Origin (ASX:ORG) share price lifts amid APLNG’s 33% revenue boost

Key points

• The Origin share price opened 0.18% higher this morning at $5.53
• The rise is gaining momentum after the release of the company’s report for the December quarter
• Over the quarter, the company’s integrated gas business was boosted alongside energy commodity prices while its gas sales dropped 17%

The Origin Energy Ltd (ASX: ORG) share price is trading in the green this morning amid the release of the company’s results for the December quarter.

At the time of writing, the Origin share price is $5.60, 1.27% higher than its previous close.

Let’s look at the highlights of the company’s latest results:

Origin share price rises on $555m of APLNG revenue

• APLNG’s production increased 2% and its revenue boosted 33% quarter-on-quarter
• As of 31 December, Origin has received $555 million from the venture this financial year
• Origin’s electricity sales increased 2% quarter-on-quarter
• Its gas sales volumes dropped 17% on the prior comparable quarter’s

The company’s integrated gas business was boosted last quarter. Australia Pacific LNG (APLNG) – an incorporated joint venture between Origin, ConocoPhillips, and Sinopec – saw its production increase 2% on that of the September quarter.

The venture’s commodity revenue also increased 33% quarter-on-quarter, driven by 3 spot cargos capturing record spot LNG prices and higher realised oil prices. Though, a drop in short-term contract volumes saw its domestic revenue fall last quarter.

APLNG’s year-to-date revenue is also 91% higher than it was at the end of 2020’s December quarter.

Origin received $555 million of cash from APLNG over the 6 months to December.

Origin’s realised gas price last quarter was $13.29 a gigajoule, comprising an average LNG price of US$11.80 per million British thermal units and an average domestic price of $6.33 a gigajoule.

In energy markets news, the company’s electricity sales volume increased 2% on that of the previous comparable quarter.

A 10% increase in business volumes – partly offset by COVID-19 impacts – was weighed down by a 6% drop in retail volumes due to cooler weather and, again, COVID-19.

The average National Energy Market spot electricity price for the quarter was $57.50 per megawatt hour.

That was down from $66.10 per megawatt hour in the prior quarter, but up from $43.80 per megawatt hour in the prior comparable quarter.

Meanwhile, Origin’s gas sales volumes fell 17% on that of the December 2020 quarter. Gas sales to generation also fell 39% quarter-on-quarter.

What else happened in the December quarter?

Last quarter also saw plenty of asset movement from the company.

The Origin share price fell when it announced it’s acquiring WINconnect for $42.2 million post-tax. Purchasing WINconnect is expected to see Origin with another 87,000 customers.

Additionally, APLNG joint venture partner ConocoPhillips purchased a 10% stake in the venture from Origin for $2.21 billion. Origin will continue to be APLNG’s upstream manager.

In exploration news, drilling of the Velkerri 76 S2-1 well – located in the Beetaloo Basin in the Northern Territory – was completed last quarter. Its preliminary results indicate the Velkerri shales are within the wet gas maturity window.

Meanwhile, in the Canning Basin in Western Australia, drilling at the Rafael 1 well indicated liquids-rich gas potential in a conventional reservoir.

What did management say?

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

Australia Pacific LNG has continued its strong performance and was able to benefit from the substantial increase in oil and spot LNG prices and favourable currency movements, helping to drive a large increase in revenue compared to the prior year.

In Energy Markets, a cooler start to summer and reduced economic activity owing to continued lockdowns in the two most populous states meant the December quarter was subdued. Prices across the National Energy Market were lower in this period, as a consequence of fewer unplanned baseload outages and increased renewable generation.

What’s next?

Those keeping an eye on the Origin share price have plenty to look forward to.

Origin’s acquisition of WINconnect is set to be finalised in the first half of 2022 and the company is expected to drop its results for the first half of financial year 2022 on 17 February.

It’s also analysing core samples from the the Velkerri 76 S2-1 well and is planning to begin a production test at the Rafael 1 well in the current quarter.

Origin share price snapshot

So far, the Origin share price has been gaining in 2022.

The company’s stock is currently trading for 5.33% more than it was at the end of 2021. It has also gained 16.67% since this time last year.

The post Origin (ASX:ORG) share price lifts amid APLNG’s 33% revenue boost 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 Bruce Jackson.

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