2012 annual general meeting - origin energy · all figures in this presentation relate to...

2012 Annual General Meeting12 November 2012

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 be complete. This presentation does not take into account the investment objectives, financial situation or particular needs of any investor, potential investor or any other person. No investment decision should be made in reliance on this presentation.Independent financial and taxation advice should be sought before making any investment decisionIndependent financial and taxation advice should be sought before making any investment decision.

Certain statements in this presentation are in the nature of 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 matters to which the statements relate. These forward looking statements involve known and unknown risks, uncertainties, assumptions and other important factors that could cause the actual outcomes to be materially different from the events or results expressed or implied by such statements. Those risks, uncertainties, assumptions and other importantfrom the events or results expressed or implied by such statements. Those risks, uncertainties, assumptions and other importantfactors are not all within the control of Origin and cannot be predicted by Origin and include changes in circumstances or events that may cause objectives to change as well as risks, circumstances and events specific to the industry, countries and markets in which Origin and its related bodies corporate, joint ventures and associated undertakings operate. They also include general economicconditions, exchange rates, interest rates, the regulatory environment, competitive pressures, selling price, market demand and conditions in the financial markets which may cause objectives to change or may cause outcomes not to be realised. None of Origin or

f it ti b idi i ffili t d i t d i ( f th i ti ffi l g t ) (th any of its respective subsidiaries, affiliates and associated companies (or any of their respective officers, employees or agents) (the "Relevant Persons") makes any representation, assurance or guarantee as to the accuracy or likelihood of fulfilment of any forward looking statement or any outcomes expressed or implied in any forward looking statements. The forward looking statements in thispresentation reflect views held only at the date of this presentation. In addition, statements about past performance are not necessarily indicative of future performance. Subject to any continuing obligations under law or the ASX Listing Rules, Origin and the Relevant Persons disclaim any obligation or undertaking to disseminate after the date of this presentation any updates or revisions to any forward looking statements to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which such statements are based.

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 year ended 30 June 2012 (this year or the current year) compared with the year ended 30 June 2011 (the prior year), except where otherwise stated.

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Important Notice

Origin’s Full Year Financial Statements for the year ended 30 June 2012 are presented in accordance with Australian Accounting Standards. Segment results, which are used to measure segment performance are disclosed in Note 2 of the 2012 Full Year Financial Statements and are disclosed on a basis consistent with the information provided internally to the Managing Director. Origin’s Statutory Profit contains a number of items that when excluded provide a different perspective on the financial and operational performance of Profit contains a number of items that when excluded provide a different perspective on the financial and operational performance of the business. Income Statement amounts presented on an Underlying basis such as Underlying Consolidated Profit, are non-IFRS financial measures, and exclude the impact of these items consistent with the manner in which the Managing Director reviews the financial and operating performance of the business. Each underlying measure disclosed has been adjusted to remove the impact ofthese items on a consistent basis. A detailed reconciliation and description of the items that contribute to the difference between Statutory Profit and Underlying Consolidated Profit is provided in Section 5.

This presentation also includes certain other non-IFRS financial measures. These non-IFRS financial measures are used internally by management to assess the performance of Origin’s business and make decisions on allocation of resources. Further information regarding the non-IFRS financial measures and other key terms used in this presentation is included in the Glossary in Section 5.

Non-IFRS financial measures have not been subject to audit or review.

A reference to Contact Energy is a reference to Origin’s controlled entity (53 0% ownership) Contact Energy Limited in New Zealand In A reference to Contact Energy is a reference to Origin’s controlled entity (53.0% ownership) Contact Energy Limited in New Zealand. In accordance with Australian accounting standards, Origin consolidates Contact Energy within its result. A reference to Australia Pacific LNG or APLNG is a reference to Australia Pacific LNG Pty Ltd in which Origin had a 50% shareholding in until 9 August 2011, whencompletion of a share subscription agreement between Australia Pacific LNG and Sinopec resulted in a dilution in Origin’s shareholding to 42.5%. Origin’s shareholding in Australia Pacific LNG, which is equity accounted in line with Origin’s shareholding, was 42.5% as at 30 June 2012. This shareholding subsequently reduced to 37.5% upon completion of Sinopec’s increased share subscription in Australia Pacific LNG on 12 July 2012.

