Australian Energy Sector A noisy reporting season ahead Event

Transcription

1 2H4 1H5 2H5 1H6 2H6 1H7 2H7 1H8 2H8 1H9 2H9 1H1 2H1 1H11 2H11 1H12 2H12 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 AUSTRALIA 1H12 Australian energy sector earnings expectations WPL STO OSH ORG Currency USD AUD USD AUD Consensus NPAT Macquarie NPAT vs pcp 6% 12% -13% 34% vs cons. 3% % -4% 2% EPS vs pcp -2% 4% -12% 17% DPS vs pcp 5% % % % Source: Macquarie Research, August 212 P/NAV Energy sector trading at a 1.4 x 1.3 x 1.2 x 1.1 x 1. x.9 x.8 x.7 x.6 x.5 x P/NPV Woodside Santos Oil Search Origin Source: Macquarie Research, August 212 Our 1H12 CFPS forecasts CFPS (Rebased to 1) WPL STO OSH ORG Source: Macquarie Research, August August 212 Macquarie Securities (Australia) Limited A noisy reporting season ahead Event On average we expect sector EBITDAX to be up 12% on pcp this reporting season while NPAT growth of 2% is diluted by growing DD&A and interest charges. However, rather than financial performance, the focus remains on commentary surrounding progress on the sector s LNG projects. Impact Woodside Outperform, $39/sh target: Our 1H12 underlying NPAT forecast of U$889m has been downgraded by 2% and is 3% ahead of consensus; however it looks like being a messy result with several one-off charges relating to Pluto start-up. The 5% y/y rise reflects the Pluto contribution offset by rising operating costs and higher DDA charges. While we believe some in the market are looking for a dividend hike to reflect the strong start at Pluto, we suspect the board is unlikely to commit to a structurally higher dividend until the path forward at Browse (and the ensuing capex requirements) becomes clearer. Santos Outperform, $17./sh target: We have trimmed our 1H12 NPAT forecast by A$15m to A$245m to reflect higher capitalised interest (and so no change to cash flow forecasts). While we expect STO to deliver 29%y/y EBITDAX growth, only 12% growth is anticipated at the bottom line due to rising interest costs and a higher expected tax rate of 34%. Following management s poor handling of the recent GLNG cost blow-out, we will be looking for greater clarity on the GLNG economic, political and environmental drivers to provide greater clarity on the project s longer-term prospects. On balance we expect a more frank discussion on GLNG to be well received. Oil Search Outperform, $8.6/sh target: We forecast underlying 1H12 NPAT of U$1m down 13% y/y but broadly in-line with consensus. Despite revenue rising 7% y/y, a doubling of unit opex (partly due to the Hides GSA renegotiation) along with rising exploration charges and DD&A (both noncash) hit the bottom line. In terms of management commentary, we will be looking for updates on the LNG development, the PNG political landscape after the election, the offshore farm-out process and the anticipated impact of the Kumul downtime which is costing OSH ~15kb/d which is likely to see full year production trend towards the lower end of the guidance range. Origin Outperform, $17.75/sh target: Our revised FY12 NPAT forecast of A$899m has been downgraded by 2% (due to higher anticipated depreciation charges) and is now ~2% ahead of consensus. Our forecast implies 33% y/y growth, slightly above management s guidance of 3%. While the second Sinopec transaction is likely to be booked next period, the reported result could be impacted by a write-down of Transform Solar and APLNG interest costs. While seasonal factors are likely to impact gas and electricity volumes (following a milder end to summer and start to winter) any further indication of structural headwinds facing electricity demand will remain a focus. Outlook We expect few stock-specific catalysts from these results, but management commentary on the LNG projects is likely to be reassuring. Greater comfort in these developments is likely to highlight the significant value across the sector, which we estimate is trading on a near-record 15% discount to core NAV (or a 29% discount to the less conservative measure of risked NAV). Please refer to the important disclosures and analyst certification on inside back cover of this document, or on our website

