Safety Moment Alert tone beep, beep, beep Follow instructions of Wardens Be ready to evacuate Evacuation tone whoop, whoop, whoop Leave now via nearest exit Proceed calmly to assembly area 2 7 December 2018 2018 Investor…
Agenda Time Duration Topic Presenter 9:30 5 mins Introduction Peter Rice (GM, Capital Markets) 9:35 20 mins Strategic overview Frank Calabria (CEO) 9:55 20 mins Capital management Lawrie Tremaine (CFO) 10:15 20 mins Integrated Gas…
Strategic Overview Frank Calabria 4 7 December 2018 2018 Investor Briefing Day
Where we are Target capital structure in sight Reducing costs and improving returns Two strong and diversified cash generating businesses Reliable performance and competitive cost position at APLNG Headwinds in Energy Markets…
Our strengths Energy Markets Electricity portfolio well positioned - renewables plus firming Strong gas supply position - length, cost and transport Large retail customer base positioned to capture future energy needs Integrated…
Fuels of the future Renewables and gas growing in all scenarios World primary energy demand Global LNG supply and demand 20 17% 20% 15 25% 14% 25% 32% 5% Btoe 22% 10 5% 5% 29% 24% 32% 28% 5 9% 22% 25% 27%…
Global trends in energy markets Opportunities from changes in technology and customer mindset Renewables lowest cost form of new generation Decarbonisation Gas as a firming fuel Lower technology costs enabling new…
Unprecedented government intervention Addressing energy affordability requires a whole of industry response ACCC noted key drivers of electricity price increases: Network (38%), wholesale (27%), green schemes (15%), retail costs…
Challenging regulatory environment Reference Price Supportive - actively working on an industry-led comparison rate Default Market Offer Impact depends on methodology, implementation & market response Underwriting generation…
Strategy to deliver value in the future energy world Our strategies Connecting customers to the energy and technologies of the future Energy Markets Integrated Gas Leading Embrace a Develop Accelerate customer decentralised…
Energy Markets Retail Simplified business centred around the customer Transform customer experience Target market leading cost position Grow new revenue streams Centralised Energy Services (CES) Solar and Storage Adjacencies…
Energy Markets Future Energy New business models to connect distributed assets and data to customers Develop platform to connect millions of distributed assets Develop leading digital and analytics capability Leveraging machine…
Energy Markets Energy Supply & Operations Competitive cost of energy in a changing world Grow low cost renewables Increase generation flexibility Optimising existing fleet Brownfield opportunities Active management of fuel…
Integrated Gas Low cost onshore Australian producer APLNG 500m cost reduction on track Pursue further breakeven reductions Invest in exploration Reedy Creek water treatment facility Replicate low cost model Beetaloo Other…
Transforming the business for all stakeholders Best ever safety performance in FY2018 (TRIFR 2.2) Employees Improved employee engagement New Purpose, Values and Behaviours Customer culture Customers Good energy brand launched…
Continuing our transformation 150m Origin savings targeted by FY2021 Simplifying the business 1,221 1,200 Transforming culture 1,000 150m nominal saving 150 million Origin-wide cost out 800 m Primarily retail cost to serve…
Dividend update Debt repayment continues to be prioritised until target capital structure is reached Provided that market conditions do not materially change or the regulatory and political environment does not adversely impact…
Capital Management Lawrie Tremaine 19 7 December 2018 2018 Investor Briefing Day
Financial framework and objectives 1st Quartile Total Shareholder Returns1 1. Resilient 2. Maximise cash 3. Disciplined 4. Portfolio capital structure & returns capital allocation management through cycles 5 YEAR AMBITION2…
