Train 1 LNG production milestones expected in Q2 FY2016 Key Goals and Milestones FY2016 Plan First Cargo from Train 1 Q2 Commencement of Sinopec SPA Q2 Completion of Bechtel Performance Test Train 1 (Bechtel Performance Date) Q3 First Cargo from
Slide 43: Corporate
Corporate Underlying EBITDA $m 20 - (17) (20) (40) (60) (69) (80) FY2014 FY2015 Underlying EBITDA down $52 million reflecting higher corporate costs and lower cost recoveries from APLNG Increased investment in Energia Andina by 9.9% to 49.9% to fund the acquisition of a 40% stake in the 69MW Jav
Slide 44: 4. Prospects
4. PROSPECTS Grant King, Managing Director 43
Slide 45: LNG pricing and east coast gas demand
Even at low oil prices, LNG pricing is still attractive, particularly for incremental LNG production ... LNG Pricing1 Global Contracted LNG 2 Curtis Island Supply US$/mmbtu US$/bbl Supply / Demand US$/mmbtu 180 US$/bbl mt 30 Contracted Supply • Once Queensland LNG projects 180 500 30 Contracted Atla
Slide 46: Gas diversion tightens electricity market
Diversion of gas from generation to the LNG market contributes to a short term tightening of the electricity market ... NEM Gas-Fired Generation1 Required Renewable Build To Meet Australia’s Post 2020 Renewables Build Equivalent Required 33 TWh RET2 Carbon Emission Target TWh TWh TWh 25 35 • Renewab
Slide 47: 33 TWh target lifts LREC prices
The certainty provided by the setting of the new 33 TWh target has led to an increase in LREC prices, with any upward pressure towards penalty price further incentivising new build ... Black, LREC and Penalty Prices1 Renewable Levelised LCOE Cost of Wind and Solar2 $/MWh $/MWh $/MWh 160 160 Black •
Slide 48: Flexible portfolio and renewables opportunity
Origin’s flexible portfolio provides an opportunity for Origin to benefit from increasing intermittency of generation as more renewables are built, as well as participate in meeting the target Origin’s Energy Portfolio (FY2015) Origin’s LRET position1 TWh ORG LRET position - 33 TWh 40 8 7 Number of
Slide 49: Remaining contribution to APLNG about $1.8 billion
Origin’s remaining contribution to APLNG is expected to be approximately $1.8 billion ... Growth and SIB Capital Expenditure and Cash Contribution to APLNG1,2 5,000 • Origin’s remaining contribution to APLNG from 1 July 2015 is estimated to be around $1.8b2, an increase of $550m from guidance provid
Slide 50: Initiatives to reduce cash costs
Initiatives have already been announced to reduce cash costs of operations in Integrated Gas and Energy Markets OPERATIONAL COSTS FUNCTIONAL COSTS Integrated Gas • Opportunity to stop activity, reduce • Implemented initiatives to reduce demand, simplify work, devolve APLNG’s total annual costs by re
Slide 51: FY2016 transitional year expectations
FY2016 is a transitional year for Origin as APLNG begins LNG production, in which Origin expects ... • Similar contribution from Energy Markets in FY2016 to that achieved in FY2015 • Ramp gas benefits largely replaced with increasing natural gas sales to LNG projects • Impact of intense competition
Slide 52: APLNG free cash flow at A$55/bbl oil
APLNG will have free cash flow available for distribution to its shareholders at approximately A$55/bbl oil on average from FY2017 Brent Forward AUD and Spot Brent Curves Price (A$/bbl)1 140 APLNG will have free cash flow 120 available for distribution at A$55/bbl oil, which is after all costs inclu
Slide 53: Liquidity and debt service capability robust
Origin’s liquidity and debt service capability is robust and not dependant on oil price recovery LIQUIDITY SERVICEABILITY FLEXIBILITY Excess funding capacity for committed Cash flow from existing businesses Initiatives to improve flexibility capital and funding needs, not services all debt, SIB cape
Slide 54: 5. Appendix
© origin 5. APPENDIX
Slide 55: Continuing and Discontinued Operations
Continuing and Discontinued Operations Continuing Discontinued / Contact Total ($ million) FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 External Revenue 11,550 12,363 2,254 2,155 13,804 14,518 Underlying EBITDA 1,662 1,606 487 533 2,149 2,139 Underlying depreciation and amortisation (618) (560) (189) (
Slide 56: Continuing and Discontinued Operations
Continuing and Discontinued Operations Continuing Discontinued / Contact Total ($ million) FY2015 FY2014 FY2015 FY2014 FY2015 FY2014 Group Operating Cash Flow 1,225 1,642 462 416 1,687 2,058 Tax paid (68) 31 (41) (48) (109) (17) Group OCAT 1,157 1,673 421 368 1,578 2,041 Net interest paid (300) (345
Slide 57: Important Information
Important Information All figures in this report relate to businesses of the Origin Energy Group (Origin, or the Company), being Origin Energy Limited and its controlled entities, for the year ended 30 June 2015 (the period) compared with the year ended 30 June 2014 (the prior corresponding period),
Slide 58: Important Information
Important Information All references to debt are a reference to interest bearing debt only. Individual items and totals are rounded to the nearest appropriate number or decimal. Some totals may not add down the page due to rounding of individual components. When calculating a percentage change, a po
Slide 59: Glossary - Statutory Financial Measures
Glossary - Statutory Financial Measures Statutory Financial Measures are measures included in the Financial Statements for the Origin Consolidated Group, which are measured and disclosed in accordance with applicable Australian Accounting Standards. Statutory Financial Measures also include measures
Slide 60: Glossary - Non-IFRS Financial Measures
Glossary - Non-IFRS Financial Measures Non-IFRS Financial measures are defined as financial measures that are presented other than in accordance with all relevant Accounting Standards. Non-IFRS Financial measures are used internally by management to assess the performance of Origin’s business, and t
Slide 61: Glossary - Non-Financial Terms
Glossary - Non-Financial Terms Term Meaning Proved Reserves are those reserves which analysis of geological and engineering data can be estimated with reasonable certainty to be 1P reserves commercially recoverable. There should be at least a 90% probability that the quantities actually recovered wi
Slide 62: Thank You
THANK YOU For more information Chau Le Group Manager, Investor Relations Email: chau.le@originenergy.com.au Office: +61 2 9375 5816 Mobile: + 61 467 799 642 www.originenergy.com.au 61