“Cash distributions from Australia Pacific LNG are subject to debt serviceability tests under the project finance arrangements, which are satisfied at current forward oil prices,” Origin said in its investors update today.
With no further material decline in forward oil prices, Origin continues to expect total cash distributions in FY2020 from Australia Pacific LNG of A$1.1 billion to A$1.3 billion although the company’s overall Capex will be lowered by up to 10%
The Sydney-based company now focused even more on cost efficiencies, which had already driven Australia Pacific LNG’s FY2020 forecast distribution break-even down to between US$29 and US$32 per barrel (incl. about US$8 per barrel of project finance principal repayment).
Resilient due to low upstream cost
Acknowledging adverse effects of COVID-19 and the slump in oil prices, the Origin CEO pointed out that “action taken in the last three years to simplify the business, significantly reduce upstream costs at Australia Pacific LNG and materially reduce debt, has put us in a financially resilient position.” Hence, Origin’s Energy Markets’ FY2020 Underlying EBITDA guidance of AS$1.4 to AS$1.5 billion is maintained.
Uncertainty abounds how long the pandemic ill last and how deeply it will affect the economy and energy demand. “The impacts have not been material to date and can be absorbed within our existing FY2020 guidance range,” Calabria said but conceded it was hard at this point in time to accurately assess the impacts on provisioning for bad and doubtful debts.
Eager to reassure customers, the Origin CEO added it will not disconnect any residential or small business customers in financial stress. This will apply until at least 31 July 2020.