Approaching target capital structure 6x Adjusted Net Debt/EBITDA2 5x Capital management priority: - Investment grade credit through 4x business cycle - target BBB/Baa2 - Provides balance sheet resilience 3x Target (2.5 - 3.0x)…
Optimising our debt portfolio Existing debt maturity profile (m) 2,500 Existing Debt Portfolio 2,000 3 years average maturity 1,500 (excluding hybrid) A3.0bn committed undrawn liquidity 1,000 Current cost of debt 5.9% 50%…
Robust risk management Opportunity to adjust risk settings as balance sheet de-levers Commodity Business Only hedge as required to protect investment grade Oil, FX, LNG credit rating Margin Business Natural gas, LNG trading,…
Improving returns Underlying ROCE1 (%) 10% Returns trending in the right direction Key drivers of growth: 7.7% - APLNG ramp up and higher commodity prices 5% - Eraring output step up 4.9% - Business gas sales growth…
Disciplined capital allocation Debt servicing and reduction Strong expected cash generation Debt reduction requirement easing Sustaining capital Continuing modest capital expenditure Provides options for funding dividends and…
Improved Investment Decisions Centralised capital allocation process Governance Ranked on returns, risk and strategic fit Framework Independent validation of economics Periodic assessment of external environment Investment…
Capital Investment Pipeline Moderate ongoing capex demands…
Continual assessment of portfolio Successful asset sale programme. Net proceeds 3.8 billion - Contact Energy, Lattice Energy, Acumen and other infrastructure assets. Progressing potential divestment of Ironbark Ongoing…
Integrated Gas Mark Schubert 31 7 December 2018 2018 Investor Briefing Day
On track to meet commitments Operational commitments Financial commitments Delivering an aligned & simplified organisation, with Achieving a step change reduction in cost and breakeven streamlined processes FY18 June 2019 In the past…
Cost per well target on track Standard vertical unfracked Surat well FY2018 Actual Capital expenditure 2.4 (Am/well) breakdown % Operated sustain 1 1.9 1.3 1.2 Exploration & 1.15 appraisal 1.1 Operated SIB Downstream…
Sustainable 500m p.a. cost out on track On track for a 2.8 billion run rate including benefit from well and operating cost savings Actual cost base may vary year to year due to a number of factors including royalties gas…
Improving prices Average realised Average realised LNG Price Domestic Gas Price (US/mmbtu) (A/GJ) 10 6 8 4 6 4 2 2 0 0 FY17 FY18 Q1FY19 FY17 FY18 Q1FY19 36 7 December 2018 2018 Investor Briefing Day
Production ramped up to stable operations Spring Gully & Thick coal seams, horizontal drilling Denison Horizontal wells producing on average 2x vertical wells Reedy Creek, Various coal formations requiring tailored technologies APLNG…
Connecting supply to processing capacity Connecting excess supply in existing fields to processing capacity Large bore pipeline infrastructure 2-3x more capital efficient than constructing a new gas processing facility. Recent…
Stable reserves base since FID APLNG Reserves Position 20,000 15,000 3P Net PJ 10,000 2P 1P 5,000 Production 0 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Current gas production higher than FID assumption…
Focus on maturing new resources FY2019/FY2020 - testing six plays Westgrove 9 Deep conventional exploration play Currently being drilled Peat Flank 3D Seismic currently being acquired Two pilots commissioned, third on track for…
APLNG Commercial update Signed a long term infrastructure sharing agreement with QGC and an oil-linked gas purchase of up to 350PJ (2024-2034) Refinanced US1.4 billion project debt (reducing distribution breakeven by US2/boe) An…
Cost competitive with US shale into Asia APLNG operating 6.0 breakeven already competitive 5.0 0.8 1.8 30 4.0 0.5 US/boe US/mmbtu 3.0 20 4.5 2.0 3.4 3.0 10 1.0 0.0 Henry Var. Shipping Shipping US…
Beetaloo a multi decade opportunity to scale the low cost operating model Facts: 70% interest in 18,500km2 permit Four, stacked, unconventional hydrocarbons plays identified Booked 6.6 TCF contingent resource relating to Velkerri…