2 Macquarie Private Wealth Fig 1 Earnings estimates for the Energy Sector where we sit Woodside Santos Oil Search Comment Currency USD AUD USD Production (mmboe) Including ORG, sector production rose by 6% on pcp Operating revenue 2,6.5 1, Other revenue Total revenue 2,62.5 1, revenue/boe (U$/boe) Unit realisations were up 15% on pcp Operating costs Royalties total opex/boe (U$/boe) Unit opex is up almost 38% on pcp Other costs EBITDAX 1, Exploration expensed proportion expensed (U$/boe) 87% 69% 45% DD&A DD&A/boe (U$/boe) DD&A/boe continues to rise with rising capital costs Other non-cash costs.. 5. EBIT 1, Net interest Capitalised Interest Growing capitalised interest introduces uncertainty Pre Tax Operating Profit 1, Tax Tax rate 3% 34% 51% PRRT (post-tax) total tax/boe (U$/boe) NPAT Minorities... Adjusted NPAT vs pcp 6% 12% -13% Consensus NPAT delta 3% % -4% EPS vs pcp -2% 4% -12% DPS vs pcp 5% % % Source: Macquarie Research, August 212 Fig 2 Upcoming Energy Sector reporting season where to watch Woodside Santos Oil Search Origin Reporting Date 22-Aug Aug Aug Aug-12 Macq NPAT forecast vs pcp 6% 12% -13% 34% Consensus NPAT Delta 3% % -4% 2% What we will be looking for in the management commentary We do not expect to see the The major result drivers are Further evidence of solid Milder weather conditions Pluto-driven dividend jump that some in the market are likely to be non-cash (DD&A & capitalised interest) progress at PNG LNG and prospects for a 3 rd train impacting electricity volumes. Market also looking for forecasting. Instead, given evidence of structural After the poor handling of the Update of the new PNG the capex uncertainties that headwinds to utility earnings. recent GLNG cost blow-out, political landscape in the remain ahead of a Browse we will be looking for greater wake of the recent election Post the US closure, we FID, we expect only a ~5% clarity on the GLNG expect the well-flagged move to 57.5c/sh. Estimates of duration of economic drivers, which is Transform Solar write-down Kumul downtime and impact Given growing competition likely to be well received. on FY production guidance An update on the APLNG for international assets from An update on the Moomba- sell down (which is perhaps NOCs with deep pockets, we We suspect the offshore 191 shale well where an being complicated by BG s expect an update on farm-out may take longer, official result is long overdue apparent intention to do a Coleman s M&A ambitions. but this is likely to reflect similar thing at QCLNG). We expect management to increased buyer interest Updates on Browse tender start talking up STO s strong Signs of the competitive process where presumably It is presumably too early for drilling programme where landscape (customer losses management must now have any meaningful update from activity is set to ramp up over or increasing churn) some handle on expected the two current wells (Trapia the next 6 months. costs. & Tarza). Update on QCA appeal Source: Macquarie Research, August August 212 2

3 Jan-9 Apr-9 Jul-9 Oct-9 Jan-1 Apr-1 Jul-1 Oct-1 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 2H4 1H5 2H5 1H6 2H6 1H7 2H7 1H8 2H8 1H9 2H9 1H1 2H1 1H11 2H11 1H12 2H12 2H4 1H5 2H5 1H6 2H6 1H7 2H7 1H8 2H8 1H9 2H9 1H1 2H1 1H11 2H11 1H12 2H12 Macquarie Private Wealth Fig 3 Our 1H12 EPS forecasts versus recent history Fig 4 Our 1H12 CFPS forecasts versus recent history 45 Adj EPS (Rebased to 1) 3 CFPS (Rebased to 1) WPL STO OSH ORG WPL STO OSH ORG Fig 5 While the sector has recovered from the July lows, all stocks are still trading at considerable discounts to NAV Fig 6 Despite higher realisations, increasing opex and DD&A is eroding profitability Despite weighted average realisations of ~U$73/bbl, NPAT/boe was merely U$2/boe 1.4 x 1.3 x 1.2 x 1.1 x P/NPV US$/boe 1. x.9 x.8 x x 4.6 x.5 x 2 WPL STO OSH Woodside Santos Oil Search Origin Total Revenue/boe EBITDAX/boe EBIT/boe NPAT/boe Source: IRESS, Capital IQ, Macquarie Research, August August 212 3