A reference to the NSW acquisition or NSW energy assets is a reference to the Integral Energy and Country Energy retail businesses and the Eraring GenTrader arrangements acquired by Origin in March 2011.

A reference to $ is a reference to Australian dollars unless specifically marked otherwise. All references to debt are a reference to interest bearing debt only (excludes APLNG shareholder loans) Individual items and totals are rounded to the nearest appropriate interest bearing debt only (excludes APLNG shareholder loans). 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 percentagechange, a positive or negative change denotes the mathematical movement in the underlying metric rather than a beneficial or a detrimental movement. Measures for which the underlying numbers change from negative to positive are labelled as not applicable.

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The Board

Ralph J Norris KNZMI d d t N ti Di tIndependent Non-executive Director

4 |

The Board

Karen A MosesE ti Di t Fi d St tExecutive Director, Finance and Strategy

5 |

The Board

Bruce G BeerenN ti Di tNon-executive Director

6 |

The Board

Trevor BourneI d d t N ti Di tIndependent Non-executive Director

7 |

The Board

Grant A KingM i Di tManaging Director

8 |

Company Secretary

Andrew C ClarkeG G l C l d C Group General Counsel and Company Secretary

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The Board

Helen M Nugent AOI d d t N ti Di tIndependent Non-executive Director

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The Board

Gordon M CairnsI d d t N ti Di tIndependent Non-executive Director

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The Board

John H AkehurstI d d t N ti Di tIndependent Non-executive Director

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Chairman’s Address

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Outline

1. Origin as an integrated energy company

2. Reflecting on FY2012 performance

3. Energy policy and community expectations

4. Safety, diversity and philanthropic activity4. Safety, diversity and philanthropic activity

5. Managing Director’s Address

6 O l k6. Outlook

7. Conclusion

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1. Origin as an integrated energy company

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Since de-merger from Boral in 2000, Origin has built the leading g , g gAustralian integrated energy company …

Integrated supplier to energy markets i A t li d

Supplier of energy to growing export markets through A t li P ifi

An expanding portfolio of energy

in Australia and New Zealand

Australia Pacific LNG

resource opportunities

based on the country’s largest customer base largest portfolio power … based on the country s largest customer base, largest portfolio power generation assets, and a strong upstream gas business

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Origin expects to have a substantial increase in free cash flows following the completion of Australia Pacific LNG following the completion of Australia Pacific LNG …

d i i ti d th th h f d l t … underpinning continued growth through a range of development options that Origin is pursuing

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2. Reflecting on FY2012 performance

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A strong increase in earnings reflecting a full year contribution from the NSW acquisition from the NSW acquisition …

Statutory Profit $980 m up from $186 m

Statutory EPS 90 6 cps up from 19 6 cpsStatutory EPS 90.6 cps up from 19.6 cps

Net items excluded from Underlying Profit $87 m up from ($487) m

Underlying Profit $893 m up 33% from $673 m

Underlying EPS 82.6 cps up 16% from 71.0 cps

Final Dividend Fully Franked 25.0 cps steady

Group OCAT (incl. share of APLNG) $1,781 m up 12% from $1,585 m

Capital Expenditure and Origin’s cash contributions to APLNG1 $2,847 m down 43% from $4,954 m

T t l R d bl I j F R t 8 0 f 6 0Total Recordable Injury Frequency Rate 8.0 up from 6.0

… with an increase in cash flow and reduced capital expenditure to support funding of Australia Pacific LNG

