Origin Energy : Full Year Results 2017

Energy Markets

Energy Markets Underlying EBITDA increased by $162 million or 12 per cent to $1.49 billion.

One of Origin's core strengths is its gas portfolio, and the volume of gas sold to customers increased by 21 per cent. In electricity, volumes increased by 4 per cent and Origin was also able to maintain a competitive cost of energy as wholesale prices rose sharply.

Origin continues to focus on improving the customer experience, and delivered a 4 point increase in Interaction Net Promoter Score to 16.1 and a decline in Ombudsman complaints. This has been enabled by a customer-led digital transformation program, which aims to improve customer relationships, create new revenue streams and reduce operating costs.

Origin has rapidly grown a large, low cost renewable portfolio, committing to 1,200 MW of new solar and wind projects since March 2016. These projects are expected to come online between now and 2020. Renewable energy now represents the lowest cost investment in new generation.

Integrated Gas

Integrated Gas Underlying EBITDA increased by $718 million to $1.1 billion.

This was offset by an increase in interest, tax, depreciation and amortisation and the recognition of financing costs associated with the funding of Origin's investment in Australia Pacific LNG.

Production increased by 40 per cent due to the ramp up of operations at Australia Pacific LNG and the commencement of production at Halladale/Speculant in the Otway Basin.

Australia Pacific LNG production increased by 46 per cent as Train 2 came online, and the operational phase of a 90-day two train Lenders' Test was completed. Australia Pacific LNG continues to meet export commitments and play a major a role in supplying gas to Australia's east coast, where it meets approximately 20 per cent of annual demand.

In response to the low oil price environment, Australia Pacific LNG is focused on improving productivity and significantly reducing its cost base by adopting a lean operating model, implementing advanced analytics and delivering well productivity improvements.

Lattice Energy assets achieved a 27 per cent increase in production. The Yolla compressor was successfully commissioned and is expected to maximise production over the life of the field.

Origin also identified a material shale gas contingent resource in the Beetaloo Basin during FY2017, and increased its interest in this highly prospective joint venture to 70 per cent.

Outlook

Origin's FY2018 guidance is underpinned by growth in Energy Markets and Integrated Gas, subject to market conditions and the regulatory environment.

Energy Markets Underlying EBITDA for FY2018 is expected to be $1.7 billion to $1.8 billion, representing a 14 to 21 per cent increase on FY2017.

Integrated Gas is expected to achieve production of 245 to 265 PJ in FY2018, reflecting an increase of 7 to 16 per cent on FY2017. Earnings contribution from Lattice Energy is expected to be driven by production of 76 to 86 PJe for FY2018. Origin will cease recognising earnings from Lattice Energy upon completion of the expected divestment.

Debt reduction remains a key priority and Origin is targeting adjusted net debt of below

$7 billion by the end of FY2018, pending the divestment of Lattice Energy.

Mr Calabria said, 'In the year ahead, we will continue to focus on meeting the challenges of energy affordability and security, while improving our operational efficiency and reducing debt so we can improve returns to shareholders. Origin is well positioned to adapt our business to the rapidly evolving market, as we transition to a cleaner and smarter energy future.'