4 Macquarie Private Wealth Fig 7 Woodside Petroleum financials Woodside Petroleum (WPL-AU) Share Price: A$34.43 Outperform Shares: 85.7m Profit & Loss 2H11A 1H12E 211A 212E 213E 214E Price assumptions 2H11A 1H12E 211A 212E 213E 214E Sales Revenue US$m 2,549 2,61 4,82 5,633 6,519 7,484 US$/A$ add other income US$m Domestic gas A$/GJ Total revenue US$m 2,564 2,621 4,857 5,674 6,562 7,53 Oil-Brent US$/bbl less operating costs US$m (664) (668) (1,2) (1,418) (1,595) (1,696) EBITDAX US$m 1,9 1,953 3,657 4,256 4,968 5,834 Production 2H11A 1H12E 211A 212E 213E 214E less exploration expensed US$m (374) (13) (587) (354) (456) (592) Natural gas PJ EBITDA US$m 1,526 1,823 3,7 3,92 4,512 5,242 Crude mmbbl less dep. & amort. US$m (348) (459) (627) (1,111) (1,284) (1,248) Condensate mmbbl less other non-cash costs US$m LPG k tonnes EBIT US$m 1,227 1,363 2,475 2,791 3,228 3,994 LNG m tonnes less net interest US$m (11) (34) (26) (12) (164) (1) Sub total boe mmboe Pre-tax operating profit US$m 1,216 1,329 2,449 2,67 3,64 3,894 Ohanet mmboe less tax expense US$m (41) (399) (775) (81) (919) (1,168) Total production mmboe less PRRT US$m (1) (41) (17) (11) (172) (219) Net operating profit US$m ,657 1,759 1,973 2,57 12 mmboe Gas Crude Condensate LPG LNG add non-recurring items US$m (134) (51) (148) 1, Reported profit US$m ,57 2,897 1,973 2,57 1 Adjusted profit US$m ,655 1,759 1,973 2,57 8 EPS (Adjusted) Acps EPS Growth % -5% 8% 14% 3% 12% 27% DPS (Ordinary & Special) UScps DPS (Ordinary & Special) Acps Franking % 1% 1% 1% 1% 1% 1% EFPOWA shares on issue m Cashflow Analysis 2H11A 1H12E 211A 212E 213E 214E Reserves 211A 212E 213E 214E Reported Profit US$m ,59 1,79 1,973 2,57 Natural gas Tcf add non-cash adj US$m 995 1,41 1,827 2,475 2,995 3,327 Condensate mmbbl add working capital adj US$m (229) - (27) Oil mmbbl add interest & div received US$m Total 2P reserves mmboe 1,717 1,636 1,539 1,442 less interest paid & other US$m (214) (84) (342) (172) (21) (173) Contingent resources mmbbl 2,137 2,137 2,137 2,137 less tax paid US$m (384) (57) (496) (91) (1,196) (1,44) Total reserves & resources mmboe 3,853 3,772 3,675 3,579 Operating cashflow US$m 85 1,226 2,242 3,14 3,68 4,294 less exploration & evaluation US$m (1,737) (1,12) (3,584) (2,18) (1,179) (1,6) 2P Reserves / production years less acq./inv. US$m EV / 1P reserves US$/boe add other US$m , - - EV / 2P reserves US$/boe less dividends US$m (321) (447) (652) (918) (1,) (1,237) EV / Total resources US$/boe add debt movements US$m (733) (1,183) add equity movements US$m Per bbl statistics 2H11A 1H12E 211A 212E 213E 214E Net cashflow US$m (563) 257 (929) 2, Sales Revenue / boe US$/boe add exchange rate adj. US$m (3) EBIT / boe US$/boe Increase in cash US$m (566) 257 (922) 2, Profit / boe US$/boe Net debt at period end US$m 5,61 5, (2,262) (3,149) (3,963) Opex/boe US$/boe Capex/boe US$/boe Balance sheet 2H11A 1H12E 211A 212E 213E 214E DDA/boe US$/boe Cash & cash eq. US$m ,667 3,364 4,178 Cash flow/boe US$/boe Current assets US$m 1,14 1,271 1,14 3,64 4,337 5,151 Fixed assets US$m 21,726 22,385 21,726 21,894 21,333 2,553 WACC of 1.% Total assets US$m 22,74 23,656 22,74 25,534 25,67 25,74 Producing assets A$m A$ps % Current liabilities US$m 2,412 1,88 2,412 2,99 1,85 1,752 North West Shelf 1, Total liabilities US$m 9,471 9,567 9,471 9,858 9,2 7,784 Laminaria Shareholder equity US$m 13,269 14,89 13,269 15,676 16,649 17,92 Stybarrow Vincent 1, 1.51 Ratio analysis 2H11A 1H12E 211A 212E 213E 214E Enfield ND/ND+E % 28% 26% 7% -17% -23% -28% Neptune Interest cover x 58.4 x 39.9 x 68.8 x 22.9 x 15.4 x 23.1 x Mutineer / Exeter 7.1 Dividend payout ratio % 65% 56% 58% 33% 55% 56% Pluto (train 1) 13, ROA % 6% 6% 12% 12% 13% 16% Static assets & exploration ROE % 7% 7% 14% 13% 13% 15% Pluto (train 2) risked 1% ROIC % 5% 5% 1% 1% 12% 15% Pluto (train 3) risked 2% Effective tax rate % 33% 3% 32% 3% 3% 3% Browse risked 7% 2, EBITDA margin % 6% 7% 64% 69% 69% 7% Sunrise risked 25% EBIT margin % 48% 52% 52% 5% 5% 53% Exploration portfolio Free cash flow A$m ,348 2,87 3,66 Financial assets Cash & Investments 1, Valuation 2H11A 1H12E 211A 212E 213E 214E Debt (5,12) (7.72) EV/EBITDAX ratio x 23.3 x 17.4 x 9.1 x 8. x 6.8 x 5.8 x Base business carbon (22) (.3) P/E ratio x 43.4 x 34.3 x 19.4 x 16.9 x 15.3 x 12. x Corporate costs (48) (.73) P/CEPS ratio x 27. x 18.8 x 11.3 x 9.2 x 8.1 x 6.9 x Risked NPV 27, FCF yield % nmf nmf nmf 11.% 9.5% 12.% Shareprice prem/(disc) to NPV -17% Dividend yield % 1.2% 1.6% 2.7% 3.2% 3.6% 4.6% - core NPV per share (A$) risked NPV per share (A$) 41.3 Sensitivities (Adjusted earnings) NPV 211A 212E 213E 214E - unrisked NPV per share (A$) Oil price (+US$1/bbl) A$m ,655 1,769 1,999 2,549 delta %.%.5% 1.3% 1.7% Source: Company data, Macquarie Research, August August 212 4

