Origin Energy Limited (ORG) Earnings Call Transcript

Okay. Good morning, everyone, and welcome to our 2020 Investor Briefing. Today with me, you're going to hear from a number of the leaders at Origin. In Sydney, joining me is Mark Schubert, Greg Jarvis, Tony Lucas and Lawrie Tremaine, and were joined virtually by Jon Briskin in Melbourne. So thanks very much for your time, everyone, this morning. On this next slide, I've got the outline. Okay. Okay. And so you can see the outline this morning. So we do look -- you'll see there a set of presentations over the morning. There will be a break, and we'll do our best to actually keep as much time as possible as we look forward to your questions at its conclusion. Okay. I'll start with an overview before handing over to Mark in relation to Integrated Gas. The first thing is that Origin is a customer-focused energy business that is well positioned for a low-carbon future. We have market-leading assets and capabilities. We have a large domestic customer base. We have a leading energy wholesale and trading capability across all the fuels of electricity, gas and also carbon. We have 37.5% in Australia's largest CSG to LNG project. which has remaining reserves at a 2P level of greater than 11,000 petajoules, and we have a firm belief that we have the best acreage position that continues to perform better every day. And we have established ourselves as a low-cost operator across all of our business. In addition to having these assets and capabilities, though we believe we also have the preferred position as we embark on the energy transition. We have the most advanced digital customer strategy at a time where you've got the introduction of new renewable and storage into the market and the changing profile of energy every day the preferred position is to be at a short energy position, and also they'll be covered for peak demand that's required both through seasons, but also on each given day. And unique capabilities really along the chain through our Integrated Gas and Energy Markets business, but also through our domestic and international customer base. We have unique capabilities to lead in renewable fuels like hydrogen. We have a robust capital framework in place by virtue of our 2 businesses. We have strong diversified cash generation. We have a moderate near-term CapEx requirement and by that being a moderate requirement. It enables us to make choices to invest in the opportunities as they present themselves. And our estimate is that for the FY '21 year, we'll generate a free cash flow yield of between 12% and 15%. Now in addition to those 3, we have a firm focus on our strategic priorities, which continue to be to maximize the value of our existing businesses, but also to pursue growth across the chain into this low carbon future that -- some examples of that growth, and you'll hear more from the team during the day is growing our customer scale through low-cost position, our customer experience and the establishment of the platform business model. There are opportunities that are tangible for us in renewable fuels, and you'll hear more about that today. And we remain very focused on crystallizing value from our upstream assets at both APLNG and Beetaloo. Now social purpose is important to us, and it is more than a license to operate. And when we think about our social purpose, we think about getting energy right for our customers, communities, our planet and our people. And I'm very pleased to see that we've made progress in relation to that social purpose, it's absolutely critical to our success. In the case of customers, I've been very pleased and proud of the team as to how we have supported bushfires, drought and COVID-19 over the last 12 months. And I'm also very pleased to see that we've got record scores for both Net Promoter Score and reputation as trust and customers will be critical to our success into the future. In terms of our communities, we think about that in terms of the broader community. There's a culture of giving back. We've got a very well-established foundation that does great work. But in addition to that, it's very important to us to be a very good neighbor, a good contributor to local and regional communities. In terms of our people, I'm very pleased to see that we achieved top quartile staff engagement for the first time ever at Origin this year. We improved our safety performance, and we've included more details of our safety performance in the appendix. And -- as a result of COVID, I'm sure we've all seen that it's accelerated the adoption of technology, including the ways of working, and that's something that Origin has embraced and thrive through and continues to adopt going forward. In terms of our planet, clearly, what we have is we've got short-term emissions targets, and that continues to evolve as well as an aim to achieve net 0 emissions by 2050. And on the next slide, I'll talk more about both our commitments and targets and equally importantly, the actions that we are taking. We unequivocally support the Paris agreement. And over the last several years, you would have seen progress by Origin in terms of commitments and targets, including the target to reduce our Scope 1 and Scope 2 emissions by 50% by 2032 and also to reduce our Scope 3 emissions by 25% by 2032. And at the time they are established, they were established in accordance with the science-based emissions reduction targets. We also now have