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Integrated energy company, Origin Energy Ltd (ASX:ORG) had taken a significant step forward in expanding its centralized energy services business by entering into an agreement to acquire OC Energy. On 15 February 2019, the company made an announcement that it has entered into an agreement to acquire OC Energy for the total consideration of $58 million which include an upfront payment of $33 Mn and deferred payments of $25 Mn. Following the release of this news, the share price of the company witnessed a marginal rise of 0.672% in its share price as on 15 February 2019 (AEST 1:51 PM).Â
As per the announcement, once the aforesaid acquisition will compete then it will add 55,000 serviced hot water and embedded electricity network customers to Origin Energy, primarily in New South Wales and Victoria. It is expected that the acquisition will increase the companyâs customers by around 30,000 as contracted developments are completed and centralized energy services are installed.
The centralized energy services business provides serviced hot water, natural gas, and electricity through embedded networks and other related services such as communal solar and battery systems to apartment blocks.
According to the companyâs CEO Frank Calabria, the purchase of OC Energy will strengthen the companyâs existing presence in centralized energy services. He further informed that the companyâs centralized energy services provide customers with convenient access to competitive energy rates through shared infrastructure.
The acquisition is subject to customary conditions, with completion targeted for 2019 January Quarter.
During the December quarter, both the companyâs Integrated Gas and Energy Markets businesses delivered a solid operational performance, with Integrated Gas business reporting record quarterly revenue from Australia Pacific LNG.
In December quarter, the companyâs share of APLNG revenue increased by 16% as compared to Sep-18 quarter and by 45% on Dec-17 quarter mainly due to higher realized LNG prices. During the December quarter, the production was stable despite planned upstream maintenance.
In December quarter, the Energy Marketsâ electricity sales volumes decreased by 8% on Sep-18 quarter in line with seasonal demand and by 5% on Dec-17 quarter, driven by lower usage and customer numbers. Further, Energy Marketsâ gas sales volumes decreased by 21% on Sep-18 quarter due to seasonal demand but were flat on Dec-17 quarter reflecting new short-term Business sales offset by less sales to generation.
Now, let us have a quick look at Origin Energy Limitedâs stock performance and the return it has posted over the last few months. ORGâs share traded at $7.490 with a market capitalization of ~$13.09 Billion. The counter opened the day at $7.430, reached a dayâs high of $7.555 & touched a dayâs low of $7.430 with a daily volume of ~ 1,285,817. Meanwhile, the stock has generated a positive YTD return of 17.72% but posted negative returns of 24.00% in the last six months (as of February 15, 2019). It had a 52-week high price of $10.270 and touched 52 weeks low of $6.030, with an average volume of 6,228,138 approximately.
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