(1) Capital expenditure is based on cash flow amounts rather than accrual accounting amounts; includes growth and stay-in-business capital expenditure, capitalised interest, acquisition expenditure and Origin’s cash contributions to APLNG made via shareholder loan repayments.

support funding of Australia Pacific LNG

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Origin has $5.2 billion1 in existing undrawn committed debt facilities and cash …

Origin Debt Maturity Profile as at 31 October 2012

facilities and cash …

2,000

2,500Undrawn committed debt facilities

• Unsecured Notes issuance in US 144A market – US$500m ($492m)Drawn debt

1,500

lion

• Subordinated Notes in Australian retail bond market - $900m

Additi l b k l

500

1,000

A$ m

ill • Additional bank loan facilities - $750m

• Executed $2.4 billion 4 and 5 year syndicated

0

500

3 4 5 6 7 8 9 0 2 +

y ybank loan, removing requirement to refinance debt to FY2015

FY20

13

FY20

14

FY20

15

FY20

16

FY20

17

FY20

18

FY20

19

FY20

20

FY20

21

FY20

22

FY20

23+

providing sufficient liquidity to fund its $3 6 billion2 share of … providing sufficient liquidity to fund its $3.6 billion2 share of Australia Pacific LNG cash contributions

(1) As at 31 October 2012. Excludes Contact Energy and bank guarantees.(2) From July 2012 to first gas from Train 2

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3. Energy policy and community expectations

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In order for Australia’s energy and resources sector to deliver on the growing energy needs of the nation and the world ...on the growing energy needs of the nation and the world ...

... it is imperative we have a stable policy environment that ... it is imperative we have a stable policy environment that encourages investment, competition and innovation

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With the rising cost of energy impacting the community ...

d li i l i h id ... we are delivering solutions that provide customers greater control of their energy use and cost

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Our relationships with landholders and the local communities in which we operate have been enhanced …in which we operate have been enhanced …

i i i h l d … as we continue to communicate with government, regulators and the broader community about our approach to developing CSG

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4. Safety, diversity and philanthropic activity

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Origin will continue to focus on preventing unsafe actions and reinforcing safe behaviours ...and reinforcing safe behaviours ...

and has launched eleven Life Saving Rules to help deliver a safe ... and has launched eleven Life Saving Rules to help deliver a safe workplace for employees and contractors

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Diversity is recognised in Origin’s Compass as intrinsic to the kind of company we are ...kind of company we are ...

... and our 2013 targets span equal pay and retention and the g p q p yappointment of women to senior roles

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Photo courtesy of The Smith Family29 |

Managing Director’s Address

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1. Recent performance of the business

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We have continued to increase our safety focus …

Safety Observations to 30 June 2012

30000

35000

Safety Observations to 30 June 2012

15000

20000

25000

5000

10000

15000

0

i h h b i di h 30 000 f b i … with the business recording more than 30,000 safety observations

32 |

NSW assets drive growth in Origin’s business

Leading retail position in Australia’s most populous state

Eraring Power Station

33 |

Retail transformation continued with 2.6 million customers migrated to a new billing and customer relationship migrated to a new billing and customer relationship management system …

• Four large scale migrations totalling 2.6 million customers to the new SAP billing platform

• Stabilisation activities underway with a focus on improving billing and exception management and improving billing and exception management and contact centre processes

• Customer experience will improve through single view of the customer and greater system capability, view of the customer and greater system capability, enabling better customer insight and ability to offer tailored solutions. This translates to more efficient and effective service and sales

• Providing greater choice such as improved on-line self service capability, electronic billing and payment options. These all lead to a lower cost to serve

Integral Energy customers expected to be migrated • Integral Energy customers expected to be migrated in early 2013, Country Energy to follow

… with Origin well placed to capitalise on the benefits of this … with Origin well placed to capitalise on the benefits of this new system

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Origin’s generation portfolio has been boosted by the completion of Mortlake Power Stationcompletion of Mortlake Power Station

