AGL works to counteract twin hits

Written by admin on 29/08/2019 Categories: 苏州美甲美睫培训

AGL is facing pressures on two fronts in its core gas business – producers are seeking to raise prices while heavy losses are likely after losing access to prime gas reserves in New South Wales.

The energy utility disclosed on Wednesday it may write off up to $250 million on its exploration reserves in NSW following a decision by the state government to restrict exploration for coal seam gas, which could ”sterilise” the extensive reserves it holds. The state government has banned coal seam gas drilling within two kilometres of urban areas.

AGL is in arbitration with its gas suppliers, seeking to prevent price rises before the expiry of long-term contracts in 2016 and 2017.

The disclosures came as the group posted a record December half net profit of $364.7 million, well up from $117 million a year earlier, thanks to the inclusion of earnings from the Loy Yang A power station it acquired last year.

Revenue rose to $4.97 billion from $3.6 billion, with earnings per share reaching 66.5¢ from 24.5¢. Underlying earnings rose 20 per cent to $279.4 million, it said, after booking a loss on the change in value of financial instruments.

The interim dividend has been raised to 30¢ a share from 29¢. Investors reacted positively to the profit lift, with its shares rallying 68¢ to $15.87.

AGL said it was spending ”millions on arbitration” in a bid to resolve the gas supply issues. It sources a large part of its supplies from Esso-BHP in Bass Strait, with its initial contracts to expire from 2016 and the balance the following year.

The company sought to deflect the pressures by pointing to the continued growth in retail customer numbers in NSW in particular, which more than offset weakness in other markets. Customer numbers rose by more than 60,000 in NSW.

AGL has spent $325 million on coal seam gas exploration in the Hunter Valley and at Camden, south-west of Sydney, which is at risk with the government’s decision. At the same time, the prospect of higher gas prices that will flow from this decision could lift the worth of the company’s prospects around Gloucester, north of Newcastle.

”There is likely to be a significant charge in the second half,” said AGL chief executive Michael Fraser, of the government’s abrupt policy shift.

”There are a lot of grey areas to the government’s announcement”, which will make it difficult to decide sooner on the extent of the write-downs. Mr Fraser refused to be drawn on talks under way for AGL to buy government-owned power generators in NSW, which are for sale.

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