Origin Takes Hit On Gas Assets
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The impairments continue at Origin Energy with another half a billion dollars plus of red ink revealed yesterday.
The company staged a major clean out in 2016-17 with more than $3.1 billion in cuts write downs and losses revealed (post tax) as it took the axe of its assets register, including its stake in a Queensland LNG business, gas pipelines and the value of Lattice Energy (which has just been sold to Beach Energy).
Origin Energy said on Thursday it expects to book a post-tax impairment charge of $533 million (more than $700 million pre-tax) for its half year results, which are due next week (Feb 15).
All up the pre-tax value of the write downs tops $4.5 billion over the past 18 months.
The latest aggregate charge includes a non-cash write down of $360 million for its Ironbark gas field (more than $500 million pre-tax), due to a downgrade in Ironbark reserves and a revised development plan, the company said in a statement to the ASX.
Origin bought the field for $655 million in 2009 and had the field on its books at $793 million.
Origin’s pre-tax write down on Ironbark will push its value in Origin's books number down by $514 million to a new carrying value of just $279 million.
The company said in a statement that the Ironbark writedown was due to a new assessment of the amount of gas it would produce.
Before the announcement, Origin had expected Ironbark to yield 249 petajoule equivalent of gas but that amount now has been slashed to 129 petajoule equivalent because of production difficulties from the rock containing the gas.
Origin says it is investigating other production methods that could help improve production flows from the field and therefore improve its reserves position.
Origin also expects to book a post-tax impairment charge of $173 million, as a result of recognising Lattice Energy earnings from July 1, 2017 up to the end of last month when the sale to Beach was completed. That was on top of a $300 million plus whack to the value of Lattice in 2016-17.
The shares fell 2% to $8.77.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.