5 Macquarie Private Wealth Fig 8 Santos financials Santos (STO-AU) Share Price: A$11.25 Outperform Shares: 942.3m Profit & Loss 2H11A 1H12E 211A 212E 213E 214E Price Assumptions 2H11A 1H12E 211A 212E 213E 214E Sales revenue A$m 1,429 1,493 2,53 3,111 3,643 4,242 US$/A$ add other income A$m Domestic gas A$/Gj Total revenue A$m 1,487 1,563 2,641 3,252 3,791 4,398 Oil-Brent US$/bbl less operating costs A$m (64) (66) (1,6) (1,367) (1,57) (1,714) EBITDAX A$m ,581 1,885 2,22 2,684 Production 2H11A 1H12E 211A 212E 213E 214E less exploration expensed A$m (124) (86) (167) (187) (16) (16) Natural gas PJ EBITDA A$m ,414 1,698 2,6 2,524 Crude mmbbl less dep. & amort. A$m (352) (378) (641) (789) (855) (888) Condensate mmbbl less other non-cash costs A$m LPG k tonnes EBIT A$m ,25 1,636 LNG k tonnes less net interest A$m (13) Total production mmboe Pre-tax operating profit A$m ,22 1,533 Third party sales mmboe less tax expense (incl PRRT) A$m (249) (192) (413) (418) (59) (776) Total sales mmboe Net operating profit A$m add non-recurring items A$m Reported profit A$m add (goodwill amm - pref div) A$m Adjusted profit A$m EPS (Adjusted) Acps EPS Growth % -12% 18% 12% 11% 16% 2% DPS (Ordinary & Special) Acps Franking % 1% 1% 1% 1% 1% 1% EFPOWA shares on issue m Cashflow Analysis 2H11A 1H12E 211A 212E 213E 214E Reserves 211A 212E 213E 214E Cash receipts from operations A$m 3,67 3,34 3,67 3,359 3,819 4,43 Natural gas PJ 3,458 3,247 3,1 2,766 less operating costs A$m (1,263) (1,383) (1,263) (1,367) (1,57) (1,714) Oil mmbbl less gross interest paid A$m (79) (4) (175) (62) (14) (18) Condensate mmbbl less tax paid A$m (283) (184) (357) (387) (57) (63) LPG k tonnes 2,7 1,845 1,566 1,276 Cashflow from operations A$m ,234 1,51 1,687 1,96 Total 2P reserves mmboe 1,364 1,311 1,252 1,189 less development & exploration A$m (1,283) (1,51) (2,915) (3,758) (3,934) (2,384) Contingent resources mmbbl 2,162 2,162 2,162 2,162 less acq./inv. A$m (3) (22) (6) (22) - - Total reserves & resources mmboe 3,526 3,473 3,414 3,351 add divestment A$m less dividends paid A$m (76) (142) (155) (285) (289) (291) 2P reserve life years add debt movements A$m (179) 241 (31) 383 1, EV/ 1P reserves A$/boe add equity movements/other A$m EV / 2P reserves A$/boe Net cashflow A$m (271) (56) (979) (1,963) (1,246) 44 EV / Total resources A$/boe add exchange rate adj. A$m 17 - (8) EV/ 1P reserves US$/boe Increase in cash A$m (254) (56) (987) (1,963) (1,246) 44 EV / 2P reserves US$/boe Net debt at year end A$m (71) 743 (71) 2,289 4,79 5,419 EV / Total resources US$/boe Balance Sheet 2H11A 1H12E 211A 212E 213E 214E Per Barrel Statistics 2H11A 1H12E 211A 212E 213E 214E Cash & cash eq. A$m 3,332 2,772 3,332 1, Sales revenue / boe US$/boe Current assets A$m 4,752 4,192 4,752 2,789 1,543 1,587 EBIT / boe US$/boe Fixed assets A$m 11,62 12,148 11,62 13,92 16,861 18,242 Profit / boe US$/boe Total assets A$m 15,814 16,341 15,814 16,691 18,45 19,829 Opex/boe US$/boe Current liabilities A$m 1,524 1,532 1,524 1,554 1,637 1,783 Capex/boe US$/boe Total liabilities A$m 6,851 7,113 6,851 7,278 8,536 9,435 DDA/boe US$/boe Shareholder equity A$m 8,963 9,228 8,963 9,413 9,87 1,395 Cash flow/boe US$/boe Ratio Analysis 2H11A 1H12E 211A 212E 213E 214E WACC of 1.6% ND/ND+E % -1% 7% -1% 2% 32% 34% Producing assets A$m A$ps % Interest cover x 15.3 x 9.6 x 9.3 x 9.8 x 12.6 x 1.3 x Cooper Basin Area 2, Dividend payout ratio % 63% 54% 36% 53% 46% 38% Onshore Queensland CSG Assets ROA % 3% 3% 5% 6% 7% 9% Otway Gas ROE % 3% 3% 5% 6% 7% 7% Western Australia 1, ROIC % 3% 3% 5% 5% 5% 5% South East Asia Effective tax rate % 46% 34% 37% 34% 34% 34% Bayu-Undan EBITDA margin % 53% 55% 56% 55% 57% 59% Chim Sao (Vietnam) EBIT margin % 28% 29% 31% 29% 33% 39% Spar/Halyard (Aus) Free cash flow A$m 25 (782) (1,5) (2,25) (2,221) (331) Developing assets Kipper risked 1% Valuation 2H11A 1H12E 211A 212E 213E 214E Reindeer/Carabou risked 1% EV/EBITDAX ratio x 12.2 x 11.7 x 6.8 x 5.6 x 4.7 x 3.9 x Oyong & Wortel risked 1% EV/DACF ratio x 16.6 x 14.8 x 9.3 x 7.1 x 6.3 x 5.6 x Glastone LNG train 1&2 risked 1% 1, P/E ratio x 52.4 x 4.3 x 22.3 x 2. x 17.2 x 14.4 x Cooper Basin - 2C P/CEPS ratio x 32.8 x 29.3 x 8. x 7.1 x 6.6 x 6. x Cooper Basin/GLNG gas supply FCF yield % 1.8% nmf nmf nmf nmf nmf Fletcher/Finucane risked 1% 1.11 Dividend yield % 1.2% 1.3% 2.7% 2.7% 2.7% 2.7% PNG LNG trains 1 & 2 risked 1% 3, Static assets & exploration Sensitivities (Adjusted Earnings) Valuation 211A 212E 213E 214E PNG LNG train Oil price (+US$1/bbl) A$m Discoveries 1, delta Exploration %.