Origin Nets 1H Loss, Seeks to Phase Out Coal Power Early – Update

By David Winning

SYDNEY – Origin Energy Ltd. recorded another loss due to an impairment charge on the sale of a stake in the Australia-Pacific project and a large capital gains tax charge on the transaction weighed on its result biannual.

Origin posted a net loss of A$131 million ($94.3 million) for the six months to December, compared with a loss of A$183 million a year ago. Revenue increased 7% to A$6.51 billion.

As reported earlier this month, Origin’s earnings included a charge of A$193 million on the sale of a 10% stake in APLNG, which the company expects to be partially offset up to A$110 million. Australian dollars when the deal closes in the coming weeks. Origin also incurred a capital gains tax charge of A$173 million on the sale of APLNG’s stake to global energy investor EIG for A$2.12 billion.

The company’s directors declared an interim dividend of 12.5 Australian cents per share, unchanged from the previous year.

“The full-year outlook has improved on the back of strong commodity prices, with a forecast for Origin’s underlying earnings before interest, taxes, depreciation and amortization higher at $1.95 billion. Australian dollars-A$2.25 billion,” Origin said in a regulatory filing.

This figure was higher than previous forecasts of AU$1.85 billion to AU$2.15 billion and is based on the APLNG project achieving an average oil price of US$67 per barrel.

“Australia Pacific LNG’s performance was outstanding, delivering record revenues on the back of a strong rebound in commodity prices. Australia Pacific LNG achieved a cash distribution of A$555 million in the first half,” Chief Executive Frank Calabria said.

While Origin’s integrated gas business benefited from the APLNG project which generated higher production and revenue, its energy markets division struggled as wholesale energy prices weakened. , cool weather spread across eastern Australia and the Covid-19 pandemic weighed on demand.

Late last month, Origin said APLNG’s production in the three months to December was up 2% from the previous quarter and revenue was up 33% as venture capital capitalizes. in a dynamic spot market for liquefied natural gas. However, Origin also said electricity and gas sales volume increased 2% and decreased 17%, respectively, in the second quarter from a year earlier.

“In energy markets, operating conditions remain challenging as previously reported, due to the combination of historically low wholesale electricity prices in fiscal year 2021 which impact customer rates. in fiscal 2022, and higher wholesale energy supply costs incurred in the current period,” Mr. Calabria said. “Specifically, Eraring was impacted by operational constraints at one of its major suppliers, contributing to a significant increase in wholesale coal and power supply costs.”

On Thursday, Origin announced plans to accelerate its exit from coal-fired power generation, aiming to shut down the Eraring power plant in August 2025 from an earlier termination date of 2032.

Origin said its plans for a battery of up to 700 megawatts at the site are well advanced and it continues to review the costs of restoring and rehabilitating the site. A provision for these costs currently stands at A$240 million, the company said.

“The Australian energy market today is very different from where Eraring first came online in the early 1980s, and the reality is that the economics of coal-fired power plants are under increasing and unsustainable pressure. through cleaner, lower-cost generation, including solar, wind and batteries,” Calabria said.

Underlying earnings before interest, tax, depreciation and amortization in the six months to December fell to A$1.1 billion from A$1.15 billion a year earlier. Underlying EBITDA from its Energy Markets business totaled A$268 million during the six months.

Origin reaffirmed an Ebitda forecast of its Energy Markets business of between A$450 million and A$600 million. It continues to forecast a rebound in earnings from energy markets to A$600-850 million in fiscal 2023.

Write to David Winning at david.winning@wsj.com

Ann J. Cox