Origin share price gains as surging commodity prices boost revenue to $2.5b

Man wearing green shirt and pink watch flexes his muscle. representing the strength in the ASX iron ore shares at the momentMan wearing green shirt and pink watch flexes his muscle. representing the strength in the ASX iron ore shares at the moment

The Origin Energy Ltd (ASX: ORG) share price is in the green today after the company released its latest quarterly report.

At the time of writing, the Origin share price is $6.86, 2.24% higher than its previous close.

Origin share price lifts as revenue doubles

Highlights for the quarter ending 31 March 2022 include:

  • APLNG revenue increased 15% to $2,577.5 million  – 104% year-on-year increase
  • Its sales for the period fell 5% quarter-on-quarter
  • Its average commodity price rose 21% to $16.10 per gigajoule
  • Production dropped 4% to 170.6 petajoules
  • Electricity market sales volume increased 7%

Origin’s Australia Pacific LNG (APLNG)’s revenue surged alongside gas and oil prices last quarter, more than double that of the same quarter of last financial year.

That’s despite the company’s recording lower production levels due to wet weather and a shorter quarter. The company’s fall in sales reflected its lower production volumes.

APLNG delivered seven spot cargoes last quarter, with North Asian LNG market prices averaged around US$31 per million British thermal units (mmbtu).

APLNG’s effective oil price came to $108 per barrel in the March quarter – up 10% quarter-on-quarter and 89% higher than the same period of last year. APLNG’s realised gas price was A$16.10 per gigajoule last quarter.  

Turning to energy markets, Origin’s electricity sales rose 7% quarter-on-quarter. New customer wins saw business volumes surge 16%, while retail volumes dropped 4% on lower usage.

Its gas sales volumes also rose 2%, and its gas sales to generation rose 46%. Though, natural gas sales fell 11% quarter-on-quarter.

The average national energy market spot electricity price was $90.88 per megawatt house last quarter. That represents a 58% quarter-on-quarter increase.

The average east coast spot gas price for the quarter was $9.97 per gigajoule – down $0.71 on that of the December quarter.

What else happened last quarter?

Last quarter was a big one for Origin Energy and its share price.

In February, the company officially offloaded a 10% interest in Australia Pacific LNG for net proceeds of $2 billion. The company still boasts a 27.5% holding in — and control over — the venture.

It also completed its acquisition of WINconnect in the March quarter.

Origin acquired two solar farm projects last quarter: NSW’s Yarrabee Solar Farm project and Victoria’s Carisbrook Solar Farm.

The company also announced its plan to close the power station earlier than previously expected in February. Eraring is now set to shut its doors in August 2025.

Output from the company’s Eraring Power Station is down 16% for the financial year so far compared to the same point of last financial year. The drop is mainly due to coal delivery constraints.

The company also released news of a $250 million on-market share buyback. It began in April.

The Origin share price gained nearly 19% last quarter.

What did management say?

Origin CEO Frank Calabria commented on the company’s latest quarterly results, saying:

Australia Pacific LNG was able to capitalise on strong commodity prices, shipping seven JKM-linked spot cargoes during the quarter, with a further four sold into the tight Asian LNG market for delivery in the coming months.

In Energy Markets, customer wins in the business segment drove an increase in volumes, more than compensating for a small drop in retail demand as the wet summer experienced by much of the east coast resulted in mostly milder temperatures and lower consumer demand.

Wholesale prices across the [national energy market] have risen significantly compared with the prior period driven by higher coal prices, lower solar output associated with the La Nina summer and baseload outages across the NEM.

Origin Energy share price snapshot

2022 has been a good year so far for the Origin share price.

Shares in the company have gained 28% since the start of the year, and are 67% higher than this time last year.

The post Origin share price gains as surging commodity prices boost revenue to $2.5b appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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