Shares in Origin Energy hardly moved yesterday after the company revealed that it had more than doubled annual sales of oil and gas, driven primarily by the ramp-up of its LNG export venture in Queensland and also by the growth in its conventional oil and gas business about to be spun off as Lattice Energy.
Full-year sales in oil and gas in 2016-17 jumped to $2.2 billion, up from $1.08 billion on a year earlier, thanks to higher prices and especially production, the company said in its June quarter and 2016-17 production report yesterday (https://www.originenergy.com.au/content/origin-ui/en/about/investors-media/reports-and-results/quarterly-production-report-20170731.html).
Revenues excluding the APLNG venture which will remain with the parent company after the Lattice sale, rose 26% to $746.9 million.
Sales from Origin’s 37.5% interest in APLNG (which exports through the Port of Gladstone in Central Queensland) surged by almost $1 billion to $1.46 billion.
All bullish news - normally - and yet the shares only managed a 0.8% rise to end at $6.92 as analysts wondered if the surge in revenue would be matched by a surge in profits.
Origin is gearing up to either float or sell Lattice, with a decision expected by September. With global oil prices rising, but still weak, Origin might find it hard to do either.
Several parties are understood to be in the bidding process for Lattice, including a venture involving Beach Energy (which is controlled by Kerry Stokes’ Seven Group Holdings).
Origin plans to keep the 37.5% stake in the $25 billion APLNG venture and its large exploration ventures in the Northern Territory, Queensland and Western Australia, which are likely to be developed for the LNG export market.
Production from the oil and gas activities rose 40 per cent overall, to 232 petajoules, helped by the start-up of the second production unit at APLNG last October and the beginning of production at the Halladale/Speculant project off the south-east coast.
Chief executive Frank Calabria said in yesterday’s statement that the rise in output and sales “reflects strong operational performance across our upstream operations”.
He said that APLNG project successfully completed a 90-day operational test last week, paving the way for some $US3.4 billion of shareholder guarantees for the project debt to be released this September quarter.
In the June quarter, production rose 30 per cent from a year earlier to 89.2 petajoules, which was also up 12% on the March quarter. APLNG shipped 33 cargoes in the June quarter.
Origin’s utilities business isn’t included in the quarterly report.