Origin Energy has reported a 1H16 loss of $254 million, compared to a loss of $25 million in the corresponding period of last year.
Origin Chairman, Gordon Cairns, said: “During the period, Origin continued to take action to strengthen its balance sheet and build further resilience in the current low oil price environment.”
Mr Cairns described the first production and export of LNG by Australia Pacific LNG as a “very important milestone” in the development of the company. He said: “Given the long-term nature of this project we believe our investment in Australia Pacific LNG will be rewarding for shareholders, notwithstanding the current low oil price environment.”
However, Mr Cairns also warned that should the current low oil price environment persist through the second half of 2016, the company will suspend dividends until appropriate debt levels are achieved.”
“As we enter the second half of the year, oil prices have fallen to levels well below expected prices at the time of the Entitlement Offer. Origin will of course pursue all opportunities to achieve ongoing debt reduction. Should the current low oil price environment persist through the second half of FY16, which puts at risk ongoing debt reduction, the Company will suspend dividends until appropriate debt levels are achieved,” Mr Cairns said.
Origin has initiated a number of cash preservation initiatives to ensure that Origin can withstand lower oil prices for longer. Origin Managing Director, Grant King, said: “To guard against falls in oil price in FY17 below US$40/bbl, 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 AUS$3 – 5/bbl.
“We have realised significant cost savings across Origin during the period. AUS$1 billion planned reduction in Australia Pacific LNG’s upstream operating costs has been achieved six months ahead of schedule.”
Edited from press release by Callum O'Reilly
Read the article online at: https://www.lngindustry.com/liquefaction/18022016/origin-energy-losses-widen-in-1h16-2015/