(Bloomberg) -- Origin Energy Ltd. headed for its biggest decline in 15 years in Sydney after the utility turned to a full-year loss and said the plunge in oil prices could significantly reduce the contribution from its liquefied natural gas project.
Origin had a loss of A$658 million ($484 million) for the 12 months ending in June, compared with a profit of A$530 million a year earlier, the Sydney-based company said Thursday. Origin expects to reduce expenses by a further A$200 million a year and cut about 800 jobs, or 12 percent of its workforce.
Shares of Australia’s largest electricity and gas retailer slumped as much as 14 percent, the biggest drop since 2000 in intraday trading, to A$8.51 in Sydney. Brent crude, the global benchmark, has dropped by more than half from a year ago as U.S. shale drillers and the Organization of Petroleum Exporting Countries boost output amid a glut.
“The oil price clearly has fallen dramatically and has continued to fall over the last six months,” Managing Director Grant King said on a conference call. “Our challenge is to respond to that.”
The downturn in energy prices comes as Origin prepares to start its A$24.7 billion gas-export project with ConocoPhillips on Australia’s east coast. Should oil stay at current levels the increase in earnings from the LNG project will be significantly below prior expectations, the company said in the statement.
Every A$10-a-barrel drop in the oil price will cut Origin’s share of cash from the project by A$200 million, the company said. The remaining cash contribution to the LNG project will increase by A$550 million to A$1.8 billion due to lower revenue and oil prices, the company said.
Origin, which had about 6,900 employees at the end of June, took a charge of A$705 million partly after writing down the value of its oil and gas assets, the company said. Excluding one-time items, profit for the year fell 4 percent to A$682 million.
The job cuts, expected to occur by the year ending June 2017, will be spread across Sydney, Melbourne, Brisbane and Adelaide, Origin wrote in an e-mail.
Origin traded 11 percent lower at A$8.76 at 2:56 p.m. in Sydney, giving it a market value of A$9.7 billion.
To contact the reporter on this story: James Paton in Sydney at firstname.lastname@example.org. To contact the editors responsible for this story: Ramsey Al-Rikabi at email@example.com Aaron Clark, Andrew Hobbs
Copyright 2017 Bloomberg News.
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