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Energy giant cops $1.68b loss blaming oil prices

Origin Energy gas
Origin Energy gas

One of the nation’s largest energy producers is fuming about low oil prices that caused the company to lose $1.68 billion after tax in the first half of the financial year.

Origin Energy blames low oil prices for bringing lower-than-expected revenue for liquefied natural gas (LNG) sales. In the first-half of fiscal 2017, underlying profit was down 28 per cent to $184 million compared to the previous period.

The company also suffered  a $1.9bn impairment charge, comprising of Origin’s 37.5 per cent share in Australia Pacific LNG’s (APLNG’s) impairment of assets ($1.03bn), investments in the Browse Basin ($578m), conventional exploration assets ($170m) and Energía Austral SpA ($114m).

Despite the loss, CEO Frank Calabria is staying upbeat about the next half-year.

“Our operational performance was solid during the period and a number of important milestones were achieved. The review of the carrying value of all Origin assets led also to a number of impairments that heavily impacted the statutory result,” he says.

“Pleasingly higher contributions from Origin’s two business units, Integrated Gas and Energy Markets, delivered a $277m increase in underlying earnings before interest, tax and amortisation (EBITDA) to $1.15bn.

“In Integrated Gas, completion of APLNG was a standout achievement. This, along with first gas from the Halladale and Speculant fields in the Otway Basin, delivered a significant increase in production, EBITDA and cash flow.”

Shareholders also missed-out, with the Origin Board refusing to pay a dividend for the period.

“The Board has determined not to pay a dividend in respect of earnings for the first half of the 2017 financial year. The Board will continue to review each dividend decision in light of our focus on debt reduction,” Origin chairman Gordon Cairns says.

The company plans to aggressively slash debt in a bid to claw back lost revenue.

“Accelerating debt reduction continues to be a key priority for Origin, with adjusted net debt targeted to be well below $9bn by the end of the 2017 financial year. Upon completion of the expected sale via an initial public offering of the conventional upstream assets, Origin expects a further material reduction in debt,” Calabria says.

Even though saving measures are in place, the company is still hiring dozens of staff across Australia: careers.originenergy.com.au/search

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