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Origin Prepares to Axe 350 Jobs by end-2013 amid Profit Slump

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Origin Energy is preparing to cut 350 jobs by the end of this year in an attempt to contain costs, as a new forecast by the company shows that expected developmental spending for the Australian Pacific LNG (APLNG) will be $25.3 billion (AUD 24.7 billion), up $2 billion from its estimate released in July last year.

Origin noted that it has already cut 500 jobs in 2H 2012, and that by the end of the company's restructuring process, 850 jobs will be eliminated. A spokesperson told Rigzone Thursday that of the 500 jobs axed, around 370 of those were from Origin's energy markets business.

The company posted Thursday a net profit of $555 million (AUD 542 million) for the half-year ended Dec. 31, down 34 percent from $813 million (AUD 794 million) a year ago. Underlying profit for the same period was at $371 million (AUD 362 million), down 26 percent from $501 million (AUD 489 million) a year ago.

"The first half of the financial year was characterized by more challenging operating conditions in the energy markets segment, which impacted profit and cash flow," Origin's Chairman Kevin McCann, said in a statement.

"As Origin's existing business matures, it is important that we improve our operational effectiveness. We are focused on lowering our cost base, meeting competition more effectively and maximizing cash flow from our existing business. We [will] also continue to review our activities and close, discontinue or divest non-core assets, which will improve our available cash flow in the short to medium term," McCann added.

Origin disclosed Thursday that the APLNG coal seam gas to liquefied natural gas (LNG) project is progressing, with the upstream component of the project 29 percent complete and the downstream component 31 percent complete.

"Gathering locations for more than 960 wells – approximately 90 percent of wells required – have been scouted. Installation of gathering flow lines and electrical and fiber optic cables started in the second quarter of the 2013 financial year," Origin said in a separate statement addressing APLNG's progress.

"Construction of the first gas processing plant at Condabri Central Gas Plant was 60 percent complete in December last year and remains on track to be mechanically complete in mid-2013. Construction of the Condabri South and North gas processing facilities are also progressing to plan. The main pipeline is on track to be complete in early 2014. The Narrows Crossing, which is being executed by QCLNG, is progressing largely in accordance with its revised plan," Origin added.

The first 4.5 million tonnes per annum (mtpa) train will produce its first LNG cargo by mid-2015, while its second 4.5 mtpa train will be started up in 4Q 2015.

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