As expected the heavy write down revealed last week in the value of its export LNG project in Queensland has seen Origin Energy report a $2.2 billion net loss for the year to June – more than three times the loss of a year earlier which saw a much smaller write down of the value of the LNG project.
And shareholders will again pay the price – no final dividend (or interim) despite a solid improvement in underlying earnings.
Origin said yesterday that full year underlying pre-tax profit was up 49% to $2.53 billion, an increase of $834 million.
But that was not enough to produce a payout for shareholders and it is the second year in a row that the company has not paid a final to its long suffering shareholders.
“Given our primary focus on reducing debt, we have determined not to pay a dividend for the second half of 2017,” Origin chairman Gordon Cairns said in yesterday’s statement.
"We are acutely aware of the importance of dividends to many of our shareholders and this decision was not taken lightly. The board is of the view that the suspension of the dividend is in the best interests of all shareholders at this time."
The total write-down of $3.1 billion was pre-announced last week and was driven by a reduction in Origin’s assumptions for future crude oil prices (which was also behind Santos latest write off this week) which eroded the book value of the APLNG venture in Gladstone.
As also announced last week the value of the Lattice Energy oil and gas spin-off was also cut.
Lattice houses Origin’s conventional oil and gas assets and is heading for either an IPO or a trade sale later this year. Once the proceeds of that are in debt will be cut further. At June 30 it was under the target of $9 billion and Origin wants it to fall to less than $7 billion by June next year, so shareholders might go another year without a payout.
The company said its rose by 51% to $550 million for the year to June, thanks to increased earnings from the energy markets business and the build-up of production at the $25 billion APLNG project.
Underlying earnings before interest, tax, depreciation and amortisation jumped 49% to $2.53 billion, after a 16% rise in revenue for the year to $14.1 billion.
Origin said gross earnings from energy markets are expected to increase by between 14% and 21% this financial year with earnings from its integrated gas business (APLNG and Lattice) affected by the pending sale of Lattice. Origin said production should grow by 7%-16% thanks to the continuing build-up at APLNG.