%.5% 1.% 1.3% Financial assets Currency (+1c) A$m Corporate/tariffs/other (21) (.3) delta Cash & Investments 3, %.% -.6% -.9% -1.% Debt (2,566) (2.71) Risked NPV 17, Shareprice prem/(disc) to NPV -39% - core NPV per share (A$) risked NPV per share (A$) unrisked NPV per share (A$) mmboe Gas Crude Condensate LPG LNG Source: Company data, Macquarie Research, August August 212 5

6 Macquarie Private Wealth Fig 9 Oil Search financials Oil Search (OSH-AU) Share Price: A$7.1 Outperform Shares: m Profit & Loss 2H11A 1H12E 211A 212E 213E 214E Price Assumptions 2H11A 1H12E 211A 212E 213E 214E Sales revenue US$m ,254 US$/A$ c add other income US$m Oil-Brent US$/bbl Total revenue US$m ,285 less operating costs US$m (69) (17) (137) (25) (23) (284) Production 2H11A 1H12E 211A 212E 213E 214E EBITDAX US$m , Natural gas bcf less exploration expensed US$m (22) (57) (61) (13) (18) (135) Crude mmbbl EBITDA US$m Condensate mmbbl less dep. & amort. US$m (24) (29) (5) (56) (54) (11) LNG m tonnes less other non-cash costs US$m (12) (16) (12) (1) (1) (1) Total production mmboe EBIT US$m less net interest US$m (1) (1) () (5) (5) 3. mmboe Gas Crude Condensate LPG LNG Pre-tax operating profit US$m less tax expense US$m (114) (13) (237) (177) (17) (261) Net operating profit US$m add non-recurring items US$m (33) - (33) Reported profit US$m Adjusted profit US$m EPS (adjusted) Acps EPS Growth % 912% 73% 62% -37% -2% 224% DPS (Ordinary & Special) Uscps DPS (Ordinary & Special) Acps Franking % % % % % % % EFPOWA shares on issue m 1,338 1,327 1,338 1,331 1,338 1, Cashflow Analysis 2H11A 1H12E 211A 212E 213E 214E Reserves 211A 212E 213E 214E Cash receipts from operations US$m ,266 Natural gas bcf () () () (1) less operating costs US$m (66) (9) (114) (177) (18) (261) Oil mmbbl less interest paid US$m (3) (4) (3) (5) (5) (54) Total 2P reserves mmboe less tax paid US$m (123) (13) (178) (177) (17) (261) Contingent resources mmbbl Cashflow from operations US$m Total reserves & resources mmboe less expl & devlp US$m (782) (1,7) (1,469) (2,186) (666) (367) less PP&E US$m (4) - (7) P reserve life years less acq./inv. US$m EV / 1P reserves US$/boe add divestments US$m EV / 2P reserves US$/boe less dividends US$m (18) (27) (37) (53) (53) (54) EV / Total Resources US$/boe add equity/other US$m add debt movements US$m , Increase in cash US$m (182) (213) (216) (521) (28) 434 Net debt at year end (cash) US$m 7 1, ,492 2,835 2,539 Balance Sheet 2H11A 1H12E 211A 212E 213E 214E Per Barrel Statistics 2H11A 1H12E 211A 212E 213E 214E Cash & cash eq. US$m 1, , Sales Revenue / boe Current assets US$m 1,295 1,82 1, ,181 EBIT / boe Fixed assets US$m 4,47 5,328 4,47 6,386 6,891 7,62 Profit / boe Total assets US$m 5,72 6,411 5,72 7,161 7,637 8,243 Opex/boe Current liabilities US$m DDA/boe Total liabilities US$m 2,685 3,294 2,685 3,971 4,31 4,455 Cash flow/boe Shareholder equity US$m 3,17 3,117 3,17 3,19 3,337 3,788 Ratio analysis 2H11A 1H12E 211A 212E 213E 214E WACC of 11.% ND/ND+E % 19% 33% 19% 44% 46% 4% Producing assets US$m A$ps % Interest cover x 4. x 3.2 x 4.2 x 3. x 3.3 x 7.2 x Kutubu - PDL Dividend payout ratio % 3% 27% 8% 5% 5% 13% Moran - PDL 2/ ROA % 4% 3% 9% 5% 4% 9% Gobe Main/SE Gobe 28.3 ROE % 4% 3% 8% 5% 5% 13% Hides GTE ROIC % 6% 4% 8% 3% 3% 8% SE Mananda 13.1 Effective tax rate % 49% 51% 5% 54% 54% 35% Developing assets EBITDA margin % 84% 77% 85% 75% 74% 8% PNG LNG Train 1 & 2 risked 1% 5, EBIT margin % 68% 53% 67% 47% 48% 59% Train 3 (Hides upside) risked 5% Free cash flow US$m , Discovered gas in PNG risked 15% 29.3 Appraisal 1, Valuation 2H11A 1H12E 211A 212E 213E 214E Exploration & Appraisal upside EV/EBITDAX ratio x 3.4 x 31. x 16.1 x 17.3 x 18.3 x 9. x Exploration Portfolio 1,55.98 EV/DACF ratio x 5.3 x 48. x 26.4 x 28.4 x 12.3 x 6.2 x Financial assets P/E ratio x 68.7 x 97.3 x 4.9 x 66.4 x 69.2 x 21.2 x Cash & Investments 1,91.92 P/CEPS ratio x 46.7 x 51.1 x 26.9 x 28.8 x 32. x 13.8 x Debt - - FCF yield % -4.4% -6.5% -7.% -14.3% -.7% 5.9% Drilling Rigs 75.7 Dividend yield %.3%.3%.5%.5%.8% 1.1% Capitalised G & A (187) (.17) Risked NPV 1, Sensitivities (Adjusted Earnings) NPV 211A 212E 213E 214E Shareprice prem/(disc) to NPV -29% Oil price (+US$1/bbl) US$m core NPV per share (A$) 7.15 delta risked NPV per share (A$) 9.95 % 1.%.%.%.9%.6% - unrisked NPV per share (A$) Source: Company data, Macquarie Research, August August 212 6

