ORIGIN ENERGY LIMITED Audio Webcast

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ORIGIN ENERGY LIMITED (ORG)

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ORIGIN ENERGY LIMITED (ORG) Events

Company (Stock Code)	Date/Time	Event	Timezone: Australia/NSW
ORIGIN ENERGY LIMITED (ORG)	Wed, 15 Oct 2008 03:30PM	Origin Energy 2008 Annual General Meeting - Mr Kevin McCann, Chairman and Mr Grant King, Managing Director
ORIGIN ENERGY LIMITED (ORG) Origin Announces CSG to LNG JV Partner	Mon, 8 Sep 2008 10:30AM	ORG - Origin Selects ConocoPhillips to Acquire a 50% Share in a CSG to LNG Joint Venture - Mr Grant King, Managing Director
ORIGIN ENERGY LIMITED (ORG)	Thu, 28 Aug 2008 10:00AM	ORG - Full Year Results 2008 - Mr Grant King, Managing Director and Mr Frank Calabria, Chief Financial Officer
ORIGIN ENERGY LIMITED (ORG)	Tue, 19 Aug 2008 09:45AM	ORG - Target's Statement - Mr Grant King, Managing Director
ORIGIN ENERGY LIMITED (ORG) Origin Energy Rejects BG Group's Unsolicited Conditional Takeover Bid	Fri, 4 Jul 2008 02:00PM	ORG - Response to BG Group Offer - Mr Grant King, Managing Director
ORIGIN ENERGY LIMITED (ORG)	Thu, 28 Feb 2008 10:30AM	ORG - 2008 Half Year Results - Mr Grant King, MD and Mr Frank Calabria, CFO
ORIGIN ENERGY LIMITED (ORG)	Wed, 15 Oct 2008 10:30AM	Annual General Meeting Australian Ballroom, The Menzies Hotel, 14 Carrington Street, Sydney, NSW
ORIGIN ENERGY LIMITED (ORG)	Wed, 15 Oct 2008	Full Year Results
ORIGIN ENERGY LIMITED (ORG)	Fri, 3 Oct 2008	Date Payable
ORIGIN ENERGY LIMITED (ORG)	Tue, 9 Sep 2008	Record Date
ORIGIN ENERGY LIMITED (ORG)	Wed, 3 Sep 2008	Ex Div Date
ORIGIN ENERGY LIMITED (ORG)	Fri, 4 Apr 2008	Date Payable
ORIGIN ENERGY LIMITED (ORG)	Tue, 11 Mar 2008	Record Date
ORIGIN ENERGY LIMITED (ORG)	Tue, 4 Mar 2008	Ex Div Date
ORIGIN ENERGY LIMITED (ORG)	Thu, 28 Feb 2008	Interim Results
ORIGIN ENERGY LIMITED (ORG)	Wed, 31 Oct 2007 10:30AM	Annual General Meeting Wesley Conference Centre, 220 Pitt Street, Sydney 2000, NSW
ORIGIN ENERGY LIMITED (ORG)	Wed, 3 Oct 2007	Date Payable
ORIGIN ENERGY LIMITED (ORG)	Mon, 10 Sep 2007	Record Date
ORIGIN ENERGY LIMITED (ORG)	Mon, 3 Sep 2007	Ex Div Date
ORIGIN ENERGY LIMITED (ORG)	Wed, 29 Aug 2007	Full Year Results
ORIGIN ENERGY LIMITED (ORG)	Fri, 30 Mar 2007	Date Payable
ORIGIN ENERGY LIMITED (ORG)	Fri, 9 Mar 2007	Record Date
ORIGIN ENERGY LIMITED (ORG)	Mon, 5 Mar 2007	Ex Div Date
ORIGIN ENERGY LIMITED (ORG)	Wed, 28 Feb 2007	Interim Results
ORIGIN ENERGY LIMITED (ORG)	Wed, 31 Jan 2007	Quarterly Production Date
ORIGIN ENERGY LIMITED (ORG)	Tue, 31 Oct 2006	Quarterly Production Date
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ORIGIN ENERGY LIMITED (ORG)

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PRESENTATION BY KEVIN MCCANN, CHAIRMAN, AND GRANT KING, MANAGING DIRECTOR OF ORIGIN ENERGY LIMITED (ORG)

“Origin Energy 2008 Annual General Meeting”

http://www.brr.com.au/event/52305

 

WEDNESDAY, OCTOBER 15, 2008, 3:30 PM.

