Origin Energy 2020 Investor Briefing 26 November 2020
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
Outline 1. Overview - Frank Calabria 2. Integrated Gas - Mark Schubert Break 3. Energy Markets - Supply - Greg Jarvis 4. Energy Markets - Retail - Jon Briskin, Anthony Lucas 5. Capital Management - Lawrie Tremaine Wrap-up / Q&A 3…
Overview Frank Calabria, CEO 4 26 November 2020 2020 Investor Briefing
A customer focused energy business positioned for a low carbon future Market leading assets & capabilities Preferred position for energy transition Large domestic retail customer base Most advanced digital customer strategy Leading…
Social purpose is more than just a license to operate Getting energy right Our Customers Our Communities Our People Our Planet Bushfire, drought and Awarded Best Top quartile staff Short term emissions COVID-19 relief Workplace…
Taking action on climate change We unequivocally support the Paris Agreement to limit the worlds temperature rise to well below 2C above pre-industrial levels and pursue efforts to further limit this increase to 1.5C Origins commitments…
Global energy trends represent growth opportunities Renewable fuels and storage Convergence of data and energy Renewables growth as coal retires Virtual Power Plants unlocking Gas and storage to play a key customer value and…
Our strategy to deliver value and grow Connecting customers to the energy and technologies of the future e Maximise value of the Pursue growth in customer value 1 2 existing businesses and low carbon solutions 9 26…
Integrated Gas Maximise value of the Pursue growth in customer value 1 2 existing businesses and low carbon solutions Strong operating and reservoir performance at APLNG Accelerate towards clean energy Upgraded FY2021 production…
Energy Markets Maximise value of the Pursue growth in customer value 1 2 existing businesses and low carbon solutions Strong foundations in a changing landscape Lead the convergence of energy and data Low cost retailer today,…
Financial performance and outlook Recap on FY2020 results FY2021 outlook Underlying Profit of 1,023m (58.1 cps) Reconfirming Energy Markets guidance for Stable vs FY2019 with lower Corporate and LNG hedging costs FY2021 partly…
Integrated Gas Mark Schubert, EGM Integrated Gas 13 26 November 2020 2020 Investor Briefing
Asia Pacific gas demand forecast to grow under low carbon environment Asia Pacific Gas Demand (bcm) 2019 to 2040 1,700 CAGR 4.4% 1,500 Natural gas will play a vital role in energy transition in the Asia Pacific: 1,300 3.6%…
APLNG continues to perform, building on strong foundations Quality resource Low-cost operator Record production APLNG reserves and cumulative Capex + opex3 (m) Production (PJ) production1 (PJ) 2,800 720 18,000 700 15,000 2,600…
Targeting further value accretion at APLNG through five levers Five value levers Creating value Creating alignment Gas Processing Facility Workover rig Well site 1. Reduce well costs Reduced current /well run rate from Focused…
APLNG responding to recent market demand outlook for FY2021 Ability to ramp up to meet market demand with record APLNG average production TJ/day (100%) operated asset production of 1,614 TJ/day achieved in November 2020 2,100…
APLNG CSG resource base continues to improve Field production: Talinga and Orana Talinga / Orana fields: improved reservoir performance in developed areas prioritised highest value areas TJ/d (6 month rolling average)…
Strong APLNG field performance enables less capex to sustain production Wells drilled and production Strong operated field performance coupled with 800 350 reserve increases enables: - a reduction in drilling rigs from three…
Updating FY2021 guidance & re-setting medium term outlook FY21 previous FY21 updated APLNG (100%) FY19 FY20 guidance guidance Production (PJ) 679 708 650-680 675-705 Capex + opex, excl. purchases1 (Ab) 2.7 2.5 2.0-2.2 2.1-2.3 Unit…
Beetaloo adding value through E&A, focused on liquids-rich gas plays Kyalla 117 well successfully drilled and fracture stimulated mud logs indicate liquids-rich1 gas 11-stage fracture stimulation executed to plan - extensive fracture…
Beetaloo engaging with host Traditional Owners We recognise and respect the connection of all Aboriginal and Torres Strait Islander peoples have to their country Our relationship and engagement with our Native Title holders and host…
Australian green hydrogen demand to be customer led National Hydrogen Strategy - hydrogen demand (mtpa) Green gaseous hydrogen production cost (US/Kg) 40.0 6.0 Energy of the Future (export + domestic) 5.0 30.0 -60% 4.0 20.0 3.0…
Participating in hydrogen is a natural extension of Origins core capabilities Green hydrogen and ammonia value chain Origin adds value through access to low cost renewable power and wholesale electricity trading expertise, including…
