Origin Energy – On the cusp of strong profit growth

Australia Pacific LNG (37.5% Origin Energy) announced today that it is ‘firmly on track for first LNG export in the second half of this calendar year.’ APLNG has a take-or-pay contract to supply LNG equivalent to 7.6m tonnes p.a. to Sinopec, which also has a 25% interest in the project. At an oil price of A$100bbl (currently A$73bbl) Origin expects its share of distributable cash flow from APLNG to be around $900m p.a. on average from fiscal 2017. Even at A$55bbl, APLNG would still have free cash flow available for distribution to shareholders. This is a stock for growth portfolios with a time horizon beyond the next year or so.