2019 Investor Briefing Day 20 November 2019 Sydney, Australia
Acknowledgement of Country We acknowledge the Gadigal People of the Eora Nation as the traditional custodians of the land on which we gather today, and pay our respects to their Elders - past, present and emerging
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 3 20 November 2019 2019 Investor…
Todays presenters Frank Calabria, CEO Sharon Ridgway Samantha Stevens Lawrie Tremaine, CFO EGM, People & Culture EGM, Corporate Affairs Mark Schubert Greg Jarvis Jon Briskin Anthony Lucas EGM, Integrated Gas EGM, Energy Supply…
Agenda Time Duration Topic Presenter 9:30 5 mins Introduction Liam Barry, Investor Relations 9:35 15 mins Strategic overview Frank Calabria, CEO 9:50 10 mins People & Culture Sharon Ridgway, People & Culture 10:00 10 mins Social…
Strategic Overview Frank Calabria (CEO) 6 20 November 2019 2019 Investor Briefing Day
Building a track record Building an inclusive and achievement focused culture Transforming culture Customer and digital first mindset Simplified processes, leaner corporate function, asset sales Simplified portfolio Leaner,…
External environment changing rapidly Core beliefs Renewables the lowest cost form of new build Australian context Fuels of the generation future Gas to grow in the Asia Pacific under all IEA Government intervention scenarios1 and…
Strategy to deliver value in a future energy world Connecting customers to the energy and technologies of the future Accelerate towards clean energy The right Low cost operator developing & growing gas energy resources Embracing…
We are committed to delivering for all stakeholders Focused on keeping our people safe Our people Changing the way we work Transforming customer experience Our customers Addressing energy affordability and reliability…
Our Purpose underpins everything we do Our Purpose Getting energy right for our customers, communities and planet 11 20 November 2019 2019 Investor Briefing Day
Safety remains a key priority TRIFR 5 FY2019 TRIFR performance disappointing following improvements in prior years 4 3 Targeted programs to reduce specific risks 2 Partnering with contractors to improve 1 personal safety during…
Our capabilities and strengths Flexible electricity position Value Competitive management Digital and gas supply across a large analytics (length, cost platforms customer and flexibility) base Well positioned for…
Executing on our strategy making good progress e Accelerate Low cost operator Embracing Customer-centric towards developing & growing gas a decentralised & retailer clean energy resources digital future 25% renewables +…
Where we are going Growing production at APLNG strong medium term outlook Investing in exploration to grow new resources at APLNG, Beetaloo and Cooper-Eromanga Targeting 150 million Origin-wide cost out by FY2021 100 million…
People & Culture Sharon Ridgway (EGM, People & Culture)
People and culture are critical to our success Key enablers of business performance are: Effective ways of working Strong people performance Strong inclusive & achievement focused culture A strong culture: Attracts the right…
Were changing the way we work Increased ownership & autonomy: Reduced organisational layers Reduced team sizes Leaner management structures Business & system simplification The right customer solutions Integrated Gas asset-led…
Our people performance Engagement Equal Pay Gender Diversity Staff engagement Equal Pay for Equal Work Women in Senior Roles % 62 Pay Gap (% points) 1.5 40 60 1.2 30 58 56 0.9 20 54 0.6 10 52 0.3 50 - - FY15 FY16 FY17 FY18…
Culture is underpinned by our Purpose & Values Getting energy right for our customers, communities and planet Work as one Be the Care about Find a better Being team, one customer our impact way accountable Origin champion…
Building an inclusive & achievement focused culture Embedded Values into: Staff incentive arrangements Recruitment Employee communications Introduced People Leadership Programme The right customer solutions Targeting to…
Social Purpose Samantha Stevens (EGM, Corporate Affairs)
Getting energy right for our Customers for our Communities for our Planet Addressing affordability Supporting education Leading position on and reliability through our Origin climate change Foundation Advocating for sound…
Getting energy right for our Planet Believe electricity sector should deliver more than its proportional share of emissions reduction Support national goal of net zero emissions in the electricity Leading position on sector by 2050…
Getting energy right for our Customers Reduced prices for 520,000 customers Addressing Record Eraring output putting downward pressure on prices affordability and Market leading program to protect hardship customers reliability…