Mortlake Power Station 500 Kv switch yard

Mortlake Power Station

35 |

Recent investments in Contact’s generation portfolio …

Ahuroa gas storage facility g g f y

Te Mihi Power Station development

h d li d i d f li fl ibili hi h fl d

Stratford gas-fired peaking project

… have delivered improved portfolio flexibility which flowed through to an increase in earnings

36 |

We have made investments to improve the output of our production facilities …production facilities …

Otway onshore gas facility

… with BassGas recently returning to production, and the forward

BassGas offshore platform

… with BassGas recently returning to production, and the forward work program for the Mid Life Enhancement project being reviewed

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Australia Pacific LNG

Condabri development

Drilling completions

Condabri development

LNG Tank A, September 2012

Pipeline

LNG Tank A, September 2012

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Australia Pacific LNG Upstream on track and work 20% complete

Drilling

• 127 Phase 1 operated

Wellhead separator modules Water – brine treatment skidCoil-tubing drill rig

Gas & Water Facilities

• 6 (out of 15 total)

Gathering

• 788 of 1 100 operated

First pipe laid south of Miles

Pipeline & Electrification

• Bulk of pipe in country127 Phase 1 operated wells have been spudded to end of September 2012

• 307 operated wells in the

6 (out of 15 total) compressor trains shipped from Germany

• First 4 gas plant pre-assembled module trains

788 of 1,100 operated wells have been scouted

• East Coast Pipelines delivering gathering systems in Spring Gully

Bulk of pipe in country

• Pipeline construction commenced in July 2012; welding commenced in September 2012p

“land bank”

• A 3rd Savanna hybrid coil drill rig is operational, a 4th conventional rig is

bili i l hi

shipped from Thailand, with one delivered to Condabri

• All equipment ordered d d i

y p g yand WDS starting in Combabula / Reedy Creek

• Condabri gathering i ll i d

p

• Narrows Crossing (QCLNG) on track to compete by mid-2014

• All aspects of electrification mobilising later this year

• Options for further rigs are available, a ‘top set’ rig will start in January

and under various stages of manufacture and delivery

• Construction under way for 3 out of 7 gas

installation underway with Leightons mobilising 3 work fronts

All aspects of electrification on schedule

for 3 out of 7 gas processing facilities and both water treatment facility sites

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Australia Pacific LNG Downstream on track and work 23% complete

Mainland / DredgingCurtis Island

LNG TanksCurtis Island site, October 2012 Train 1 – Refrigeration compression columns

• Roll-On Roll-Off facilities on Fisherman’s Landing and Curtis Island sites are complete and now operational

D d i ti iti i

1. Site preparation works well advanced

2. Early works were impacted by wet weather, however key critical path activities are on or ahead of schedule:

1. Compressor manufacture by GE on track. Pouring of the • Dredging activities progressing more

slowly than anticipated, however all critical aspects are now completed to support construction activities

Module Yard in Indonesia

1. Compressor manufacture by GE on track. Pouring of the Train 1 foundations commenced in June 2012

2. Material Offloading Facility construction is progressing as planned to support delivery of compressors and other components in early 2013

Module Yard in Indonesia• Steel deliveries to the facility

commenced in July 2012

• Module assembly commenced as expected in September 2012

3. Construction of LNG tanks slightly ahead of schedule

3. Curtis Island site camp on track to support initial occupancy in September Quarter 2012

4 Curtis Island transport infrastructure slightly behind plan expected in September 2012 4. Curtis Island transport infrastructure slightly behind plan, but will not adversely impact overall schedule

40 |

Australia Pacific LNG is on schedule to meet the below milestones to achieve first gas (LNG) in mid 2015to achieve first gas (LNG) in mid 2015

Upstream Milestones Date (CY)

2011 and

Downstream Milestones Date (CY)

