Highlights:
Production for the March 2009 quarter was 2.1 PJe or 9% lower than the December 2008 quarter reflecting lower seasonal gas demand and the Australia Pacific LNG (APLNG) transaction.
Other significant events and influences during the quarter:
Otway gas project: Seasonal demand resulted in lower average production volumes, although short periods of high production were experienced during heatwave conditions in southern Australia.
Bassgas project: Following resolution of downhole problems in late December 2008, production levels increased by 50% over those of the December 2008 quarter. A contract has been signed to sell about 25% of the BassGas produced CO2 to air liquide for liquefaction.
Kupe gas project: Construction of the onshore production station remains on schedule for a commencement of commercial sales in the September quarter of 2009.
CSG:
Origin Energy’s interest in existing CSG operations is held through APLNG in which Origin Energy has a 50% interest.
Spring Gully project: The third gas processing plant in the Spring Gully field,
Taloona, was commissioned during the quarter. Gross daily production from the
Spring Gully project has reached 122 TJ/day.
Talinga project: Construction of the gas plant and water handling facilities is progressing. Development drilling also commenced.
Onshore Taranaki basin: Oil and gas production recommenced in the TAWN fields.
Drilling Activities:
CSG: During the quarter, APLNG participated in 61 wells including 24 development wells (Talinga 4, Fairview 6 and Lauren 14), 18 cored exploration/appraisal wells and 19 exploration/appraisal production/DST or pilot wells.
Cooper/Eromanga basin: Origin Energy participated in ten wells (one gas appraisal and nine oil and/or gas development wells). All except the appraisal well and one oil development well were successful (one oil, two gas and five oil and gas).
Otway and Bass basins: Agreements were entered into for drilling slots to drill three exploration or appraisal wells (two Bass basin /one Otway basin) in late 2009/early 2010.
Seismic surveys:
New Zealand: The 1150 square kilometers (sq km) Waka 3D seismic survey and the 940 km Punt 2D seismic survey were completed in the offshore Canterbury basin and a smaller 153 km Piwakawaka 2D seismic survey was completed in the offshore Northland basin.
Surat basin: The 2009 seismic program commenced with the Mardi 2D seismic survey.
Acquisitions/Divestments:
Overseas Exploration Opportunities:
Origin Energy signed a production sharing contract with Vietnam Oil and Gas Group (PetroVietnam) for block 121, offshore Hong Song basin, Vietnam
Origin Energy renegotiated the terms of the production sharing contract in respect of the L8 block, offshore Lamu basin, Kenya. Origin Energy has committed to a further two year program in that block, including a 3D seismic survey.
Post Report Date Events:
Acquisition of ATP 788P
On April 22, 2009 Origin Energy entered into a conditional agreement to acquire a 100% interest in exploration permit ATP 788P from the Pangaea group of companies for a total consideration of $660 million to be funded from existing cash reserves.
Origin Energy expects to book proved, probable and possible (3P) reserves of CSG of around 1,150 PJ in respect of this area following completion of this transaction, together with further contingent resources of about 500 PJ.
Under Origin Energy’s joint venture arrangement with ConocoPhillips, APLNG has the right to acquire the interest in ATP 788P prior to completion.
As part of the arrangements Pangaea will receive a 75% beneficial interest in areas that are stratigraphically deeper than the Walloon Coal Measures.
The acquisition of interests in ATP 788P will be completed after certain conditions precedent have been satisfied, including a number of approvals from relevant government departments.
ATP 471P Bainbilla block Acquisition
On April 21, 2009, Origin Energy acquired a 24.748% interest in ATP471P Bainbilla block, located in the Surat basin in Queensland from Ausam Resources Pty Ltd, a 100% owned subsidiary of Bounty Oil and Gas NL, for a cash consideration of $415,500.
Closing of the sale is conditional on the possible exercise of pre-emptive rights held by other joint venture participants.
Commencement of Perth basin Drilling
On April 21 2009, drilling commenced on Hovea-13, an oil development well in the Hovea oil field in the Perth basin. Origin Energy has a 50% interest in the Hovea oil field. This well is the first of a planned 4-well drilling campaign to be undertaken by Origin Energy and its joint venturers in the Perth basin.
Production, Sales And Revenue:
In late October 2008 Origin Energy completed a transaction with ConocoPhillips (COP) whereby that company acquired a 50% interest in an incorporated CSG to LNG joint venture known as APLNG. The upstream interests included in this incorporated joint venture include all the CSG exploration and production tenements previously held by Origin Energy, together with its interests in conventional oil and gas tenements in the Denison Trough. Origin Energy is the operator of all the upstream activities undertaken by APLNG.
Production and Sales Summary
YTD performance
On a proportional interest basis, total production, sales volumes and revenues of the upstream ventures in which Origin Energy has an economic interest increased by 12%, 14% and 14% respectively for the year to March 31, 2009 compared with the prior corresponding period in 2007/2008.
Total Production was 79.4 PJe, up 12% from 70.6 PJe. Key contributions to the increase in Production performance included the Otway gas project and Taranaki assets (which did not contribute last year). Despite the 50% dilution in Origin Energy’s interest in CSG assets resulting from the APLNG transaction in late October 2008, YTD CSG production attributable to Origin Energy increased 2% to 27.7 PJ from 27.2 PJ in the period to March 31, 2008 reflecting the significant increase in production capacity of these operations.
These factors more than offset decreases resulting from the continuing natural decline in the Perth basin fields, sale of the onshore Otway basin assets, and slightly lower contributions from the Bassgas project and the Cooper/Eromanga basin . In the Surat basin the re-injection of gas into storage facilities has resulted in lower recognized production.
Sales Volumes were 14% higher than in the comparable period last year, reflecting the increased production, lower inventory build and higher third party product purchases. Revenue was also up 14% compared with the corresponding period last year.
This reflected the increased sales volumes and higher average liquids prices in the September quarter, balanced by lower liquids prices in the December 2008 and March 2009 quarters.
March quarter 2009 compared with March quarter 2008
On a proportional interest basis, total production and revenue of the upstream ventures in which Origin Energy has an economic interest decreased by 8% and 4% respectively when compared with the March quarter 2008. Sales volumes increased by 4% compared with the March quarter 2008.
Total production was 21.8 PJe compared with 23.6 PJe in the March quarter 2008. The reduction was primarily attributable to the dilution of Origin Energy’s effective share of CSG production as a result of the APLNG transaction, which was only partially offset by the added contribution from the Otway gas project.
