LNG and oil prices support Origin’s outlook

“With the price of oil now over US $ 80 per barrel and our forecast for 2022 cash distribution breakeven between US $ 20 and US $ 25 / bbl, Origin is well positioned. to take advantage of the rising commodity cycle, ”CEO Frank Calabria said.

“We also note that Australia Pacific LNG has already sold three shipments of spot LNG in the tight Asian LNG market, with the mix of contract and spot LNG sales for the remainder of the year yet to be determined. . “

Origin declined to give details of the three LNG cargoes, with a spokeswoman only saying they were sold for more than budget expectations.

The stronger outlook for APLNG will help offset lower expected earnings from the Energy Markets business, where Origin still expects a further decline in earnings this year, before a turnaround in fiscal 2023.

Underlying earnings before interest, taxes, depreciation, and amortization in energy markets are expected to drop to $ 450 million to $ 600 million before increasing in 2023 from $ 150 million to $ 250 million.

Origin shares rose 0.5% to $ 5,115 at noon.

Mr. Perkins championed Origin’s climate and emissions performance and targets, but acknowledged the strong support of proxy voting for activist resolutions submitted to the AGM.

A resolution on the allocation of capital spending aligned with the Paris Agreement attracted 43.65% of support from proxy votes, while a resolution on climate-related lobbying by industry groups including the company is a member attracted 36.62% support.

A separate campaigning resolution on informed consent of traditional owners for the Origin gas exploration project in the Beetaloo Basin was supported by nearly 11% of the proxy votes.

The activist resolutions are symbolic because a resolution for an amendment to the constitution of Origin failed.

Still, Dan Gocher of the Australasian Center for Corporate Responsibility, which put the resolutions on lobbying and capital spending, said Origin had “faced significant criticism from shareholders,” given the voting results.

He said Origin needs to come up with a real strategy if he is truly committed to the 1.5 degree goal.

Mr Perkins promised the company would release an updated plan for how it would align its operations and spending to 1.5 degrees this coming year. It has already committed to giving shareholders a vote on its climate reporting at the next AGM.

Origin’s current commitment to a 50% reduction in direct emissions by 2032 is based on the announced closure on that date of its Eraring power plant in New South Wales, the largest coal-fired generator in the country. . However, Mr Perkins reinforced market expectations that the generator will shut down sooner given the difficult economic conditions for coal-fired plants.

“Our stated plan was to exit coal-fired generation by 2032, although we note that operating conditions for basic power plants continue to be very difficult with wholesale prices at historically low levels,” Mr Perkins said.

“As a result, we continue to plan for a range of different scenarios that may
to achieve.

Regarding Beetaloo gas, Mr. Perkins highlighted Origin’s view that gas will play a crucial role in supporting renewables in the pursuit of net zero emissions. and stressed that the work is supported by official decision makers for indigenous title holders in the region.

All resolutions approved by the Board of Directors were passed by an overwhelming majority by proxy vote, with the compensation report approved by 95.26 percent. A resolution on capital grants to Mr. Calabria got the least support, at just under 83 percent.

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Felix J. Dixon

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