Sharp Oil Price Fall Hurts Earnings Outlook; Trimming FVE to AUD 7.50
The Brent oil price has fallen 28% to USD 62.5 per barrel from USD 84 in early October 2018. Lower oil prices detract meaningfully from no-moat Origin's earnings via its stake in APLNG, though we never baked in peak prices. We reduce our near-term oil price assumptions, resulting in our fiscal 2019 and 2020 net profit after tax forecasts falling by around 7%. We also slightly trim longer-term growth assumptions, and reduce our fair value estimate to AUD 7.50 per share from AUD 8. The stock is tr...Origin Energy is engaged in the operation of energy businesses including: exploration and production of oil and gas, electricity generation, wholesale and retail sale of electricity and gas, and sale of liquefied natural gas. Co. supplies energy to wholesale and retail energy markets in Australia and to the Asia Pacific region. Co. also has exploration and production operations in Australia and New Zealand, with exploration and production interests in the Otway, Bass and Cooper Basins in Australia, the Browse and Perth basins in Australia, the Bonaparte basin in north-western Australia, the Beetaloo Basin in the Northern Territory and the Taranaki and Canterbury Basins in New Zealand.
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