Origin production numbers in the recent quarter displayed some encouraging progress within the LNG business unit. Production volumes increased 8% quarter on quarter and upstream revenue increased 32%.
APLNG T1 continues to operate above nameplate capacity & T2 has now started.
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ORG’s balance sheet remains under pressure with $9.1b in debt, although the company is ahead of market guidance with respect to managing the reduction of debt.
ORG should continue to benefit from its diversified exposure to energy markets. FY17 outlook is for revenue of $12b, net profit of $550m with gearing at 50% and no dividend. FY18 we see a slight improvement in revenue and net profit increasing to $800m and the likely announcement of a return to paying $0.25 per share in dividends. This places the stock on an FY18 yield of 5%.
Origin has options available to unlock shareholder value. We may see a split of their retail division which will open potential acquisition options for Woodside (or others) to consider the Origin LNG assets as an example.