7 Macquarie Private Wealth Fig 1 Origin Energy financials Origin Energy (ORG-AU) Share Price: A$12.3 Outperform Shares: 186.2m Profit & Loss 1H12A 2H12E 211A 212E 213E 214E 215E 216E Assumptions 1H12A 2H12E 211A 212E 213E 214E Total Revenue $m 6,499 6,229 1,344 12,728 13,241 14,8 14,599 15,137 USD/AUD c less operating costs $m (5,37) (5,74) (8,641) (1,444) (1,799) (11,549) (12,158) (12,672) AUD/NZD c EBITDA $m 1,129 1,155 1,73 2,284 2,442 2,459 2,441 2,466 WTI oil prices US$/bbl less dep. & amort. $m (38) (351) (539) (659) (699) (711) (714) (71) EBIT $m ,164 1,625 1,742 1,748 1,727 1,756 E&P Production 1H12A 2H12E 211A 212E 213E 214E less net interest expense $m (84) (191) (143) (275) (368) (449) (56) (566) Natural gas (inc Ethane) PJ add share in associates (inc. APLNG) $m Crude kbbls Profit before tax $m ,51 1,379 1,44 1,456 1,439 1,491 Condensate kbbls , , , ,667. less tax expense $m (227) (189) (316) (416) (425) (42) (379) (366) LPG ktonnes Net profit $m ,54 1,6 1,126 APLNG PJe less minorities $m (32) (32) (62) (64) (58) (62) (66) (74) Total production (inc APLNG) PJe Adjusted profit $m ,51 add net abnormals $m 35 (42) (487) 263 (24) (46) (53) - E&P Reserves 1H12A 2H12E 211A 212E 213E 214E add amortisation of goodwill $m P Reserves PJe 1,137 1, Reported profit $m , ,51 2P Reserves PJe 6,12 6,37 5,948 5,858 3P Reserves PJe 9,9 9,817 9,727 9,637 EPS (Adjusted) Acps P reserves life yrs EPS Growth % 31.8% 3.3% 6.6% 17.1% 1.3% 7.1% -.3% 5.2% Generation 4.16 Retail 9.14 EPS (Reported) c Contact Generation NPV breakdown , A$m Segment EBITDA DPS (Ordinary & Special) Acps E&P % 3,5 Franking % 1% 1% 1% 1% 1% 1% 1% 1% APLNG , EFPOWA shares on issue m 1,75.2 1, ,81.4 1,92.2 1,98.4 1,15. 1,11.8 Other 1.1 2,5 Retail Other 4% 5% 2, Cash Flow Statement 1H12A 2H12E 211A 212E 213E 214E 215E 216E 1,5 Total revenue $m 6,499 6,229 1,344 12,728 13,241 14,8 14,599 15,137 less operating expenses $m (5,37) (5,74) (8,641) (1,444) (1,799) (11,549) (12,158) (12,672) 1, less net interest expense $m (174) (191) (269) (365) (42) (514) (582) (65) APLNG 5 19% less tax payable $m (13) (212) 3 (225) (469) (455) (438) (427) Total payments $m (5,557) (5,478) (8,97) (11,35) (11,67) (12,518) (13,178) (13,73) Contact E&P Gross cash flow $m ,437 1,694 1,57 1,49 1,421 1,435 8% Exploration and Production Energy Markets 1% Contact Energy Networks add proceeds from sales $m APLNG add capital raisings/debt drawdowns $m 4, ,58 5,728 1,642 1, less debt repaid $m (4,21) (1) (8,191) (4,31) (5) (2) (857) (688) 2% RoFe RoFe by division 3,5 A$m Segmental Capex less capital expenditure $m (699) (943) (5,6) (1,469) (1,142) (772) (635) (592) 18% 3, less dividends paid $m (162) (272) (48) (434) (546) (591) (57) (589) 16% 14% 2,5 add change in working capital (359) (16) (19) (519) (216) (49) (16) (16) 12% add other $m (17) (845) 12 (1,188) (78) (1,55) (316) 33 2, 1% Net cash flow $m 113 (66) (95) (493) 73 (146) ,5 8% Cash at Beginning of Period $m % 1, Cash at end of period $m % 5 2% Balance Sheet 1H12A 2H12E 211A 212E 213E 214E 215E 216E - % Cash E&P Energy Markets Exploration and Production Energy Markets Contact Energy Fixed Assets 1,72 11,121 1,313 11,121 11,52 11,581 11,52 11,384 Contact Exploration Assets Corporate Maintenance Capex APLNG Intangibles Valuation 1H12A 2H12E 211A 212E 213E 214E Other 14,97 15,879 14,339 15,879 16,924 18,825 19,534 19,665 EV/EBITDA ratio x 8. x 7.7 x 11. x 7.9 x 7.3 x 6.8 x Total Assets 27,637 28,36 26,64 28,36 29,876 31,692 32,324 32,573 EV/EBIT ratio x 11.1 x 11.2 x 16.3 x 11.1 x 1.4 x 9.6 x Senior Debt 3,443 4,268 4,15 4,268 5,334 6,582 6,616 6,243 P/E ratio x 15.5 x 16.3 x 22.4 x 15.9 x 14.6 x 13.6 x Total Liabilities 13,27 13,827 13,124 13,827 14,859 16,18 16,293 16,3 P/CEPS ratio x 13. x 11.8 x 11.2 x 12.4 x 9.9 x 9.2 x Total S/Holders Funds 14,367 14,533 13,516 14,533 15,18 15,512 16,31 16,57 FCF yield x.58% -1.92% % -4.78% 1.61% -.41% Dividend yield x 3.55% 4.7% 3.14% 3.79% 4.11% 4.4% Key Ratios 1H12A 2H12E 211A 212E 213E 214E 215E 216E Net Debt/Equity % 23% 28% 23% 28% 31% 34% 33% 31% WACC of 9.3% Net Debt/(Net Debt+Equity) % 29% 39% 3% 39% 44% 52% 5% 45% Base business A$m A$ps % Debt Coverage Ratio % 7.7 x 4. x 6.5 x 5.3 x 4.7 x 3.5 x 3.1 x 2.9 x Generation 4, Enterprise Value $m 19,486 19,15 19,597 19,965 2,65 21,536 21,651 21,13 E&P 2, Effective tax rate % 3% 3% 31% 3% 31% 31% 31% 3% Retail 9, EBITDA margin % 17.4% 18.5% 16.5% 17.9% 18.4% 17.6% 16.7% 16.3% Contact 1, EBIT margin % 12.6% 12.9% 11.3% 12.8% 13.2% 12.5% 11.8% 11.6% Developing assets ROA % 6.4% 6.2% 5.1% 6.2% 6.3% 6.5% 6.6% 8.