Origin Profit Drops

Origin Energy announced a statutory profit of $322 million for the half year ended 31 December 2013, down from $524 million, and a 5 per cent increase in underlying profit to $381 million for the period.

The primary factors contributing to a decrease in Statutory Profit include the gain on dilution of Origin’s interest in Australia Pacific LNG in the prior corresponding period not recurring in the current period, higher LNG-related funding expense and higher impairments. This was partially offset by the net gain on settlement of the GenTrader arrangements and the benefit from the changed tax treatment of unbilled income.

Underlying profit increased by 5 per cent to $381 million. A reduced contribution from energy markets was more than offset by increased contributions from all other segments.

Group operating cash flow after tax was up 125 per cent from $461 million to $1.04 billion due mainly to operational improvements resulting in a $485 million improvement in working capital.

Origin Chairman, Gordon Cairns said, “The half year result reflects the focus we have on improving the performance of our existing businesses. We are pleased to see that there have been substantial improvements in operational performance which is reflected in the strong increase in operating cash flow in the first half.

“The delivery of Australia Pacific LNG’s project is one of Origin’s key priorities and good progress continues to be made with the Upstream component 58 per cent complete and the Downstream component 62 per cent complete.

“During the half, Origin completed a number of funding initiatives to extend its debt maturity profile and improve its liquidity position. Origin has $6.5 billion³ in existing liquidity comprising committed undrawn debt facilities and cash. This strong liquidity position is substantially more than that required to satisfy Origin’s remaining funding requirements for its 37.5 per cent shareholding in Australia Pacific LNG.”

Delivering first LNG through Australia Pacific LNG in mid-2015

Australia Pacific LNG continues to make good progress on the delivery of the CSG to LNG project and is 58 per cent complete on the Upstream and 62 per cent on the Downstream parts of the project. As at 31 December 2013, $17.2 billion of the $24.7 billion project cost estimates had been spent. The Australia Pacific LNG project remains on track for first LNG in mid-2015 and estimated costs to complete are in line with budget.

Planning is underway for transitioning from the project phase to investing in sustaining production and ongoing operations. With the current good progress in the drilling and completions, and gathering parts of the project, resources will continue to be used, and costs incurred, in advance of first LNG in mid-2015 to sustain production.

The LNG project will deliver a step change in Origin’s earnings and cash flow from the 2016 financial year when the project begins to deliver LNG under its existing long-term contracts.

Press Release, February 20, 2014; Image: Origin