Beetaloo - multiple stacked plays increases chance of success CY19 Velkerri CY19 Kyalla Shale Play1 Shale Play1 1) Well locations are illustrative only 44 7 December 2018 2018 Investor Briefing Day
Beetaloo plan focus on highest value plays CY2018 CY2019 CY2020 CY2021 Stage 2 E&A Moratorium Velkerri liquids rich play well EPT1 Kyalla liquids rich play well Stage 3 E&A (two horizontal wells target depends on EPT1…
Looking to the future Pursuing further reductions in distribution breakeven to target APLNG US35/boe via further cost outs and productivity improvements Replicating and scaling the low-cost model Growth assets Beetaloo - targeting…
Retail Jon Briskin 47 7 December 2018 2018 Investor Briefing Day
Retail overview Market remains highly competitive Market dynamics Successfully managing share and value and progress Improving customer experience Growing Centralised Energy Services (CES), Solar and Broadband Addressing customer…
Managing share and value Improving customer Successfully managing Growing CES, Solar and experience with digital share and value Broadband investment Electricity and Natural Gas Digital Service Interactions CES Customers % Churn…
Addressing customer affordability From 1 Jan 2018: 26% discount to VIC concession customers (standing and non-discounted offers) 17% discount to other VIC customers (standing and non-discounted offers) Low rate concession offers in…
Implications of a Default Market Offer Yet to determine default prices by region and network patch Initial proposal: Top-down approach based on a range between AER Pricing the median of current standing offers; and methodology the…
Potential impacts of a Default Market Offer Estimated annual bill Residential () Origin has 2.4 million residential customers 2,800 Indicative impact of 60 million pre-tax for 2,600 residential customers (based on customers 2,400…
Step change in our Retail business Simplified organisation driven by a customer and digital first mindset Transform Target market Grow new customer leading cost revenue streams experience position Maintain churn differential…
Moving to a simplified & digitised organisation Today Tomorrow FY2021 Products Multiple offers and price Few simple offers points Bundle benefits Channels Digital interactions Digital interactions dominant increasing Brand +…
Investment in customer experience to maintain churn differential Good Energy brand Digitising customer Simpler offers Streamlined journeys interactions Low rates expressed in dollars Removing customer pain Self-serve with rich…
Lowering cost to serve Targeting 100m cost reduction by FY2021 Energy Markets Cost to serve Reduction in labour (171/cust) Journey redesign Shift to digital…
Grow new revenue streams Centralised Energy Solar Adjacencies Services and Storage Integrated energy solutions Opportunity to engage Evolving customer value for high-rise developments beyond the meter proposition Scale benefits…
Energy Supply & Operations Greg Jarvis 58 7 December 2018 2018 Investor Briefing Day
Australian market transitioning quickly Renewables growing Lower forward prices Rooftop solar Rooftop changing solar NEM changing NEM demand demand Renewable capacity (GW) Electricity (A/MWh) Average NEM Average NEM demand…
Energy Supply and Operations overview Cautious approach to investment in the current regulatory environment 580MW of new contracted solar capacity online by Q1 2019 Renewables 530MW of new contracted wind capacity expected online…
The right portfolio for a changing market Coal capacity factor High Strategy: Short energy, Long capacity Strategy: Long energy, Long capacity 2010 Origin portfolio Expected future state 2008 2017 OCGT capacity Volatility…
Covered for peak demand Capacity position 9,000 MW of exposure to peak prices 10,000 (14,500/MWh) if unhedged We manage this exposure through physical generation and hedge (swap and cap) 8,000 contracts Cap contracts allow us…
Flexible energy position in a changing market Flexible energy position 40 SA Exposure managed Able to flex the short energy position Short 35 position via peakers and via generation and hedging cap products Generation is able…