1 t t LNG T k A il 2012Pipeline Manufacture 2011 and 2012

Condabri construction camp occupied June 2012

Third hybrid coil drill rig introduced mid 2012

1st concrete LNG Tanks April 2012

1st concrete Train 1 foundations June 2012

Roll-on roll-off facility fully operational June 2012

Pipeline welding commences Q3 2012

100 wells with gathering lines installed late 2012

Fourth drill rig introduced late 2012

p

1st occupancy of Curtis Island camp Q3 20121

Module assembly underway Q3 2012

Heavy mechanical erection start late 2012Condabri Central gas plant 50% complete late 2012

150km pipeline installed late 2012

200 operated wells drilled late 2012

Heavy mechanical erection start late 2012

Material Offloading Facility complete early 2013

First LNG module delivery early 2013

First compression shipped to site early 2013200 operated wells drilled late 2012

Mechanical completion of first gas processing plant mid 2013

Main pipeline completion early 2014

p pp y

Material Offloading Facility operational early 2013

LNG cold box delivery mid 2013

Narrows Crossing pipeline completion Mid 2014

Train 1 electrification complete mid-2014

Train 1 - gas processing plants late 2014

LNG modules mid 2013

Pre-commissioning late 2014

First LNG from Train 1 mid 2015

complete late 2014

First gas to LNG Train 1 early 2015

(1) Schedule updated. There has been no change to the critical path as a result of this schedule change.41 |

Australia Pacific LNG’s industry leading 2P reserves base continues to expand …

30,000

continues to expand …PJ

20,000

25,000 • 2P reserves increased over the

year by 1,336 PJ to 13,111 PJ

• 3P reserves increased over the

10,000

15,000

• 3P reserves increased over the year by 1,305 PJ to 16,047 PJ

-

5,000

Estimated Requirements

3C 2C 3P 2P1 1

… and more than covers gas requirements for all domestic contracts and offtakes for both trains

QCLNG GSA Domestic Gas Origin ContractRamp and Tail Gas Train 2 Train 1

and offtakes for both trains(1) 3P reserves include 2P reserves; 3C resources include 2C resources.Note: Some of APLNG’s CSG reserves and resources are subject to reversionary rights. Refer to Origin’s Management Discussion & Analysis for the year ended 30 June 2012 for further information.42 |

Origin expects to have a substantial increase in free cash flows following the completion of Australia Pacific LNG

Exploration and Appraisal Activity • Ironbark – evaluation activities continued, with surface facilities and gathering networks being

flows following the completion of Australia Pacific LNG …

installed to support the pilot well project• Kenya - drilling of the Mbawa-1 well in the Lamu Basin completed encountering approximately

51.8 net metres of natural gas pay in three zones. Analysis of subsea will guide future activities • South East Asia - well location selected and preparations continue for drilling in Block 121 in the • South East Asia well location selected and preparations continue for drilling in Block 121 in the

Song Hong Basin during FY2013 • Botswana - tendering for CSG exploration program commenced• New Zealand - Anadarko, as operator, has secured a rig to drill Caravel-1 in the offshore

C t b B i ( t d FY2014) t ti i ifi t d li idCanterbury Basin (expected summer FY2014), targeting significant gas and liquids

Renewable Development OptionsGeothermal• Exploration continued in Chile and the joint venture is acquiring additional geothermal concessions• Exploration activities continued in Indonesia, with drilling of the first well expected in FY2013Hydro

Acquired 51%1 interest in hydro development joint venture in Chile with the project mid way • Acquired 51%1 interest in hydro development joint venture in Chile, with the project mid-way through its feasibility stage

• Feasibility studies for PNG hydro nearing completion

underpinning continued growth through a range of development

(1) 51% voting interest. Economic interest is currently 20.65%. Origin expects to make further capital contributions as specific development milestones are met, which will increase its economic interest to 51%.