% APLNG Domgas risked 1% ROE % 8.4% 6.8% 6.% 7.3% 7.2% 7.5% 7.3% 7.5% APLNG tr 1 risked 1% 1, ROIC % 5.1% 3.2% 4.1% 4.3% 3.8% 3.6% 3.2% 3.3% APLNG tr 2 risked 1% 2, Free cash flow $m 44 (73) (3,487) (686) 216 (54) 1,479 2,324 APLNG tr 3 risked 15% ATP 788P risked 5% Segmental EBITDA 1H12A 2H12E 211A 212E 213E 214E 215E 216E GLNG supply contract risked 75% E&P Trefoil (T/18P - Bass Gas) risked 5% 58.5 Energy Markets ,174 1,671 1,833 1,777 1,732 1,798 Redback South-1 (Perth) risked 75% 12.1 Contact Energy Redback South-2 (Perth) risked 75% 12.1 APLNG Mbawa-1 (L8 - offshore Kenya) risked 1% Corporate (4) (41) (68) (81) (83) (86) (88) (91) Static Assets Total EBITDA (inc. associates) 1,157 1,198 1,782 2,355 2,524 2,78 2,812 3,298 Generation options risked 12% Underlying EBITDA growth 2.% 3.5% 32.3% 32.1% 7.2% 7.3% 3.8% 17.3% Financial Assets Cash Debt (5,453) (5.2) Solar Power 97.9 Geodynamics - - Corporate overheads (226) (.21) Risked NPV 19, Shareprice prem/(disc) to NPV -31% Source: Company data, Macquarie Research, August August 212 7

8 Macquarie Private Wealth Important disclosures: Recommendation definitions Macquarie - Australia/New Zealand Outperform return >3% in excess of benchmark return Neutral return within 3% of benchmark return Underperform return >3% below benchmark return Benchmark return is determined by long term nominal GDP growth plus 12 month forward market dividend yield Macquarie Asia/Europe Outperform expected return >+1% Neutral expected return from -1% to +1% Underperform expected return <-1% Macquarie First South - South Africa Outperform expected return >+1% Neutral expected return from -1% to +1% Underperform expected return <-1% Macquarie - Canada Outperform return >5% in excess of benchmark return Neutral return within 5% of benchmark return Underperform return >5% below benchmark return Macquarie - USA Outperform (Buy) return >5% in excess of Russell 3 index return Neutral (Hold) return within 5% of Russell 3 index return Underperform (Sell) return >5% below Russell 3 index return Volatility index definition* This is calculated from the volatility of historical price movements. Very high highest risk Stock should be expected to move up or down 6 1% in a year investors should be aware this stock is highly speculative. High stock should be expected to move up or down at least 4 6% in a year investors should be aware this stock could be speculative. Medium stock should be expected to move up or down at least 3 4% in a year. Low medium stock should be expected to move up or down at least 25 3% in a year. Low stock should be expected to move up or down at least 15 25% in a year. * Applicable to Australian/NZ/Canada stocks only Recommendations 12 months Note: Quant recommendations may differ from Fundamental Analyst recommendations Financial definitions All "Adjusted" data items have had the following adjustments made: Added back: goodwill amortisation, provision for catastrophe reserves, IFRS derivatives & hedging, IFRS impairments & IFRS interest expense Excluded: non recurring items, asset revals, property revals, appraisal value uplift, preference dividends & minority interests EPS = adjusted net profit / efpowa* ROA = adjusted ebit / average total assets ROA Banks/Insurance = adjusted net profit /average total assets ROE = adjusted net profit / average shareholders funds Gross cashflow = adjusted net profit + depreciation *equivalent fully paid ordinary weighted average number of shares All Reported numbers for Australian/NZ listed stocks are modelled under IFRS (International Financial Reporting Standards). Recommendation proportions For quarter ending 3 June 212 AU/NZ Asia RSA USA CA EUR Outperform 55.67% 61.