Origin Energy Posts Resilient Fourth Quarter Results

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Origin Energy Posts Resilient Fourth Quarter Results


On the 31st of July 2020, Origin Energy (ASX: ORG) releases its quarterly report which details the energy market and how Integrated Gas has performed during the COVID-19 pandemic. Chief Executive Officer Frank Calabria notes several highlights which include record production levels and cash distributions from Australia Pacific LNG. The quarter passed on lower wholesale costs to customers, with ORG recognising the financial difficulties being faced by Australians, extending late payment fees until the 31st of October.

The impact of COVID-19 and declining commodity prices with the continual move towards low carbon energy solutions have created an environment that means Origin forecasts a revision on restoration and rehabilitation provisions. Statutory profit after tax expectations spans between AUD720 and AUD770 million.

OPEC+ members disagreements and meetings affected the oil markets macroeconomically this quarter, along with the COVID-19 pandemic. These uncertain conditions left JCC and Spot LNG prices experiencing decline this quarter.

Looking at the Oil and LNG markets, the impact that these two macroeconomic effects are APLNG’s realised lagging oil price in this quarter as US68/bbl or AUD104/bbl (barrel of oil). This result is up from the US65/bbl or AUD99/bbl in the previous March quarter and the US67/bbl on the 19th of June quarter. With this environment in mind, positive results carry much more weight.

Production in this quarter per petajoule (PJ ) for Integrated Gas fell from March’s 66.8 to 64.5, which also saw the commodity revenue fall from AUD628.5 million to AUD610.2 million This figure is also down from last year’s June quarter of AUD643.4 million. Currently, revenue is sitting at AUD2643.5 million year to date.

Looking at the energy markets, electricity sales per TWh (terawatt-hour) fell from 8.7 to 7.8 in this quarter, with last year’s June quarter being 8.7 also. Currently, Sales are sitting at 33.5 TWh compared to FY19’s 36.2 TWh. Natural Gas sales rose from 57.7 PJ to 67.2 PJ, which is a 16 per cent jump. This result is higher than last June’s 65.1 PJ results. However, the total PJ from Natural gas is lagging behind FY19 full results with 259.2 PJ FY20YTD compared to 271.3 PJ FY19.

Finally, Corporate results concerning ORG CAPEX increased from last quarter’s AUD114 million to AUD127 million in June Quarter, bringing the FY20YTD up to AUD500 million compared to FY19’s full year of AUD341 million. ORG investments are sitting at AUD141 million compared to AUD16 million in the March quarter. FY20YTD investments are up to AUD165 million compared to FY19’s full year’s AUD64 million.

Overall, CAPEX this quarter was higher due to running costs and COVID impacts, which created dips in demand. The macroeconomic environment has multiple factors affecting ORG, yet Natural Gas sales remain secure with AUD1275 million meeting guidance and beating FY19. Full-year audited results will be released on the 20th of August 2020.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

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