 

            ORG    Well, ladies and gentlemen, welcome and good morning. Welcome to the Origin Energy’s 2008 Annual General Meeting. My name is Kevin McCann.

10                    I’m the Chairman of Origin Energy and I’ll be chairing today’s meeting.

 

      Female      Could you adjust the microphone so that we could hear, please? Thank you.

            ORG    Is that better?

      Female      Well, I think you have to make…

15        Male     It’s too soft.

      Female      I can’t hear from here.

            ORG    Okay. Is that better?

      Audience   Yes.

            ORG    Alright. It’s one of those microphones where I have to lean into it. Okay.

20  Female      It wants to be up close and personal to you.

            ORG    Okay. Thank you for your help.

      Female      Sure.

 

            ORG    Okay. It’s now 10:30 and there’s a quorum of shareholders present so I

25                    formally declare the meeting open and I’m pleased to welcome all shareholders here today. In addition to those present, the holders of 436 million shares or approximately 50% of the issued capital are here represented by proxy. The notice convening the meeting has been sent to all shareholders and I’ll take that as read. The minutes of the 2007 AGM have

30                    been signed and copies are available from the Company Secretary if you wish to inspect them.

 

                        Before I actually begin the proceedings, I’d like to introduce the Board and members of Senior Management who are here today. Up on the podium with

35                    me this morning, on my far right, is Dr. Roland Wiliams, who’s a Non-Executive Director. Next to him is Mr. Bruce Beeren, who’s a Non-Executive Director. Next to me, on my right hand, is Grant King, our Managing Director, and we’ll be hearing from Grant later today. That’s a picture of him there on the screen, I see. On my left, where am I, yes, on my left is Bill Hundy, the

40                    Company Secretary. Dr. Helen Nugent, who’s a Non-Executive Director. Helen is also Chair of our Audit Committee. Next to her is Mr. Trevor Bourne, Non-Executive Director. Trevor is also Chair of our Remuneration Committee. On the far left is Gordon Cairns, a Non-Executive Director. I should have said that Dr. Williams is our Chair of our Health Safety and Environment

45                    Committee.

 

                        Now, we also have here today the people who really manage the Company and have produced all of these outstanding results. The first is Karen Moses, our Chief Operating Officer for Australia. Next to her is Mr. Frank Calabria, who’s our Chief Financial Officer. Next is a new face, Mr. Carl McCamish. He’s our Executive General Manager handling Government Affairs and Communications and Corporate Development. Next to him is Melanie Laing, who’s our Executive General Manager of Human Resources, and Mr. David

5                      Baldwin. David is an Origin Executive who’s been seconded to Contact Energy, which is our subsidiary in New Zealand. For some reason, Rob, you are not mentioned, but Dr. Rob Willink -- Rob is Head of our upstream activities in hydrocarbons and has had a wonderful year. We’ve also got Mr. Duncan McLennan of KPMG. The Company’s auditor is present. If you could

10                    identify yourself, Duncan?

 

                        The order of business today will be that I’ll commence with an overview of our results and strategies for the past year. I’ll then ask Grant to comment on the results and also give you an account of some of our activities this year. You’ll

15                    find that extremely interesting. He’s got a very good presentation. Then I’ll outline the outlook for the coming year and then we’ll go to the business of the meeting.

 

                        We have refreshments which will be served at the end of the meeting and

20                    that will give you an opportunity to meet with Directors and Management after the formal meeting is concluded. Now, as I say, we’ve got all the senior management team who’ll be able to tell you a great deal about the Company.

 

                        Now, let me just turn to the Chairman’s Address and look at our results, and

25                    I’m starting by saying that it’s been a transforming and a successful year for Origin. It certainly has been transforming.

 

                        The definitive and defining events were the attempt by the BG Group to obtain control of Origin through a scheme of arrangement and then later

30                    hostile takeover offer, and then our announcement in September this year of a CSG to LNG joint venture with ConocoPhillips potentially worth up to A$9.6 billion.

