Origin widens loss, may suspend dividends

Origin Energy of Australia reported a first-half loss of $254 million, as compared to a net loss of $25 million a year ago.

Origin, that owns a 37.5 percent stake in the Australia Pacific LNG project, said in a report on Thursday it would suspend dividends if oil prices remain at low levels through the second half of fiscal 2016.

During the period, Origin continued to take action to “strengthen its balance sheet and build further resilience in the current low oil price environment,” Origin Chairman, Gordon Cairns said.

“As well as achieving $5.5 billion in debt reduction during the period, Origin has initiated cash preservation measures to reduce net debt to below $9 billion in FY17. A pleasing feature in our results has been the increase in Energy Markets’ contribution driven by an increase in EBIT to sales margin from 9.4 to 11.2 percent,” Cairns said.

“As we enter the second half of the year, oil prices have fallen to levels well below expected prices at the time of the entitlement offer. Origin will of course pursue all opportunities to achieve ongoing debt reduction. Should the current low oil price environment persist through the second half of FY16, which puts at risk ongoing debt reduction, the company will suspend dividends until appropriate debt levels are achieved,” Cairns added.

Integrated gas

Integrated Gas underlying EBITDA decreased 50 percent to $137 million, Origin said in the statement.

Exploration & Production EBITDA decreased $94 million to $117 million. This is due to a non- cash write-off of exploration expense of $53 million in Vietnam following a decision to withdraw from all international exploration activity (excluding New Zealand), lower liquids prices and lower production, the statement said.

LNG EBITDA decreased $42 million to $20 million reflecting a reduction in cost recovery from Australia Pacific LNG as upstream expenditure fell, and the impact of low oil prices on the project’s oil-linked gas sales to QGC which commenced during the period.

The Upstream project is complete and “performing at or above expectations with all key facilities commissioned, including the three final gas processing trains at Combabula and the Spring Gully Pipeline Compression Facility.,”

The Downstream project produced first LNG in the period and to date has exported five LNG cargoes, including three to Sinopec. First cargo from Train 2 is expected to occur in 1H17, Origin said.

During the period Origin’s net cash contribution to Australia Pacific LNG was $856 million, down from $1.41 billion in the prior period.

LNG World News Staff