Quarterly production report reflects a period of major transformation for the company’s upstream business and for Origin.
Origin Energy Limited (Origin) today released its Quarterly Production Report to the Australian Securities Exchange for the Quarter ending 31 December 2008 which covers its activities in the areas of gas and oil exploration and production (the E&P business). The report does not cover other areas of the integrated energy businesses undertaken by the company, including electricity generation, energy retailing or its subsidiary Contact Energy of New Zealand.
Commenting on results for the December Quarter, Origin’s Managing Director Grant King said “This is the first quarter that incorporates the effect of the transaction with ConocoPhillips to establish APLNG. Notwithstanding this transaction, the E&P business for the half year to 31 December 2008 has achieved record levels of production, sales and revenues – each 23% higher than the half year to 31 December 2007.”
The completion of the transaction with ConocoPhillips to establish a 50:50 incorporated joint venture – Australia Pacific LNG (APLNG) – Australia’s largest proposed CSG to LNG project resulted in the Origin Group receiving an upfront payment of A$6.9 billion. In addition to this initial payment COP will carry Origin’s share of expenditure for a further A$1.15 billion. APLNG is targeting a final investment decision in the LNG project by late 2010.
Mr King said “The APLNG transaction has seen Origin reduce its interest in its CSG assets by 50%. As a consequence of its reduced interest, Origin has recorded a lower share of production from CSG over the last two months of the December Quarter. This, combined with the lower seasonal gas production usually seen when moving from the September (winter) Quarter to the December (spring/early summer) Quarter and a constraint on production from the BassGas project, has seen December Quarter production approximately 30% lower than the September Quarter.”
Origin anticipates that the successful remediation in late December of the BassGas production constraint, the anticipated seasonal increase in gas demand in the March quarter and continued growth of underlying domestic production from the CSG assets will see production levels increase in the March Quarter.
In respect of the December Quarter, a decrease in the international price of oil, condensate and LPG has significantly impacted revenue, with a 41% overall reduction in revenues recorded between the September and December Quarters.
In conclusion Mr King said “The December quarter was a period of major transformation for the company’s upstream business and for Origin. The company has no net interest bearing debt, a significant cash balance and significant undrawn bank facilities. The strong financial position of the company at a time of global economic uncertainty provides many opportunities for Origin, including the continued development of our E&P business”.
Origin will release its interim financial results covering its entire business activities for the half year ended 31 December 2008 on Thursday 26 February 2009. With respect to the company’s current on-market share buy-back scheme (initiated in November 2008), the company does not intend to operate this scheme between now and the release of its interim financial results. The company will give an update on the operation of its buyback and the full-year outlook for the company on the release of its interim financial results.
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