ORG share price crashed 7% from APLNG performing below expectations
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Origin lowers its APLNG forecasts
1 February 2025
The Australian
Electricity and gas giant Origin Energy has cut its Australia Pacific LNG production forecasts for the 2025 financial year by 2-3 per cent to 670-690 petajoules.
The company’s shares sunk 6.7 per cent, or 75c, on the news to $10.45, giving it a market capitalisation of $18bn.
Australia Pacific LNG revenue for the December quarter was 3 per cent higher than the prior quarter, at $2.71bn, driven by higher LNG volumes and prices, but offset by lower short-term domestic volumes.
Origin revised its previous guidance of 685-710PJ due to lower than expected benefits from well optimisation activities at Condabri, Talinga and Orana, as well as lower field performance and unplanned maintenance at non-operated assets, it told investors on Friday.
Citi analyst James Byrne said APLNG wells were underperforming because the ramp-up of production after shut-ins was lower than expectations and past performance.
“Origin will learn which wells to preferentially shut in when there is downtime in the processing facilities, but we think it will take some time to optimise the field accordingly,” Mr Byrne said, noting that brokers’ consensus APLNG net present value could be downgraded in the low single digits. “Once the learnings are absorbed, the JV will then need to determine the pathway forward.” Despite lower production, unit capital and operating spending is unchanged at $3.90-$4.30 a gigajoule due to expected cost savings, partially offset by accelerated well optimisation activities in the second half.
Origin LNG trading earnings before interest, taxes, depreciation and amortisation rose 270 per cent to $285m in the first half to be on track for its FY25 guidance of $400m-$450m.
In energy markets, electricity sales volumes were steady compared to the December 2023 quarter, with higher customer numbers and warmer weather offset by lower usage from solar uptake and energy efficiency.
The third stage of the Eraring battery was approved during the quarter, adding 700 megawatt hours to the first stage under construction and increasing its dispatch duration to about four hours. The combined storage of all three stages of the Eraring battery will be 700 megawatts, or 2800MWh.
The production figures follow an official report by the grid operator this week revealing the cost of generating electricity across Australia’s grid over the final three months of 2024 soared more than 80 per cent, as record high demand for electricity amid soaring temperatures coincided with all-time low availability of coal power. Origin Energy’s Eraring coal power station and AGL Energy’s Bayswater experienced prolonged issues, both of which came as the state experienced unseasonably warm weather.
Kraken not covered above, but is still performing as expected and taking market share
With a leading energy software platform that could be worth multiples if it goes public, ORG looks attractive at this price .
[held]
Broker report from ORG
ORG is one I'm really interested in because of their investment in Kraken
And I think other people are interested in also.
Shares have held up pretty strong and Ausbiz thinks ORG is now trading at a premium, attracting only a hold from both analysts last week
Of course Octopus has a few problems which may benefit competitor products like Hansen and Gentrack
But I think Octopus is large enough to get through their problems and hold firm. The acquisition of former customers on Powercloud to Kraken is already one example
Above is the meaty valuation on Kraken of 3.8bn!