% 53.43% 42.58% 69.23% 46.6% (for US coverage by MCUSA, 9.5% of stocks followed are investment banking clients) Neutral 3.5% 22.11% 36.99% 52.41% 28.2% 33.69% (for US coverage by MCUSA, 8.14% of stocks followed are investment banking clients) Underperform 13.83% 16.89% 9.59% 5.1% 2.75% 19.71% (for US coverage by MCUSA,.45% of stocks covered are investment banking clients) Company Specific Disclosures: Important disclosure information regarding the subject companies covered in this report is available at Analyst Certification: The views expressed in this research reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst principally responsible for the preparation of this research receives compensation based on overall revenues of Macquarie Group Ltd (ABN , AFSL No ) ( MGL ) and its related entities (the Macquarie Group ) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. General Disclosure: This research has been issued by Macquarie Securities (Australia) Limited (ABN , AFSL No ) a Participant of the Australian Securities Exchange (ASX) and Chi-X Australia Pty Limited. This research is distributed in Australia by Macquarie Equities Limited (ABN , AFSL No ) ("MEL"), a Participant of the ASX, and in New Zealand by Macquarie Equities New Zealand Limited ( MENZ ) an NZX Firm. Macquarie Private Wealth s services in New Zealand are provided by MENZ. Macquarie Bank Limited (ABN , AFSL No ) ( MBL ) is a company incorporated in Australia and authorised under the Banking Act 1959 (Australia) to conduct banking business in Australia. None of MBL, MGL or MENZ is registered as a bank in New Zealand by the Reserve Bank of New Zealand under the Reserve Bank of New Zealand Act Any MGL subsidiary noted in this research, apart from MBL, is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Australia) and that subsidiary s obligations do not represent deposits or other liabilities of MBL. MBL does not guarantee or otherwise provide assurance in respect of the obligations of that subsidiary, unless noted otherwise. This research is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice, you should consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision. This research has been prepared for the use of the clients of the Macquarie Group and must not be copied, either in whole or in part, or distributed to any other person. If you are not the intended recipient, you must not use or disclose this research in any way. If you received it in error, please tell us immediately by return and delete the document. We do not guarantee the integrity of any s or attached files and are not responsible for any changes made to them by any other person. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any transaction. This research is based on information obtained from sources believed to be reliable, but the Macquarie Group does not make any representation or warranty that it is accurate, complete or up to date. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. The Macquarie Group accepts no liability whatsoever for any direct, indirect, consequential or other loss arising from any use of this research and/or further communication in relation to this research. The Macquarie Group produces a variety of research products, recommendations contained in one type of research product may differ from recommendations contained in other types of research. The Macquarie Group has established and implemented a conflicts policy at group level, which may be revised and updated from time to time, pursuant to regulatory requirements; which sets out how we must seek to identify and manage all material conflicts of interest. The Macquarie Group, its officers and employees may have conflicting roles in the financial products referred to in this research and, as such, may effect transactions which are not consistent with the recommendations (if any) in this research. The Macquarie Group may receive fees, brokerage or commissions for acting in those capacities and the reader should assume that this is the case. The Macquarie Group s employees or officers may provide oral or written opinions to its clients which are contrary to the opinions expressed in this research. Important disclosure information regarding the subject companies covered in this report is available at 9 August 212 8