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Origin doubles full-year revenue as output jumps

Origin doubles full-year revenue as output jumps

CANBERRA: Origin Energy has delivered a jump in fourth-quarter oil and gas production and revenue, as the Australia Pacific LNG plant at Gladstone ran full-tilt and domestic and export gas prices grew. But the report from the Sydney-based oil, gas and electricity seller is not quite as strong as it looks. Origin (ORG) said June quarter oil and gas sales — which include LNG exports but not gas retail income — rose 20 per cent from the previous quarter to $673.4 million. This was double the previous year’s fourth-quarter revenue of $326.2m. The boost came as it exported more from its 37.5 per cent-owned Australian Pacific LNG project at Gladstone, which for two of the three months of the quarter ran at 110 per cent of nameplate capacity because of a 90-day production test (which continued through most of July).

Origin also produced more from Bass Strait, as its Halladale and Speculant wells in the Otway Basin ramped up. As a result, Origin’s sales volumes were up 15 per cent from the March quarter to 92.4 petajoules. The rub is that some of the revenues will come with little or no margin, with Origin having purchased extra gas from the Santos-led Gladstone LNG project while it ramped up production. It was not a hugely significant volume of gas purchased, though, with Origin’s share of APLNG external purchases rising from 1.4 petajoules in the March quarter to 4.8 petajoules in the June quarter.

Origin also pointed to production problems at Shell’s Queensland Gas Company, which operates the Queensland Curtis LNG plant and operates CSG fields Origin has an interest in. “Production from QGC-operated fields decreased from 345 terajoules per day (in the March quarter) to 330, primarily due to the planned shutdown of a gas processing plant and unplanned field downtime in May and June 2017,” Origin said. Shell last week revealed there were some field issues at QGC but has not expanded on them.

Origin said its average wholesale domestic gas price received (outside the APLNG project) was $5.68 per gigajoule, up from $5.62 the previous quarter. LNG prices rose to $US6.97 per million British thermal unit, from $6.72 and crude oil prices slipped to $71 a barrel, from $77. Origin chief Frank Calabria said it was a good result. “The substantial uplift in production and sales revenues for the year reflects strong operational performance across our upstream operations,” Mr Calabria said.

Origin reports its full-year results on August 16, when a key focus is expected to be progress on its moves to spin-off most of its upstream oil and gas assets as Lattice Energy. A trade sale is also being investigated. RBC analyst Ben Wilson said the quarter was broadly in-line with expectations. “Sales were better than anticipated due to an overlift across domestic gas, which was largely driven by increased third party purchases over the period,” Mr Wilson said. “Commodity sales revenue was slightly lower than expected due to lower than forecast LNG realised pricing.” Origin shares were up 6c at $6.92 at 12.48pm.