The comments come as Origin revealed it is targeting more than $150 million of savings by the 2021 financial year, primarily as it cuts costs of supplying its 2.4 million customers. About $100 million of cuts are targeted from the large energy markets business.

It is separately targeting $500 million of cost reductions in the other major pillar of its business, its $25 billion Australia Pacific LNG venture in Queensland. It has a longer term target for cutting the oil price at which APLNG breaks even at $US35 per barrel.

Shares in Origin were up 4.4 per cent at $7.025 at 11:43am AEDT. They are still sharply down from over $10 as recently as early July amid the slide in oil prices and increased regulatory risks.

Origin also said it would continue to prioritise paying down debt but flagged a fully franked dividend of 20¢ per share for this current financial year, including 10¢ per share fully franked for the first half. It said it would announce a dividend policy based on a free cash flow ratio at its 2019 full-year results, due in August next year.

Origin has a line-up of gripes on energy policy. Origin Energy

The company flagged in August it would return to paying dividends this financial year after spending several years paying down debt after the collapse in oil prices and a ballooning in borrowing to pay for the APLNG construction.

Chief financial officer Lawrie Tremaine said Origin’s five-year ambition is to record underlying earnings per share showing a compound annual growth rate of at least 5 per cent, with underlying return on capital employed of at least 10 per cent.

It is targeting a BBB/Baa2 investment grade credit rating through the cycle, higher than its current BBB-/Baa3 rating. Debt “optimisation” plans over the next 18 months include redeeming hybrid securities and refinancing $1 billion of debt, while APLNG will refinance a further $US3 billion of borrowings.

Net debt stood at $6.5 billion at the end of June.

Origin said it is progressing the potential sale of its Ironbark coal seam gas project in Queensland, continuing its successful asset sale program which has raised $3.8 billion from the sale of oil and gas business Lattice Energy, metering business Acumen, New Zealand’s Contact Energy among other activities.

Origin reaffirmed its guidance that underlying profit should increase this financial year, including underlying earnings from the energy markets business of $1.5 billion-$1.6 billion, which would be lower than last year.

Read More


Please enter your comment!
Please enter your name here