Getting energy right for our Communities 25 million distributed by Origin Foundation since inception Supporting education includes 3 million of employee matched donations through our Origin Foundation 60,000 volunteer hours by our…
Founded in 2010 Focus on education to break the cycle of disadvantage Since 2010, supported 60 non-profit organisations, including: SolarBuddy The Big Issue Big Picture Education Australia Gawura school Matched…
Capital Management Lawrie Tremaine (CFO) 28 20 November 2019 2019 Investor Briefing Day
Improved financial position & performance Maximise cash & Resilient capital Disciplined capital Portfolio returns through structure allocation management cycles Two strong cash Target capital Capex and opex Leaner, simplified…
Maximising cash generation from APLNG APLNG estimated distribution and Origin oil/LNG hedging and trading (Am) 981m Effective Oil Effective Oil Net Cash Actual FY2020 Scenarios Price Price 1,400 Am US/boe A/boe 1,200 FY2019 73…
Potential to grow distribution to shareholders Free cash flow yield1,2 Origin uses of proportionate FCF2 (m) Origin APLNG reflected on proportionate consolidation basis 2,000 981m Origin Potential to reallocate 1,500 FCF to fund…
Leaner, Simpler operating model Origin-wide operating cost excluding Number of permanent employees APLNG (m) (excluding contractors) 1,400 150m cost 7,000 out target 1,700 1,200 6,000 reduction 1,000 5,000 800 4,000 600…
Optimising our debt book Debt Maturity Profile as at Interest paid and average interest rate November 2019 (Am) 2,500 700 7% 600 6% 2,000 500 5% 1,500 400 4% Am 1,000 300 3% 200 2% 500 100 1% - - - 0% FY15 FY16 FY17…
Capital discipline Capex1 (m) 3,500 Capex constrained at 400 million over time, excluding E&A 3,000 Beetaloo E&A driving the increase 2,500 in FY2020 outlook 2,000 Mature capital governance 1,500 process in place 1,000 Origin…
Disciplined capital allocation framework Cash from Cash from Strong cash generation, a stable Interest sustaining capex operating investing paid activities activities1 Potential for distributions at high end of payout range…
Accounting Update AASB 16 Leases (effective prospectively from July 2019) Required to account for all leases on-balance sheet Origin excluding share of APLNG Predominant lease types Commercial offices, LPG terminals, power stations and…
Questions Morning tea break 38 20 November 2019 2019 Investor Briefing Day
Integrated Gas Mark Schubert (EGM, Integrated Gas) 39 20 November 2019 2019 Investor Briefing Day
Track record of transformation and performance Distribution breakeven and PRODUCTION 2X 2015 - 2020 effective oil price (US/boe) 73 FY2020 breakeven guidance upgrade from US33-361/boe WELL COSTS 50% 2017 - 2019 56 to…
Focused on getting energy right APLNG supplied 30% of east APLNG regional spend of A198m coast domestic demand in FY2019 in FY2019 Security of supply for Queensland gazettal China and Japan with 20 supply keeps 450 Incitec year…
Asset led model creates ownership, alignment and results Avg GPF Production GPFs2 reliability3 TJ/day1 Reedy Creek, Combabula & 445 2 99.6% Peat Condabri, 757 4 100% Talinga & Orana Spring Gully & 284 1 100% Denison Non…
Built a business which is competitive with US Shale into Asia Short-run Marginal Cost (SRMC) of US Shale into Asia & APLNG (US/mmbtu) 5.0 APLNG SRMC lower 0.8 than US Benchmark 4.0 1.9 3.0 0.4 US4.2/ 2.0 US3.0/ mmbtu…
Production up, strong performance to continue APLNG asset production (PJ) 800 700 Strong field performance and completion of Eurombah to Reedy Creek Interconnect 600 pipeline has led to increased FY2020 500 production 400…
Resource base performing well APLNG reserves position1,2 (PJ) Solid reserves 18,000 Reserves converging towards 3P since FID 15,000 Field performing in line with expectations 12,000 Approximately half of 2P reserves yet to be…
Exploration program underway and remains on track Westgrove 9 (deep conventional play) Drilling complete Fracture stimulation planning underway Reids Dome Denison Awaiting Westgrove 9 results Peat Flank profiled on the…
Peat Flank profile 20 year old CSG field located on crest of geological structure, current production 10TJ/day Appraisal programme testing if field can be expanded to 60-100 TJ/day 2 pilot wells online indicate commercial…
APLNG commercial update Supporting the domestic market - multiple supply contracts signed 61 PJ to Origin Energy over 2020 and 2021 50 PJ to manufacturers including Incitec Pivot, Orica and Orora LNG contract Downward Quantity…
Beetaloo Stage 2 appraisal underway Kyalla shale liquids rich gas play: Well spudded 9 October, preparing to drill the horizontal section 90-day extended production test (EPT) to commence in Q3 FY2020 Results expected in Q4…
