In light of prolonged low oil prices, Origin Energy Managing Director Grant King says the company’s focus going forward will be on projects that increase gas production in Australia.
Mr King made the comments during a presentation to investors and analysts on the company’s half year results to 31 December 2014.
As a result of the current slump in global oil prices, Origin will moderate their key priorities in order to conserve cash flow and to accelerate cost reductions.
Mr King said that Origin will limit capital expenditure in the existing exploration and production business to permit and joint venture commitments and projects that increase gas production into growing gas demand in Australia.
The APLNG project will remain a focus, with emphasis on first production this year, as well as continuing the progress on achieving the planned $1 billion per annum reduction in APLNG’s upstream total cost structure.
For the half year, Origin advised a statutory loss of $25 million, and underlying profit of $346 million. Origin Chairman Gordon Cairns said, “We have previously stated that the 2015 and 2016 financial years will be transitional years for Origin as the energy markets businesses mature and LNG production in Queensland commences.
“This period will see the completion of our investment in Australia Pacific LNG, for the development of its LNG project, and the commencement of sustained LNG production from the first quarter of the 2016 financial year.”
He also noted that Origin’s Directors were mindful that during the final phase of investment in APLNG, the recent significant fall in oil price, if sustained at current levels, will result in lower growth in cash flow and earnings than previously expected.
However he added that “At current market expectations of oil prices, the economics of Origin’s investment in Australia Pacific LNG remains robust.”
Australia Pacific LNG remains on track for completion of Train 1 in mid-2015, with sustained production from the first quarter of the 2016 financial year.