Origin Energy widens H1 loss to A$254m
JOHANNESBURG (miningweekly.com) – Sydney-headquartered Origin Energy has widened its loss to A$254-million in the first half of the 2016 financial year, from a loss of A$25-million in the corresponding period.
The group’s revenue decreased by 14% year-on-year to A$6.13-billion in the six months to the end of December 2015.
Origin MD Grant King reported on Thursday that the company had made good progress on cash preservation initiatives to ensure that it could withstand the lower oil prices for longer.
He stated that Origin was targeting a reduction in its net debt to below A$9-billion in the 2017 financial year. The group had A$6.8-billion of committed undrawn debt facilities and cash, which it considered sufficient to support its remaining contribution to the Australia Pacific liquified natural gas (LNG) project.
“To guard against falls in the oil price in the 2017 financial year below $40/bl, Origin has purchased put options to provide a partial offset to any additional contributions to Australia Pacific LNG. In the short term, as upstream operator for Australia Pacific LNG, Origin is working on reducing Australia Pacific LNG’s breakeven costs by A$3/lb to A$5/lb,” King said.
Chairperson Gordon Cairns cautioned that oil prices had fallen in recent weeks well below the expected prices at the time of the entitlement offer, which might put its ongoing debt reduction strategies at risk. Should the current low price environment persist through the second half of the 2016 financial year, Cairns said that Origin would suspend dividends until “appropriate debt levels are achieved”.
Its guidance at the time of the entitlement offer was for an oil price of $54/bl in 2016 and $59/bl in 2017. The group had adjusted its oil price assumption for 2016 to $43/lb and for 2017 to $45/bl.
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