Green hydrogen and ammonia partnerships and projects underway Green hydrogen Green liquid hydrogen export Green ammonia for export domestic demonstration NH3 and H2 for domestic H2 injection into green manufacturing domestic gas…
Integrated Gas value opportunities APLNG Asset Improved gas recovery and field performance Upgraded FY2021 production guidance Targeting 10% - 20% reduction in capex + opex unit costs over FY2022-24 from previous outlook Pursuing…
Break 28 26 November 2020 2020 Investor Briefing
Energy Markets Supply Greg Jarvis, EGM Energy Supply and Operations 29 26 November 2020 2020 Investor Briefing
Strong assets, capabilities and market position Flexible generation assets Competitive gas supply Leading trading capability Owned/contracted dispatchable External gas sales (PJ) generation (MW) Strategic NPS 282 214 222 204 664…
Market is going through transition Strong investment in renewables but not matched by investment in and the ageing coal fleet dispatchable capacity is approaching retirement Recently commissioned and committed NEM generation capacity…
Preferred portfolio for the transition: short energy, balanced capacity TWh GW Short energy Covered for peak demand 40 10 35 Long-Term Losses Short Contracts position 8 30 11 TWh variable Short-term cost supply Business Short-Term…
Evolving Eraring to better position it for increasing renewables Operational strategies and their timing will be dependent on changes in market conditions TODAY NEAR TERM MEDIUM TERM Increased intra-day ramping of Greater intra-day…
Peaking portfolio is well placed but with enhancement opportunities Origin firming portfolio today Future opportunities Thermal peaking generation Pumped hydro Batteries 3,149 MW of thermal peaking 240 MW of pumped hydro long…
Progressing development opportunities to enhance our portfolio Existing generation Contracted renewable PPAs Darling Downs (644 MW CCGT) Development opportunities Expansion potential Government taking an (battery and fast start…
Competitive gas supply Energy Markets contracted gas (PJ) Scale, integration and trading ability are our key strengths 300 Scale to contract with major supply fields and commit to large capacity (transport and storage), enabling us to…
Maximising value and pursuing growth opportunities Maintain competitive Maintain short energy position to benefit from low-cost renewables cost of energy Evolving Eraring to better position it for increasing renewables Gas…
Energy Markets - Retail Jon Briskin, EGM Retail Anthony Lucas, EGM Future Energy and Technology 38 26 November 2020 2020 Investor Briefing
Delivering the fundamentals of a great retail business Large customer base Leading customer experience Low-cost operator Customer accounts ('000) Strategic NPS Retail cost estimates (Am) FY17 FY18 FY19 FY20 200-250 million 3,900…
Growing revenue streams Community Energy Services & Solar Broadband 20% share in Octopus Energy CES and Solar gross profit (m) Broadband customer accounts ('000) 120 106 Strategic NPS 20 100 83 31 80 66 26 60 10 20 22…
Strategic partnership with Octopus Energy to accelerate our strategy Adopting Octopus disruptive operating model Significant upside potential from 20% equity interest in and proven IT platform (Kraken) Octopus Energy Delivering a…
On track for 50,000 customer migrations to Kraken in 2020 Setup MVP Scale up Complete Closeout in FY2023 Planning Build MVP Build out platform and operations teams 100% of customers migrated Decommissioning of legacy platform and…
Changing energy landscape as Data and Energy converge Current market trends Emerging market trends Market remains highly competitive Greater customer empowerment and engagement Increasingly variable and decentralised generation…
Platform business to fundamentally transform the customer relationship Traditional Business Platform Business Customer 4 interaction points per year Customers home continually interacting with the platform (quarterly bills) Level…
Core elements for a world class platform business and customer experience Traditional Utility Business 2017 2018 2019 2020 NOW Platform Business In house Agile Kraken Flexible, low cost Basic quarterly SAP SAP in cloud Retailing…
Origin developing leading connected customer Engagement Layer In market Market testing 20k customers Behavioural gamified demand response Battery solutions program with rewards, launched in August Gamified and incentivised self…
Capital management Lawrie Tremaine, CFO 47 26 November 2020 2020 Investor Briefing
Consistent approach to Capital Management Strong free cash flow generation Cash from Cash from Interest operating investing paid Asset portfolio well positioned for energy transition activities activities1 Dividend policy of…