 

                        But the Company has been active on other fronts. We have, for instance,

35                    completed the integration of the Sun Retail Business in Queensland. We have acquired the Uranquinty Power Station at Wagga Wagga in New South Wales. We did that in July. We’ve progressed a range of major development projects including a new gas fired power station at Darling Downs in Queensland and Mortlake in Victoria. Grant will describe those activities in

40                    more detail.

 

                        In 2008, Origin extended its financial track records in soliciting in 2000 by a significant outperforming the broader Australian Stock Market.

 

45                    Market capitalisation of the Company has grown from around $8 billion at the time of last year’s Annual General Meeting to some $13.5 billion today. Our weighted average share price in the month preceding last year’s AGM was $9.71 and the average price over the last month has been about $16 -- a one-year rise of 66%. This increase occurred despite sharp falls and volatility in the value of Australian shares over the same period. Origin is now in the Top 20 Australian companies, and if the Westpac-St. George merger proceeds, we will be in the Top 15, and what a transition that is.

 

5                      If I can go down memory lane, when I gave my first AGM speech, we were number 100 and now we are potentially at the end of this calendar year going to be number 15. So, we can all feel very proud, I think, of that accomplishment.

 

10                    Let me just describe how we see the Company going forward. We are an integrated fuel company, and by continuing our integrated fuel generator and retail strategy in 2007 and 2008, Origin has consolidated its position as firstly a leading producer, wholesaler and retailer of energy in Australia and New Zealand. We are the largest holder of proved and probable gas reserves in

15                    Eastern Australia (all of those are centred in Queensland, also at Queensland and offshore Victoria), the largest owner and developer of gas fired electricity generation in Australia and the largest green energy retailer in Australia.

 

                        Let me now look at the financial performance. Our results for 2007-2008

20                    reflect our success. The underlying profit for the year was $443 million, up 20% on last year and primarily derived from a very good second half performance. We had a statutory profit, in fact, of $517 million which included a number of one-off items such as the profit on the sale of our Networks business and the impact of fair value changes to financial instruments -- that

25                    was 13% increase. However, we think that underlying profit is the better way to look at our undertaking and that’s what we focus on.

 

                        Our focus on upstream resources and on generation has not been at the expense of our retail business. The year has seen the first full contribution

30                    from Sun Retail -- that’s the retail business in Queensland which helped in raising underlying earnings from the retail segment by 41% last year.

 

                        We have continued to deepen integration of the business through a substantial increase in upstream gas reserves and by continuing to pursue

35                    acquisitions and developments in electricity generation. Some $2.3 billion of development projects are currently underway in power generation alone, and Grant King will detail those in his address.

 

                        Overall, in the last year, we have spent $1.685 billion on capital expenditure

40                    and over 80% of that was growth expenditure.

 

                        Let me now turn to workplace safety. We’re very pleased this year to report a significant improvement in reduction of the number of safety-related incidents. Our total recorded incident frequency rate in this year has decreased from

45                    16.3 to 8.5, an improvement of over 47%. However, ladies and gentleman, we’re not complacent about this outcome and we strive for zero harm for our employees and contractor employees as well. Under our leadership of Dr. Williams and Grant King, safety remains one of the top priorities for the Board and Management and I can pledge that in the coming year we’ll devote increased resources and awareness to safety in our workplace.

 

                        Let me now turn to the environment. Over the past year, there’s been

5                      significant amount of policy work at State and Federal Government level to progress and appropriate response to climate change.

 

                        Origin believes that reducing the carbon intensity of our economy is an important environmental objective. We, at Origin, will continue to support

10                    development of effective policies, particularly relating to emissions trading, which will support the long-term reduction of carbon emissions, especially from the stationary energy sector, and that’s the sector in which we have an important role.

 

15                    We believe that Origin is well placed to contribute to this important environmental objective. We have extensive knowledge of the Australian energy markets and can and will contribute effectively to policy development. Origin has also positioned its business through investment in lower carbon technologies such as efficient gas fired generation and renewable energy

20                    sources to lead the way to a lower carbon future.

 

                        Let me now turn to coal seam gas. These are the events that transformed the Company in the last calendar year.