Long term PPAs underpin LREC requirements Bundled PPA prices () Origins LREC position (Large scale wind and solar) 160 (millions) 8 Thousands 120 Number of LRECs 6 80 4 40 2 - - Legacy & Contracts…
Solar changing the shape of daily demand Our fleet is adaptable to the changing market conditions Average day in the future NEM Evening peak provides opportunity for flexible capacity Strategy Increased solar generation…
Shoalhaven feasibility study Fast start pump hydro ideally suited to changing markets Current operations Located 150km south west of Sydney 240MW (two units at both Kangaroo Valley and Bendeela) Zero to full load within 15 minutes…
Potential to operate Eraring more flexibly Short term shutdown and restart MW Short term shutdown and restart 2,800 Ramp down Ramp up 2,000 1,200 Current min generation Area of opportunity 0 Exploring ability for…
Changing DDPS, freeing up gas Darling Downs Power Station (DDPS) volume and price 12 180 160 10 140 /MWh 8 120 GWh 100 6 80 4 60 40 2 20 0 0 01/10/2018 06/10/2018 11/10/2018 16/10/2018 21/10/2018 26/10/2018…
Our gas portfolio is a competitive strength Energy Markets East Coast Gas Supply Portfolio PJ 300 SWQP 250 Moomba 200 Wallumbilla 150 100 50 0 FY18 FY19 FY20 FY21 FY22 FY23 APLNG purchase Fixed price (other)…
Virtual tour of the portfolio As renewable penetration increases and coal generation plants retire the electricity market needs reliable flexible dispatchable generation Origin has a range of generation and storage development…
Wrap up Frank Calabria 71 7 December 2018 2018 Investor Briefing Day
FY2019 guidance re-affirmed Provided that market conditions do not materially change or the regulatory and political environment does not adversely impact operations: Origin expects Underlying Profit to be higher and further debt…
Wrap up A simplified, more resilient organisation Two strong and diversified cash generating businesses Further upside potential in Integrated Gas Addressing headwinds and transforming Energy Markets Reducing costs and…
Appendix 74 7 December 2018 2018 Investor Briefing Day
APLNG is a strong and aligned joint venture between Origin, ConocoPhillips and Sinopec APLNG is underpinned by: Strong reserves1,3 13,310 PJ Quality assets Leading operators Upstream Operator Downstream Operator Aligned…
Electricity forward price by state NSW forward baseload energy prices Qld forward baseload energy prices 130 130 110 110 90 90 A/MWh A/MWh 70 70 50 50 30 30 F17 Swap F17 Average F18 Swap F18 Average F17 Swap F17…
Ironbark 100% owned Queensland CSG resource, adjacent to APLNG and QGC infrastructure Ironbark is ideally located to supply to the east coast domestic market via the Wallumbilla Hub Running a dual process: Entered FEED for…
Glossary Financial Terms Term Meaning Adjusted Net Debt Net Debt adjusted to remove fair value adjustments on hedged borrowings. CAGR Compound Annual Growth Rate. CPS Cents per share EPS Earnings per share Free Cash Flow Net cash from…
Glossary Non-Financial Terms Term Meaning 1P Proved Reserves are those reserves which analysis of geological and engineering data can be estimated with reasonable certainty to be commercially recoverable. There should be at least a 90…
Glossary Non-Financial Terms Term Meaning GJ Gigajoule = 109 joules GW Gigawatt = 109 watts GWh Gigawatt hour = 103 megawatt hours JCC Japan Customs-cleared Crude LNG Liquified Natural Gas LPG Liquified Petroleum Gas LREC Large…
Important Notice (cont) 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 financial year ended 30 June 2018 (the…
Important Notice (cont) Reserves Disclosures of Origin and APLNGs reserves and resources are as at 30 June 2018. These reserves and resources were announced on 16 August 2018 in Origins Annual Reserves Report for the year ended 30 June…
For more information Peter Rice General Manager, Capital Markets Email: peter.riceoriginenergy.com.au Office: +61 2 8345 5308 Mobile: + 61 417 230 306 Liam Barry Senior Manager, Investor Relations Email: liam.barryoriginenergy.com.au…
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