Origin Energy (ORG) | SNAPSHOT
Profile: Origin Energy Ltd (ORG) is an integrated energy company headquartered in Sydney, Australia. Its operations include electricity generation and the exploration and production of natural gas, as well as the sale of electricity, gas and liquefied natural gas (LNG). ORG also sells Liquified Petroleum Gas (LPG) to markets in Australia, the Pacific and Vietnam. The company has a 37.5% stake in the Australia Pacific LNG (APLNG) project, the largest on Australia’s east coast.
History: In February 2000, Boral (ASX: BLD) demerged its energy business which became known as Origin Energy. In 2011, ORG acquired 1.6 million new customer accounts from Country Energy and Integral Energy in NSW. In 2013, ORG acquired Eraring Energy, Australia’s largest power station. In 2015, AGL divested its 53% stake in Contact Energy Ltd. The APLNG project commenced production in late 2015 with the first shipment in January 2016. In January 2018, Origin completed the $1,585 million sale of Lattice Energy to Beach Energy.
Earnings composition: The Energy Markets division generated $1.6bn, or 45%, of ORG’s FY19 EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation). Integrated Gas generated $1.9bn, or 55%, of EBITDA.
Most recent result – FY19: Underlying EBITDA increased 16% on the prior corresponding period (pcp) to $3.2bn, driven by strong performances in the Integrated Gas division. Underlying EBITDA for Integrated Gas increased 51% to $1.9bn, as ORG’s share of APLNG EBITDA increased 51% to $2.1bn with the realised LNG export price increasing 40% to A$13.42/GJ (gigajoule). Energy Markets underlying EBITDA was down 5% to $1.6bn, as higher Gas earnings (up 10% to 715m on higher volumes and business margins) were offset by a reduction in Electricity earnings (down 10% to $1.4bn on price relief, lower volumes, completion and discounts). ORG reinstated its dividend (Figure 2) at 10 cents per share in 1H19 (ORG stopped paying a dividend in FY16 due to falling oil prices and in order to reduce debt – Figure 11) and declared a 2H19 dividend of 15 cents.
Company outlook: ORG forecasts FY20 underlying Energy Markets EBITDA of $1.35-1.45bn. It expects APLNG production in the range of 680-700 petajoules (PJ). ORG is targeting a payout ratio of 30-50% of free cash flow p.a.
Important dates: Ex-dividend date was 2 September 2019. Payment date is 27 September 2019. AGM is scheduled for 16 October 2019. 1Q20 results are scheduled for 31 October 2019.