 

25                    It’s fair to say that in 2008, the broader Australian investment community finally came to appreciate the potential significance of Australia’s coal seam gas resource.

 

                        The surge in interest was led by the international energy companies with the

30                    BG Group, Petronas and Shell making investments in QGC, Santos and Arrow. The reason for this interest was the prospect of establishing an Eastern Australian LNG industry to supply demand for LNG from both global and particularly Asian customers.

 

35                    After more than a decade of investment in this area, Origin was at the beginning of the year and remains today the largest holder of CSG reserves and the leading developer of CSG in Australia.

 

                        Now, let me just turn to take you through the British Gas approach. As a

40                    result of its interest in our CSG assets, BG Group approached us on 30 April this year with a proposal to buy all the shares of Origin for cash price of $14.70 per share. After considerable negotiations, that was increased to $15.50 per share less any dividends paid on the shares.

 

45                    The Board, after careful consideration and with the benefit of both an upgrade in our CSG reserves and the Petronas benchmark for Santos’ CSG assets, determined that the offer significantly undervalued the Company.

 

                        BG returned on the 24th of June with a hostile bid at the same price, and again, the Board rejected this as undervaluing the Company. The successful monetisation of the CSG resources proved this to be the right decision.

 

5                      Let me now talk about the ConocoPhillips joint venture. In parallel with the initial rejection of the BG bid, the Board instigated a process to accelerate the monetisation of its CSG reserves and to ascertain whether participating directly in a CSG to LNG project could deliver greater value to shareholders than the BG bid.

10

                        Now, following a rigorous tender process which attracted extremely strong interest from a number of leading global energy companies, we announced on 8 September the selection of ConocoPhillips to acquire half our CSG interest and invest in the joint development of a four-train CSG to LNG project

15                    using our joint CSG reserves, and the total price, if those four trains go ahead, could be up to A$9.6 billion.

 

                        ConocoPhillips is paying, in effect, $1.88 a gigajoule for CSG 3P reserves for a four-train development. That price confirms the increased valuation for

20                    large-scale, high-quality CSG resources which are capable of supporting multiple-train LNG projects. It also confirmed, ladies and gentlemen, the inadequacy of the BG bid, which has subsequently lapsed.

 

                        The ConocoPhillips transaction is subject to only FIRB approval and we

25                    expect that that should be available and announced in early November. We expect completion and payment of the initial trunch of funds -- the US$5 million -- will follow shortly thereafter.

 

                        Now, let me look at our financial position. Origin is operating in a period of

30                    global financial turmoil which has led to the impairment of the effective operation of the world’s banking, financial systems and stock markets. The problems of these institutions have the potential to affect the world’s economy including Australia.

 

35                    At Origin, we applaud the actions of the Australian Government to enable Australian banks to raise the funding they require and reassure depositors of the safety of their deposits. Hopefully, initiatives announced this week in the United States and the other G7 countries, that is the major European countries and Japan, to restore the integrity of their banks and financial

40                    institutions will restore business and consumer confidence.

 

                        At Origin, we have the financial strength to fund a decade of growth and the LNG joint venture will add substantially to our already extensive portfolio of integrated energy developments.

45

                        Ladies and gentlemen, at a time when most companies face liquidity management challenges, Origin will enter the new year with minimal debt and one of the strongest balance sheets in corporate Australia.

 

                        Origin shareholders will also benefit in the shorter term from this transforming joint venture.

 

                        Firstly, we have continued to increase our dividend payments and we’ve

5                      made a final dividend payment of 13 cents fully franked and everyone will have received that. This takes total dividends for the year to 25 cents, up from 21 cents the previous year.

 

                        We’ve also announced that we will double the dividend to 50 cents per share

10                    by the payment of an additional 25-cent dividend following completion of the transaction with ConocoPhillips, and we hope that that will be done as quickly as we can subject to stock exchange formalities. Our intention is that dividends will remain at this high level with the target payout ratio of at least 60% of underlying earnings in the years to follow.

15

                        We’ve also announced an on-market buy-back of ordinary shares up to the value of $1.275 billion. This is likely to commence in November. We will also consider other capital management initiatives which may include an off-market buy-back of ordinary shares.

