Origin Energy (ORG) is involved in gas and oil exploration and production, power generation and energy retailing.

As a leading Australasian integrated energy company, ORG participates in most segments of the energy supply chain, including natural gas and oil exploration and production, electricity generation, and energy retailing.

The group has significant operations in New Zealand through its 52.8% interest in Contact Energy, New Zealand’s largest energy provider. ORG and Conoco Phillips each hold a 37.5% stake in the Australia Pacific LNG Project (APLNG), which supplies gas to power stations in South East Queensland.

ORG also has a 42.5% stake in the Victorian BassGass project (AWE owns 57.5%), which supplies gas to Victoria from the Yolla gas field in Bass Strait.

Weak start to FY13

It was a disappointing September quarter for ORG, which reported a 3% year-on-year on fall in revenue to $224.5 million.  This was despite a rise in average selling prices.

Production of 33.1 petajoules (pj) was 10% lower than the same period the year before as BassGass was shut down due to the Yolla Mid Life Enhancement project.

Whilst BassGass has come back on line, it has been a major headache for ORG.  The project’s cost has blown out from the original $345 million estimate in 2009 to up to $580 million.

The September quarter production numbers followed a solid FY12 result that included a 33% lift in underlying profit to $893 million. The Energy Markets business experienced strong 33% growth in underlying EBITDA, with electricity volumes rising 26% following the acquisition of NSW’s power assets.

Offsetting this, however, gas volumes in Victoria and NSW fell during the year due to mild weather.  Also, ORG was forced to pay more for natural gas and electricity, which impacted gross margins.

Poor FY13 guidance

ORG’s FY13 guidance was disappointing to say the least. The group forecast no growth in underlying profit, citing fewer new capital investments, volatile commodity prices, regulatory uncertainty and changing demand patterns in Australia.

Capital spending plans have been curtailed, with ORG instead focussed on the delivery of APLNG. As a result of this change in strategy, ORG recorded significant impairment of projects in FY12 including Transform Solar, wind and geothermal developments and other upstream assets.

ORG’s share of APLNG underlying EBITDA fell 25% on-year, driven by the group’s sell-down of its stake to 37.5% following an agreement with Sinopec, which upped its share from 15% to 25%.

ORG failed to provide clarity on the timeframe for the remaining divestiture of its APLNG stake.

Outlook

For ORG, the significant scale back of its capital spending plans signals a diminished growth outlook. Sentiment towards ORG has worsened considerably since the FY12 profit release in late August, with investors taken aback by the weak FY13 outlook.

We expect the negative sentiment to continue in the near-to-medium term, which is likely to further weigh on the stock price.

This article was distributed to our members on November 5th, if you would like further information you can sign up for FREE 7day recommendations and access all our research files on not only Origin but all our current trading ideas. Simply click here and starting trading today.

   Written by: admin   Other posts from: admin

Origin Energy (ORG) is a leading Australasian integrated energy company, participating in most segments of the energy supply chain, including natural gas and oil exploration and production, electricity generation, and energy retailing.

The company is also considered among the blue chip stocks in the Australian share market.

On 15 November, ORG announced a $2.3 billion capital raising to help pay for December’s purchase of NSW’s electricity assets.

The raising also means that ORG has reinstituted its FY11 guidance to underlying profit growth of around 15%.

The higher earnings forecast reflects an expected lower interest expense due to the paying down of debt associated with the asset purchase.

The new issue will be through an entitlement offer at $13, representing a 17% discount to ORG’s last price of $15.66.

To receive free daily Australian Energy Shares news and Origin Energy advice, click here.

   Written by: admin   Other posts from: admin

Australian Stock Pick 8 April 2010

Origin Energy (ORG) is an integrated energy company and is involved in the exploration and production of oil and gas. It also is a retailer of electricity and natural gas. 

ORG has advised that operations at its BassGas project in Victoria have resumed after the completion of maintenance work.

ORG and AWE Ltd (AWE) each own 42.5% of the project, and it is especially important for AWE that the project is fully operational given that it counts on the site’s gas for a significant part of its output.

ORG advised that the project will return to full completion after the retrieval of maintenance equipment from another well.

According to the Australian shares graph, Origin Australian share price displayed choppy action since late February and traded within the $16.50 to $17.00 range. Its shares closed down at $16.85 on April 8.

   Written by: admin   Other posts from: admin