Responding to the current economic and policy environment 1 Reducing sustaining capital and APLNG development spend 2 Lowering operating costs and managing commodity price risk 3 Managing debt book to lower cost and eliminating…
Responding to commodity cycle by managing our spend down Origin Capex (m) - Excluding investment in Octopus Origin gross controllable opex1 APLNG Opex2 + Capex (m) 500 (m) 3,000 1,000 2,500 400 900 2,000 300 1,500 800 200…
Managing oil price exposure Oil hedging program designed to preserve cash and protect capital structure against commodity cycles FY2021 Full Year Oil Price Sensitivity FY2021 Origin share of APLNG JCC oil price exposure is 24 mmboe…
Generating significant cash even at current low commodity prices Estimated FY2021 Origin Free Cash Flow Yield1 16% Continuing strong free cash flow Reflects resilience of our businesses 14% Estimated range of 12-15% Low cost…
Managing capital structure and debt book Committed to investment grade credit rating through cycle Adjusted Net Debt / Adjusted Underlying 4x Target BBB/Baa2 EBITDA Gearing of 20-30% 3x Net Debt/EBITDA 2-3x Target capital…
Committed to shareholder returns Dividends Dividend policy of 30-50% of Free Cash Flow reaffirmed Dividends declared FY19 FY20 880 million of dividends paid since dividends recommenced Interim dividend 10cps 15cps FY2020 dividend…
Investment framework supports value accretive decisions Principles Application Centralised capital allocation process Octopus investment and platform licensing Governance Ranked on returns, risk and strategic fit leading to…
Wrap-up Frank Calabria, CEO 56 26 November 2020 2020 Investor Briefing
FY2021 guidance update Provided on the basis that market conditions and the regulatory environment do not materially change, adversely impacting operations. Considerable uncertainty exists relating to potential ongoing impacts of…
A customer focused energy business positioned for a low carbon future Energy Markets Integrated Gas Grow customer scale through low cost position and Strong operating and reservoir performance at leverage platform to sell a broader…
Questions 59 26 November 2020 2020 Investor Briefing
Appendix 60 26 November 2020 2020 Investor Briefing
Origin: our business Leading Australian energy retailer, with 4.2 million Energy sales to 4.2 million accounts and a low-cost, customer centric delivery model customer accounts Preferred short energy position, but covered for peak…
FY2020 sustainability performance Customers Communities Strategic Net Promoter Score Regional procurement spend 2 as % of total spend 33,100 2.9m 14% 12% Customers successfully completed Contributed by the (6) 5% our Power…
HS&E Committed to keeping our people safe and engaged Pandemic response plans implemented Origin wide to protect the health and safety of our employees, contractors, and TRIFR customers, and maintain energy continuity as an…
Sustainability Report More information can be found in our FY2020 Sustainability Report Our Sustainability Report includes our TCFD and UN Sustainable Development Goals disclosures 64 26 November 2020 2020 Investor Briefing
COVID-19 has contributed to near term commodity headwinds Japan Customs-Cleared Crude (US/bbl) ACCC JKM Netback Gas Price Series NEM forward prices (NSW /MWh) (A/GJ) 80 10 130 70 8 110 60 6 90 50 4 70 40 2 50 30 0 30…
Oil hedging FY2021 Origin hedging As at 31 October 2020 Realised Unrealised FY2021 Hedge Instrument Volume (mmbbl) Average Price Volume (mmbbl) Average Price Brent AUD swaps 3.8 A85/bbl 0.6 A61/bbl Origin share of APLNG JCC oil…
APLNG sales mix and domestic legacy contracts Legacy domestic contracts: FY2020 FY2019 40 PJ p.a. to Origin ending 2034 Sales mix (100%) 472 PJ over 21 years to Rio Tinto ending 2031 PJ % PJ % 16 PJ p.a. to QAL ending 2041…
Beetaloo Basin E&A multiple stacked plays Facts: 77.5% interest in 18,500km2 permit Four, stacked, unconventional hydrocarbons plays identified Booked 6.6 TCF contingent resource relating to Velkerri B shale dry gas play…
Firming technologies will have differing roles in the future portfolio Batteries Pumped Hydro Gas Peakers Role Supplier of grid security Shifts large volumes of low-priced Cap price exposure in peak periods and services energy to…
Glossary Financial Term Meaning Adjusted Net Debt Net Debt adjusted to remove fair value adjustments on hedged borrowings. Adjusted Underlying EBITDA Underlying EBITDA Share of APLNG Underlying EBITDA + net cash from APLNG CAGR Compound…
Glossary Non-financial Term Meaning CSG Coal Seam Gas CY Calendar Year DCF Discounted Cash Flow DMO Default Market Offer DQT Downward Quantity Tolerance E&A Exploration and Appraisal ERIC Eurombah Reedy Creek Interconnect ERP…
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 Group Manager, Investor Relations Email: liam.barryoriginenergy.com.au…
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