a shorter-term target to reduce our Scope 1 emissions by 10% on average over the next 3 years, and that target is linked to our executive remuneration. We do have an ambition to achieve net 0 emissions by 2050 and the plan to update our emission reduction targets to a 1.5-degree pathway. And also, we set ourselves a near-term target to establish greater than 25% of our owned and contract generation through renewables and storage. So that's good to have commitments and targets, but I'm also -- it's equally important to actually have actions that support that. And our actions, I think, have borne out over the last 12 months. You can see that we've actually grown our businesses in renewables in -- through our residential and business solar business installation. And you can see that's grown by 22% in the last 12 months. Our Scope 1 and Scope 2 emissions did reduce by 9% in the financial year '20. And so you can see we've made good progress on that over the last 12 months. We're targeting FEED in calendar '21 for a green 300-megawatt green hydrogen export facility that Mark will talk further about. And you've seen, therefore, the action that supported our near-term target for renewables to have greater than -- we've got over 1,200 megawatts of renewable PPAs in place, and that will continue to grow, and that's supported also by our largest gas-fired generation fleet. So great to see both the commitments and targets but also the actions that are supporting that, and we continue to take action on climate change. Now I thought I'd just reflect on the global energy trends that are underway, and those trends are also playing out in Australia, and they represent growth opportunities across the Energy business. The first is that you're seeing, obviously, the rapid increase in renewables, and that will continue as coal retires. Storage or firming generation, as battery costs come down, they will continue to play a key role, represents a further growth opportunity and gas firming will continue to be part of the mix for many, many years to come. At the same time, what we've seen over the last 12 months at both a national level is the opportunity for Australia and the demand growth really spurned by overseas markets like Japan for renewable fuels like hydrogen. And you've also seen the emergence, I think, of progress regarding carbon offsets and those technologies. Secondly, what we've got is we've got the key global trend of the convergence of data and energy that we've talked about for some time, but I think is really starting to play out in real ways for you to observe the emergence of virtual power plants that unlock customer value are growing every day. And that's also bolstering our wholesale capability and becomes a key part of how we manage both our wholesale position but also unlocking customer value multiple, service offerings are emerging, and they're all coming together on the same platform. And we're also seeing data insights and automation like you are across all sectors that are going to the core operations of the business. Now electrification is going to continue and electrification will move beyond mobility to buildings and industry. This is a trend that's going to take longer to play out. It will be in the shorter term regarding electric vehicles. The change out into electrification of buildings, residences and industry will be much slower based on the ability of the capital cycle for the industry but also as it relates to the change out of appliances in the residents. But no doubt, over the longer term, what you will see is an increased demand for electricity as that electrification continues. And I think the last global trend that we're seeing also here is that just the changing investment environment through participation in markets by government, they're supporting and getting them directly involved and combining that with an abundance of capital and low interest rates really does change the nature of investment in our sector, and that's something that will be embraced, I think, in Australia and continue to do so. At the heart of these trends, though, we believe there's an overarching theme and belief in that is that customers in the future will become the scarce resource. And I hope you see through today how we're dealing with that nearly -- with all of our activities really playing out on a basis that they're customer led. Now our strategy to deliver value and grow continues to be connecting customers to the energy and technology of the future. And I hope you can see in that statement a linkage to those trends that we've just discussed. And that's underpinned by 2 key strategic priorities. One is maximizing the value of the existing businesses we have in Integrated Gas and Energy markets. And the second is to pursue growth in customer value and low-carbon solutions. And I'll now turn to each of our respective businesses to summarize some of those key strategic priorities, and you'll get to see more and listen more from the team through the morning on these. Firstly, in relation to Integrated Gas and maximizing the value of that business. It really is a very -- continues to be a very strong operating and reservoir performance at APLNG. We have upgraded our FY '21 production guidance by 25 petajoules, and we have reduced our breakeven to USD 25 to USD 29. And that upgrade in production is really in response to demand. And we are also now targeting a 10% to 20% reduction in unit costs