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Highlights
- APLNG revenue rose 3% to $2.71 billion, but FY 2025 production guidance was downgraded by 2-3%.
- Octopus Energy added 680,000 new customer accounts, reinforcing its position as the UK's largest energy retailer.
- Eraring battery expansion approved, increasing total storage capacity to 2,800 MWh upon completion.
Origin Energy Ltd (ASX:ORG) shares declined on Friday following the release of its second-quarter update. In morning trade, the stock was down 3.5% to $10.82 as investors reacted to a mix of strong earnings, lowered production guidance, and strategic developments.
APLNG: Revenue Growth but Production Downgrade
Origin’s Australia Pacific LNG (APLNG) segment reported a 3% quarter-on-quarter increase in revenue to $2.71 billion, driven by higher LNG volumes and improved prices. However, this was partially offset by lower short-term domestic sales.
Despite the strong revenue performance, production during the quarter declined slightly, prompting the company to revise its FY 2025 production guidance downward to 670–690 petajoules (PJ), compared to the previous forecast of 685–710 PJ.
According to Origin, the downgrade reflects lower-than-expected benefits from well optimisation efforts at Condabri, Talinga, and Orana, as well as reduced performance from non-operated assets and unplanned maintenance.
Offsetting this news, Origin LNG trading EBITDA surged 270% to $285 million in the first half, positioning the company well to achieve its FY 2025 EBITDA guidance of $400 million to $450 million for the segment.
Energy Markets: Steady Electricity Sales, Declining Gas Volumes
Origin reported stable electricity sales volumes year-over-year, with customer growth and warm weather counterbalancing lower usage due to increased solar adoption and energy efficiency measures.
However, gas sales volumes dropped 9% compared to the December 2023 quarter. Retail gas sales fell 5%, impacted by weather conditions, though this was partially offset by a growing customer base. Meanwhile, business gas volumes declined 11%, largely due to contract expirations and weaker short-term trading activity.
Looking ahead, Origin has already secured 55% of its expected FY 2026 coal volumes through contracts or hedging arrangements, with pricing largely in line with FY 2025 levels.
Additionally, the company announced an expansion of the Eraring battery project, adding 700 megawatt-hours (MWh) of storage capacity. Upon completion, the battery will have a total capacity of 700 MW and 2,800 MWh, reinforcing Origin’s push towards renewable energy and grid stability.
Octopus Energy: Rapid Growth Continues
Origin’s Octopus Energy division continues its impressive growth, adding 680,000 new customer accounts in the quarter. This brings its UK customer base to 7.3 million, solidifying its position as the largest energy retailer in the UK.
On a global scale, Octopus Energy now serves 1.8 million international customers, while its Kraken technology platform expanded to 62 million contracted customer accounts. The platform remains on track to hit 100 million contracted accounts by 2027.
CEO’s Perspective
Commenting on the quarterly update, CEO Frank Calabria acknowledged the company’s strong revenue performance in LNG while also addressing the challenges in production.
"Australia Pacific LNG delivered strong revenue for the quarter driven by higher LNG volumes and prices, however, production slightly declined as we achieved lower-than-expected benefits from well optimisation activities at some fields, and output was also lower at some non-operated assets," Calabria stated.