20

                        Ladies and gentleman, in the coming year, the Board will again be focused on ensuring we deliver growth in shareholder value and earnings from operations. We’ll be intent on maximising the value of the financial strength in our balance sheet.

25

                        While the Board will review acquisition opportunities in its core business, it will be disciplined in its approach and will be mindful of the decline in asset values and the expectation of high returns from acquisitions.

 

30                    Now, what I intend to do is to hand over to Grant King to talk more about our operations and activities during the 2008 financial year. I’ll then resume to talk briefly about the Board and also about the outlook for the coming year.

 

                        Next, Grant.

35

            ORG    Thanks, Chairman, and good morning to all.

 

                        Since listing in 2000, Origin has had a strong record of delivering growth to shareholders.

40

                        We’ve had a compound annual growth rate in underlying earnings per share of 17%, and I think importantly for shareholders, a compound annual growth in dividends per share of 30%.

 

45                    Notwithstanding the recent turmoil in global financial markets that have seen significant reductions in the share prices of many companies, our shareholder return over this period has averaged 35%.

 

                        We’re clearly now living in uncertain economic times and many market commentators are predicting challenging times for the economy both globally and within Australia and the subsequent impact this will have on the outlook for Australian companies.

5

                        The Chairman in his address used the term a “decade of growth.” I’d like to talk briefly today to the projects and opportunities Origin has before it that will see Origin continue its record of continuing growth.

 

10                    We remain optimistic about our future even though the economic outlook looks more challenging than ever.

 

                        We have continued to grow Origin based on our strategy as a fuel integrated generator retailer. As a result, we have continued to invest in assets that grow

15                    our business. Historically, we have made a number of important retail acquisitions that have grown that side of Origin’s business, and particularly looking into the future, we will invest substantially in upstream and generation assets as you can see on this chart which looks forward over the next few years at the sort of investments we make. It’s these investments which would

20                    drive the Company’s growth over the next few years.

 

                        To talk you through each of these projects and to give you an idea of what your Company is involved in, I’ll just work basically down that list.

 

25                    The first of those, the offshore Otway Gas Project, was completed and fully commissioned just at the end of the last financial year. This project is now operating reliably and will be a significant new contributor to full year earnings this financial year.

 

30                    In July, we purchased the 640-megawatt Uranquinty Power Station from Babcock & Brown Power. This project was in an advanced stage of construction. The first of four turbines is now commissioned and the power station will be fully completed early next year. The acquisition of this power station is our first major investment in the New South Wales energy market

35                    and we’d be hopeful that there might be further opportunities to build our business in New South Wales in months and perhaps next year ahead.

 

                        Expansion of the Quarantine and Mt. Stuart Power Station in South Australia and Queensland is also progressing well. The expansion of these power

40                    stations will support our growing retail businesses in South Eastern Australia and Queensland. Both projects should be completed in 2009.

 

                        Kupe, our gas and liquids project in the Taranaki Basin in New Zealand, is also progressing well in very challenging circumstances. Demand for skilled

45                    labour, materials and resources in the petroleum industry is very high. Despite these challenges, we expect this project to be completed in the middle of next year.

 

                        Whilst Origin has contracted with a number of counterparties for renewable energy supply from wind farms, for example, Origin has now secured a number of development sites in our own right. Construction has commenced on a 30-megawatt project, a wind farm, the first of these sites in Cullerin in

5                      New South Wales. We expect this project to be the first of a number of renewable energy projects including wind, solar and geothermal that will be necessary for Origin to acquit its obligations under a number of State and Federal renewable energy schemes.

 

10                    Origin’s largest single power station project, the 630-megawatt Darling Downs Power Station, is also well into construction. This will be the largest combined cycle power station in Australia using highly efficient environmentally friendly gas turbine technology. It will use coal seam gas from Origin’s extensive coal seam gas reserves and support Origin’s large electricity retail business in

15                    Queensland. This project is targeted for completion in 2010.

 

                        In July, we announced our decision to proceed with the construction of the 550-megawatt Mortlake Power Station in Victoria. This power station will use gas from our interests in the Bass and Otway Basin Gas projects and support

20                    our electricity retail business in Victoria, particularly during periods of high electricity demand and high prices.