Engaging with Beetaloo Traditional Owners We have the support of our Traditional Owners (TOs) who are Native Title holders for where we are working We provide them with forward work plans, including any hydraulic fracture…
Other Australian exploration opportunities Cooper-Eromanga Basin 75% equity and Origin operatorship, Bridgeport 25% Staged farm in drilling up to 5 exploration wells by 2024. Origin will carry Bridgeports cost up to 12 million…
Looking to the Future FY2020 production guidance increased to 690 710 PJ due to strong field performance Targeting to maintain current strong production performance over the next 3-5 years with potential to increase production…
Energy Markets Supply & Operations Greg Jarvis (EGM, Energy Supply & Operations) 55 20 November 2019 2019 Investor Briefing Day
Track record of performance Record output at Eraring over the last two years Owned Generation Output (TWh) Capable of 880 MW to 2,880 MW in 1-1.5 93.2% 91.9% 96.0% 95.6% hours Fuel flexibility with minimal long term take- 5.6 3.6…
Wholesale energy earnings drivers Key Drivers Earnings Considerations 15-20 TWh of relatively fixed cost generation Wholesale Covered for peak demand fast start generation allows us to generate electricity prices more in higher price…
Ageing NEM coal fleet, high wholesale prices NEM forward prices stubbornly high Expected coal retirements (GW) (/MWh) 25 NSW 140 8GW by 2032 20 120 100 15 80 60 10 40 5 20 - - Jul-15 Jul-18 Jul-19…
Increasing renewables driving intra-day volatility NEM Renewable Generation (TWh) Average NEM demand July- Sep (GWh) 70 30 60 28 50 26 40 24 30 22 20 20 10 18 Opportunity for flexible capacity - 16 0:00 6:00 12:00…
Well positioned in an increasingly volatile market Origins Fast Start Generation Portfolio (MW) 2,500 2,000 Potential to invest in 1,500 fast-start gas, pumped hydro and batteries 1,000 500 - 10 15 20 25 30 SA VIC NSW…
Our flexible portfolio in action today 1,200 Generation in VIC and SA, June 25-30 2019 300 1,000 250 Primarily supplied by renewables with short-run gas to complement variability and solar shape 800 200 Spot Price (/MWh)…
Firming requires a range of technologies Cost of firmed renewables with different technologies OCGT (Gas) and hydro will continue Battery (2030) to play an essential role in longer duration firming (particularly for evening and…
Progressing opportunities in a disciplined way Stockyard Hill (contracted PPA) 476 MW 530 MW planned to be new renewable Morgan online in 2020 supply online Option for solar FY2019 plus battery (up Darling Downs to 300 MW)…
Competitive gas supply JKM Netback (A/GJ) Energy Markets East Coast Gas Supply (PJ) 300 14 Short term volumes purchased to match duration 12 250 of C&I sales contracts 10 200 8 150 6 100 4 50 2 - - Jan-18 Jul-18 Jan-19 Jul-19…
Mortlake on schedule Old rotor being removed at Mortlake New stator on-site at Mortlake Replacement rotor unloaded at Avalon airport, and transported to site Unit expected Rectification online Mortlake Outage scope works…
Energy Markets Retail Jon Briskin (EGM, Origin Retail) 66 20 November 2019 2019 Investor Briefing Day
On track to deliver our strategy in changing market Market dynamics have changed post implementation of VDO/DMO Reduced dispersion in market offers In situ churn reducing We continue to manage customer numbers and Customer…
Price dispersion reduced, transparency improved Market dynamics have changed post implementation of VDO/DMO Market offers dispersion Victoria (CitiPower) NSW (Endeavour) 2,800 2,800 Discounts quoted off DMO/VDO reference bill…
Customer numbers and value remain a key priority Wins/Retains (000s) 700 Despite lower market activity, 2 million customers per annum are still being managed through a retention or win event 600 We take a careful commercial…
Considering share and value We seek to win share, but are mindful of Customer Lifetime Value Customer accounts (000) Headline vs Origin discount NSW (Full bill %) 4,000 Nov-18 Nov-19 25% 25% 3,000 20% 20% 15% 15% 2,000…
Focused on customers, cost and growth Effortless digital experience Transform customer experience Simpler offers and streamlined customer journeys Leading brand awareness and consideration Simplified organisation driven by a…
Moving to a simpler, digitised customer experience Good Energy brand Streamlined customer Personalised, effortless Simpler offers journeys digital experiences Digitally-led customer journeys Helping customers stay in control…
100m cost out on track Cost to serve (m) Digitisation, automation and simplified organisation 12 months to Oct 19 100m 624 610 Retail headcount1 21% 560-570 Service call volumes…
Grow revenue streams Community Energy Solar Broadband and Services and Storage Adjacencies CES Gross Profit (m) Solar installs (MW) Broadband Customers (000) 13 18 20 57 12 12 44 35 38 8 23 27 18 Jun-17 Jun-18 Jun-19…
