Origin Energy leaves door open to splitting

Bloomberg

Origin Energy Ltd. left the door open to splitting up once its $9 billion debt pile has been further trimmed as it reels from the collapse in energy prices. Australia’s largest electricity company made the “difficult decision” on Thursday to cancel its dividend for the first time since it was formed in 2000, preferring to concentrate on strengthening its balance sheet by paying down debt after full-year underlying profit plunged 41 percent.
With the low oil price weighing on earnings, Managing Director Grant King said the potential split of the oil and gas production businesses from its generation and retail units remains an option when it moves into a stronger debt position. Origin is among oil and gas producers that are struggling as a decline in prices and weaker demand growth have reduced revenue while new projects from Asia to North America expand a glut in supply. “Getting that debt down is the key to everything,” King said in an interview from Sydney. “Whether people want to speculate on demergers or asset sales, we have not ruled any of those out. What we have said is they all sit in priority behind the need to continue to target absolute debt reduction first.”

DEBT SLASHED
Origin, whose debt ballooned in the years it took to build the A$25.9 billion ($20 billion) Australia Pacific liquefied natural gas plant, said it cut net debt by A$4 billion over the year after selling assets and issuing equity. The company is on track to cut adjusted net debt to below A$9 billion this year, according to slides for Thursday’s earnings presentation.