over the next 3 financial years from FY '22 to FY '24 that's 10% to 20% lower than our previous outlook for that period. At the same time, we continue to focus, as I said earlier, to crystallize value from the upstream, and that really is through the ongoing pursuit of what we introduced at the full year presentation, which is really the value levers in APLNG. And Mark will describe the progress we've made and the future opportunity associated with those. And clearly, we are really very much in the midst of Beetaloo appraisal, and we've got an update for you today in respect of that. And not surprisingly, with a 77.5% interest, we will continue to pursue both the appraisal and at the appropriate time, also farm-down opportunities as we go forward. In terms of pursuing growth, very much want to introduce today to many of you what we've been doing towards accelerating to a clean energy future, and we'll be describing the progress we've made, and I think good progress to be a leading proponent in the commercialization of renewable fuels, both green hydrogen and ammonia. And that is led by customers. And also, as I said before, we do truly believe we've got unique capabilities by virtue of the value chain in which we operate today, but also our customer relationships, and we're targeting that FEED in calendar year '21. There's also been good strong progress in reducing the emissions of our existing operations in Integrated Gas and that continues to be pursued. In energy markets, in terms of maximizing the value of the existing business, we are a low-cost retailer today, and we're obviously targeting further cost reduction through our initiatives that have been underway for some time, but also the step change that will arise through our investment in Octopus and its technology. As I described earlier, the generation portfolio is well placed for the transition, giving us an opportunity to continue to capture better value in a market that really does move around on each given day and through the year, and our gas supply portfolio remains a competitive advantage that we continue to enhance. At the same time, it's really critical with customers being a scarce resource that we transform our customer experience. I'm very pleased to see the way we engage digitally with our customers. Like many industries, that's accelerated months. This year that would have taken years otherwise, and it's now by far and away, the dominant way we engage with our customers. It's about simplified products and it's also about new revenue streams. And as I described earlier, our strategic partnership with Octopus not only drives lower cost, but it really will drive a step change in that customer experience, which Jon will talk to later. Now in terms of leading the convergence of energy and data we've described previously to you about the capabilities we're building. Really what we're seeing now is a real opportunity that's underway in growing our customer scale through that low-cost position and customer experience, but then advancing the customer offerings and growing those via our platform business model that's delivering really a connected customer experience. And we continue to see strong growth through Octopus Energy that we participate through our 20% shareholding that's both through their retail business and also their technology licensing abroad. What we do see now, and you can see there's been a lot of progress, both on a national and state level that there really is a lot of progress around the key issue we would have described to you previously around the firming generation to match, the influx of renewables, and we really do see the potential to partner with governments and others and in relation to the investment in generation as this transition underway as coal retires and new forms of generation and capacity come in. So just my last slide before handing over to Mark, we really have recapped our 2020 results and probably the only message I'd say there is you could see that really we made strong progress in terms of both cash flow, reduction in debt. We held the dividends for the year at $0.25. And also our underlying profit was flat year-on-year with many moving parts underneath that. Really, the world has shifted, as you know, since then. And what I can say to you is that we -- in terms of our FY '21 outlook is that we are reconfirming our Energy Markets guidance for the year. No doubt with lower commodity prices that you've all seen, whether it be forward electricity, gas and others, that's a business that still has its earnings under pressure, but I'm pleased to be able to confirm its guidance today. At the same time, I'm also very pleased to be able to upgrade the integrated gas guidance I just described in terms of both production and also the reduction in the breakeven, and we'll describe that more fulsomely through the morning. I did describe earlier the free cash flow yield, and we estimate that to be 12% to 15% for this financial year, and we continue to have a dividend payout policy or dividend policy of distributing 30% to 50% of free cash flow and really then utilizing the balance of the cash flow to pursue opportunities and reduce debt as those opportunities arise and priorities emerge. So thank you very much for that. I'll be back to do a wrap-up, and we'll look forward to your questions. And at this point, I'll hand over to Mark to take you in further detail to the Integrated Gas business.