 

                        Through our 51.4% interest in our subsidiary, Contact Energy, we’re also exposed to a number of exciting projects.

25

                        Contact and Origin will jointly develop an underground gas storage facility in a depleted onshore oil and gas field in Taranaki Basin in New Zealand. This will be a critical piece of energy supply infrastructure that will hope balance gas supply and electricity demand in New Zealand.

30

                        Contact Energy also has a very strong and competitive position in geothermal energy in New Zealand. This gives the team at Contact Energy world class skills in geothermal energy. Contact is both redeveloping and expanding these assets with the first stage being the Te Mihi geothermal development

35                    and this project should be completed by 2011.

 

                        Renewable energy will also play an increasing role in the New Zealand energy supply. In addition to geothermal energy, Contact is developing some large wind farm projects. The biggest and most advanced of these is in the

40                    North Island of New Zealand which will have the capacity of 540 megawatts, and a name I can’t pronounce, so I’ll look to my New Zealand colleague there to help me in that regard. The project will be developed in stages with the first stage due on line in 2013.

 

45                    This set of opportunities provides significant momentum to Origin’s growth. In addition to these projects, the Company can now add the largest opportunity yet secured by Origin. The development of our extensive coal seam gas assets will supply the production of LNG for export to overseas markets.

 

                        Over the past 10 years, Origin has acquired and developed an extensive portfolio of coal seam gas acreage covering what we call the “sweet spots” in the Queensland Coal Seam Gas industry. With proven, probable and possible reserves of 10,000 petajoules and contingent resources in excess of 15,000

5                      petajoules, Origin has demonstrated a resource position that is substantially greater than required to support our domestic channels to market.

 

                        As the Chairman mentioned in his address, we conducted a CSG monetisation process to accelerate the development of these large coal seam

10                    gas reserves.

 

                        ConocoPhillips was the successful bidder in this process. They will acquire 50% interest in our coal seam gas assets for payment of up to $9.6 billion to establish a joint venture with Origin which will produce coal seam gas to

15                    satisfy both our existing domestic requirements and establish an export channel through the production of LNG.

 

                        Now, ConocoPhillips brings two important skills to our CSG to LNG joint venture, which will be established on completion of the transaction.

20

                        Firstly, they have extensive experience in the development, construction and operation of LNG projects. This is evidenced by the successful construction of the Darwin LNG project, which is the picture you see in your slide here. It’s only the second LNG project developed in Australia, and of course, in

25                    addition to the existing North West Shelf project.

 

                        In that picture you can see a train, what we call an LNG train. The Darwin train size is 3.5 million tonnes per annum, and it is the intention of ConocoPhillips and Origin in a joint venture that up to four of these trains will

30                    be built to be supplied by coal seam gas and produce LNG, so four times the size of the project that you see there in that picture.

 

                        The second important skill is Conoco’s long history of successful operation of coal seam gas projects in the United States. The San Juan Basin in New

35                    Mexico is the leading coal seam gas project in the world with annual production from this basin at a level somewhat similar to total gas production in Eastern Australia, some 25 years of experience in operating the coal seam gas in the San Juan Basin.

 

40                    We think these skills will greatly help Origin accelerate the development of our extensive coal seam gas position.

 

                        Origin is already the leading producer of coal seam gas in Australia through our established projects in Queensland. The establishment of the Origin-

45                    ConocoPhillips joint venture brings together two organizations committed to the development of the full potential, as I say, of our extensive coal seam gas interest.

 

                        The payment by ConocoPhillips to acquire their 50% interest in joint venture will transform Origin’s balance sheet and financial position.

 

                        The initial payment of US$5 billion will effectively eliminate Origin’s net debt

5                      and provide a substantial cash balance. As the Chairman has indicated, some of this cash will be used to fund an additional dividend and on-market buy-back of shares. Even after these commitments, the Company will still have substantial balance sheet capacity to fund growth.

 

10                    I trust that following this brief presentation, shareholders can see why we are optimistic about our future. We have a substantial set of projects ahead of us. We have some exciting opportunities through our exploration and development activities. We think that a number of interesting acquisition opportunities may also emerge given current market conditions. At a time

15