Next wave of transformation Built capability to transform customer experience and cost A customer-centric culture Simplified ways of working A leading digital platform with automated processes Growing sophistication of data and…
Future Energy Anthony Lucas (EGM, Future Energy & Business Development) 77 20 November 2019 2019 Investor Briefing Day
Energy and Data are converging We are experts at Energy, and now we have to be experts at Data Every time someone consumes an electron, data is generated Distributed assets are democratising energy and climate change…
Decentralisation & digitisation changing the energy landscape THE GRID IS CHANGING THE CUSTOMER IS CHANGING Centralised grid with increasing Decentralised energy assets and renewables IoT devices Historically Many distributed…
Building blocks for the future Evaluated 2,000 companies, deciding on where to procure, partner, invest or build capability Distributed Digital Security Data & Analytics Generation & Connected Assets Orchestration & Distributed…
Built a world class Data & Analytics capability Artificial Intelligence & Machine Learning Redesign of business processes based on predictive analytics Personalised customer experiences Industry Leading Targeted marketing and…
Data & Analytics capability is a business enabler RETAIL AND BUSINESS ENERGY DIGITAL IoT RETAIL & Business simplification and WHOLESALE CAPABILITY leading customer experience Data & Analytics Churn Renewal Demand AI…
Case Study: Call Optimisation Customer A: Frequent Encourage customer to calls go Digital, avoiding need regarding for call product information and switching Customer B: AI used to predict likelihood of a Send customer…
Built AI orchestration platform for distributed assets Combines use of machine learning and algorithms to optimise across the grid for a number of variables, including supply/demand balance wholesale price customer tariffs…
Strategic investments in Intertrust and Cryptowerk Management and security of data critical Blockchain technology can provide a cyber- in distributed and digitised energy world resilient solution for data verification Global…
Deeply imbedded in the global innovation ecosystem Co-founder of Free Electrons, a global open Principal sponsor of EnergyLab, Australias innovation program largest cleantech start-up accelerator Over 1,500 applications 42 clean tech…
Wrap up Frank Calabria 87 20 November 2019 2019 Investor Briefing Day
FY2020 Guidance update Provided on the basis that market conditions do not materially change and the regulatory and political environment does not result in further adverse impacts on operations FY2019 FY2020 FY2020 previous guidance…
Wrap up Two strong and diversified cash generating businesses APLNG increasing production, capex + opex1 per gigajoule not expected to increase materially over the next 3-5 years Wholesale portfolio well suited for renewables +…
Questions Lunch 90 20 November 2019 2019 Investor Briefing Day
Appendix 91 20 November 2019 2019 Investor Briefing Day
Capital investment pipeline Moderate medium term capex at 400 million, excluding E&A Estimated medium FY2020 Project examples term spend p.a. Major inspections at Generation 150m Uranquinty and Eraring Sustain Mortlake…
Regulatory summary Major regulatory themes and activities during 2019 Government Feb 19: Snowy Mar 19: Underwriting New Underwriting 1bn to CEFC to investment in 2.0 approved Generation Investment Transmission work invest in new…
Oil price risk management FY2020 oil hedging (US/bbl) FY2020 oil hedging 70 28 million1 hedge premium Gain of 11 million based on forward market prices as at 20 November 2019 68 11.6 mmbbl hedged at US48/bbl floor Effective oil…
APLNG sales mix and domestic legacy contracts Legacy domestic contracts: 40 PJ p.a. to Origin ending 2034 472 PJ over 21 years to Rio Tinto Sales mix FY2019 FY2018 ending 2031 (100%) PJ % PJ % 16 PJ p.a. to QAL ending 2041…
Australian energy market context Retail market Wholesale market Retail profitability on marginal supply is Margins reflect long term investments and modest risks Competitive market Investment in generation Default tariffs act as…
Flexibility: short energy, covered for peak Flexible energy position (TWh) Capacity position (MW) 40 10,000 Losses Losses Exposure managed Short via peakers and 35 SA position cap products Business 8,000 Hedge (recontract Hedge…
Resilience to a low carbon future Climate Change Scenarios NEM Emission Scenarios (NtCO2-e) Change in NPV (m) 600 200 400 150 200 100 - 50 (200) (400) - (600) NDC Coal value Gas and 2C Coal value Gas and 1.5C renewable…
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