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UPDATE 1-Origin to take A$1.9 bln charge on LNG, exploration assets

Published 15/02/2017, 12:35 pm
© Reuters.  UPDATE 1-Origin to take A$1.9 bln charge on LNG, exploration assets
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(Adds analyst comment, gas assets writedowns)

MELBOURNE, Feb 15 (Reuters) - Origin Energy ORG.AX tweaked up its earnings forecast but warned on Wednesday it will book a A$1.89 billion ($1.45 billion) charge in its half-year results, mainly on its stake in the Australia Pacific liquefied natural gas (APLNG) project.

Origin raised the bottom end of its forecast range for annual underlying earnings before interest, tax, depreciation and amortisation (EBITDA) by 3 percent to A$2.45 billion, but kept the top end of the forecast at A$2.62 billion.

It is due to report half-year results on Thursday, the first results under its new chief executive, Frank Calabria, who took the helm in October.

Origin's shares jumped as much as 2.3 percent to a 17-month high following the announcement, but shed those gains to trade flat by midday.

Analysts said the A$1.03 billion impairment charge on its 37.5 percent stake in the APLNG project was not a big surprise in the wake of writedowns taken by rivals, like Santos Ltd STO.AX , on their LNG projects last year.

"The market is probably just seeing it as clearing the decks for the new CEO," said a Sydney-based analyst who declined to be named as he was not authorised to speak to the media.

APLNG, operated by ConocoPhillips (NYSE:COP) COP.N , is one of three coal seam gas-to-LNG plants which opened over the past two years in the northeastern state of Queensland amid a sharp slump in global oil and gas prices.

APLNG had no immediate comment on the impairment. Origin said it was mostly due to a change in assumptions on U.S. dollar interest rates.

Origin also flagged it would book a A$578 million charge against its Browse Basin assets, which it bought for US$600 million in 2014, as it does not see them being developed anytime soon to supply ConocoPhillips' Darwin LNG plant.

It said it believed another asset in the area, the Caldita-Barossa fields owned by ConocoPhillips, Santos and PetroChina 601857.SS , was likely to be chosen to supply Darwin LNG when its existing gas source, Bayu-Undan, runs out early in the next decade.

Origin also flagged a A$170 million charge against the exploration assets which it plans to spin off in an initial public offering this year, which had been expected to fetch around A$1 billion. ($1 = 1.3034 Australian dollars)

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