PERTH (miningweekly.com) – Energy major Origin Energy has announced plans to cut between A$300-million and A$400-million in upstream capital expenditure (capex) at the Australia Pacific liquefied natural gas (APLNG) project for 2021.
The reduction will be driven by reduced development activity as well as lower exploration and appraisal, but was not expected to materially impact production in 2021, Origin said.
Excluding the APLNG project, Origin is also targeting a 5% to 10% save in capex for 2020, from the previously targeted A$530-million to A$580-million spend.
Origin on Monday said that the continued focus on cost efficiencies has also driven APLNG’s forecast distribution breakeven down to between A$29/bl and A$32/bl, inclusive of approximately $8/bl of project finance principal repayment, based on the Australian/US dollar exchange rate of 70c.
The company also told shareholders that there was no change to APLNG’s production or distribution breakeven guidance for 2020, with the cash distribution from the project subject to debt servicibility tests under the project finance arrangements, which are satisfied at current forward oil prices.
With no further material decline in forward oil prices, Origin continues to expect total cash distributions from APLNG to reach between A$1.1-billion and A$1.3-billion in 2020.
“While Origin is clearly being affected by both Covid-19 and the significant reduction in oil prices, action taken in the last three years to simplify the business, significantly reduce upstream costs at APLGN and materially reduce debt, has put us in a financially resilient position,” said CEO Frank Calabria.