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Origin sinks deeper into red on APLNG writedown

February 16, 2017

A hefty impairment charge of A$1.9 billion deepened Australia’s Origin Energy’s losses to $1.68 billion (US$1.3 billion) for the half-year 2017.

The charge was comprised of Origin’s 37.5 per cent share of Australia Pacific LNG’s impairment of its assets (A$1.03 billion), and impairment of investments in Browse Basin, conventional exploration assets and Energía Austral.

Origin’s underlying profit for the half year ended December 31, 2016, dropped 28 percent from $254 million to $184 million.

The company attributed the drop to a lower contribution from Australia Pacific LNG due to low oil prices resulting in insufficient LNG revenue to cover increases in interest, tax, depreciation and amortization.

Speaking of the results, Origin CEO Frank Calabria said that besides the impairment charge, the performance during the period was “solid”, noting that the company is focused on accelerating debt reduction and improving returns to shareholders.

Calabria further added that Origin’s intention to sell its conventional upstream assets via an IPO is on track to be completed during 2017.

“Accelerating debt reduction continues to be a key priority for Origin, with adjusted net debt targeted to be well below A$9 billion by the end of the 2017 financial year. Upon completion of the expected sale via IPO of the conventional upstream assets, Origin expects a further material reduction in debt,” he said.

Origin’s report shows that the Australia Pacific LNG project continues to increase production with supply on track for the two train operational test. During the period, 45 cargoes were loaded and shipped from the Australia Pacific LNG facility.

The company’s underlying EBITDA rose to A$1.15 billion, with Origin advising that is FY2017 underlying EBITDA guidance range, which was previously A$2,370 to A$2,615 million, has improved to A$2,450 to A$2,615 million, subject to market conditions. Underlying profit guidance is A$480 million to A$590 million for FY2017.

1 AUD = 0.770054 USD