… underpinning continued growth through a range of development options that Origin is pursuing

43 |

Pursuing large-scale renewable opportunities in international markets with high prospects and access to growing demand …markets with high prospects and access to growing demand …

Chile• Acquired 51%1 interest in one of Chile’s leading

Chile• 40% interest in Chile’s leading geothermal

exploration company Energía Andina S A hydroelectric development companies, EnergíaAustral

• Project is mid-way through its feasibility stage

exploration company, Energía Andina S.A• Exploration continued, with the drilling of four

shallow gradient wells underway at Pampa Lirima• JV acquired additional concessions in FY2012

Papua New Guinea• 50% interest in a JV with PNG Sustainable

Development Program• Potential capacity of 2,500 MW

Indonesia• 47.5% interest in the Sorik Marapi concession, in a

JV with Tata Power ote t al capac ty o ,500 MW• Feasibility studies have begun and will continue

through to FY2014

• Exploration activities continued; drilling of first exploration well expected to commence in FY2013

ki O i i f th l t li t d i t i bl

(1) 51% voting interest. Economic interest is currently 20.65%. Origin expects to make further capital contributions as specific development milestones are met, which will increase its economic interest to 51%.

… making Origin one of the largest listed investors in renewable energy

44 |

2. Public policy and regulatory issues

45 |

Public policy and regulatory issues

46 |

Managing Director’s Address

47 |


48 |

Outlook

• In conjunction with full year results announced on 23 August 2012, Origin advised that based on then prevailing market conditions it expected:

Underlying EBITDA to increase by around 10%; and

Underlying Profit to be in line with the 2012 financial year.

H i i d t l f f th fi t f th f th • Having reviewed actual performance for the first four months of the financial year, and based on current forecast for performance of the remaining eight months, Origin is revising its guidance for the 2013 financial year to:financial year to:

5–10% increase in Underlying EBITDA; and

5-10% reduction in Underlying Profit.y g

49 |


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1. Financial Report

51 |

Resolutions 2 to 5:Election and Re-election of Directors

52 |

Resolution 2:Election of Sir Ralph J Norris KNZM

53 |

Resolution 2:

Ralph J Norris KNZMIndependent Non-executive DirectorIndependent Non executive Director

54 |

Resolution 2:Election of Sir Ralph J Norris KNZMElection of Sir Ralph J Norris KNZM

Proxy votes received:

For 514 256 791For 514,256,791Against 6,008,144Open 15,142,903Abstain 1,776,140

55 |

Resolution 3:Re-election of Mr John H Akehurst

56 |

Resolution 3:

John H AkehurstIndependent Non-Executive Directorp

57 |

Resolution 3:Re-election of Mr John H AkehurstRe election of Mr John H Akehurst



58 |

Resolution 4:Re-election of Ms Karen A Moses

59 |

Resolution 4:

Karen A MosesExecutive DirectorExecutive Director

60 |

Resolution 4:Re-election of Ms Karen A MosesRe election of Ms Karen A Moses



61 |

Resolution 5:Re-election of Dr Helen M Nugent

62 |

Resolution 5:

Helen NugentIndependent Non-Executive Directorp

63 |

Resolution 5:Re-election of Dr Helen M NugentRe election of Dr Helen M Nugent



64 |

Resolution 6:Remuneration Report

65 |

Resolution 6:Remuneration ReportRemuneration Report



66 |

Resolutions 7 & 8:Grant of long term incentives to Mr Grant King and Ms Karen Moses

67 |

Resolution 7:Grant of long term incentives to Mr Grant A King – Managing Director

68 |

Resolution 7:Grant of long term incentives to Mr Grant A KingGrant of long term incentives to Mr Grant A King



69 |

Resolution 8:Grant of long term incentives to Ms Karen A Moses – Executive Director

70 |

Resolution 8:Grant of long term incentives to Ms Karen A MosesGrant of long term incentives to Ms Karen A Moses



71 |

Resolution 9:Approval of potential termination benefits

72 |

Resolution 9:Approval of potential termination benefitsApproval of potential termination benefits



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2012 annual general meeting - origin energy · all figures in this presentation relate to...

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