All right. Good morning, everyone. I'm Mark Schubert, and I look after Integrated Gas. And on behalf of the team, I'm excited to be here with you and to share how Integrated Gas is going and our plans looking forward. Starting on the first slide. I do want to spend a little bit of time very briefly talking about the outlook for gas. Origin's focus is on the lowest cost onshore gas resources. And we see an important role for this low-cost gas in the energy transition. Being in Australia, we think it's right to focus on Asia. And whilst there are many gas demand scenarios, which I'm sure you're all looking at, the IEA is a great example where even under a 1.65 degree climate case, gas continues to grow, really driven by 4 things. The first is the installed infrastructure for gas around the world means there's just an enormous inertia for gas and gas growth. The second is gas is the perfect partner for intermittent renewables. Thirdly, we see a role for gas in the high heat industries, which are really hard to electrify. And really, that occurs until hydrogen comes along. And then finally, there is a key role for gas in developing nations as they transition from other higher CO2 fuel forms. We do know gas resources will have to compete and they'll have to compete with U.S. shale. And that really brings me to my next slide, which is around how APLNG continues to beat U.S. shale into Asia. I know Frank has already mentioned our improved FY '21 guidance, and you've likely read ahead and seen our improved medium-term guidance as well. So I want to spend the next few slides really explaining what's driving that exceptional performance. If we start on the left-hand side, firstly, our resource base has been improving since FEED for APLNG, which occurred in 2011. There's really 2 key insights that you need to thumb through the reserves report to find. The firstly is that our 2P reserves add in the operated assets has replaced 90% of our operated production over the last 3 years. And the second one is that our 2P reserves have increased since 2012 by almost 1,700 petajoules, excluding production. And these are 2 key evidence points of the strong APLNG reserves position. I do want to draw your attention to the bottom left hand bullet, which says that our long-term supply exceeds our contract requirements. This is really key because it allows us to be very disciplined with our exploration spend going forward. Total OpEx plus CapEx on an unconventional project like ours is a really useful indicator of total cash costs, total cash cost of sustaining production and which really reflects the journey over the last 3 years where we've gone from a project to our asset-led model. Our 13 core processes, million-dollar wells, AUD 1 per giga joule OpEx delivered the $500 million cost out and on to where we are today with -- where FY '20 was where we spent $2.5 billion on OpEx plus CapEx. Of course, you might say the scope is different over the years, and that's very true. But if you move to the right-hand side, what you see is production rising while spend is falling with record production in FY '20 of 708 petajoules with underlying capability of 719 petajoules. So to recap this slide, strong and stable resource base, now heavily de-risked, a strong long-term contract coverage, leading to less scope on E&A, a lower total cash cost due to unit costs and strong field performance and all of that at the same time, increasing production over the period where FY '20, we had daily, weekly, monthly and annual records. If we move to the next slide, I thought it'd be fun this year to share what we're working on in terms of the next wave of improvements in APLNG, building on the operating model that we've laid down. I don't want you to think that this is new in the sense that we started this journey on our 5 levers 12 months ago. Any improvement program in an asset as big as APLNG needs to be laser-focused, would be the first thing I'd say. So we studied what are the economic drivers of value over the next 10 years and are really boiled down to the 5 things you see on the left-hand side. And we coined those 5 things, our 5 levers. Just to give you a bit more color. So reduced well costs means the unit cost of fracking costs, horizontal well costs and workover costs. Reducing field OpEx means working the field costs hard because the field gets bigger over time and therefore, naturally expand. So we want to get those settings right now. Improving well reliability means reducing the frequency of well workovers. The fourth one, optimizing production. I mean the word optimizing is always a difficult one, but it means getting more out of the existing wells. When I explain it to the team, I say it's about getting gas without drilling. And the fifth one is extending the production plateau, which really means picking up the tail or optimizing the E&A program. So with a laser focus on which levers we then go to the right-hand side and we create alignment across IG on the levers. And just a few highlights here. So -- over the last 12 months, we've taught the profit and loss statement, cash flow, time value of money and NPV to all our leaders. We've linked all 900 personnel in the upstream part of APLNG's variable pay to cash flow and value. And we've gamified and celebrated the best cash flow and value improvements every month. If I had to summarize the right-hand side, it is just one word alignment. Our multiskilled operators in APLNG focus on safe, environmentally responsible, reliable, efficient operations today, and improving the business for tomorrow by the levers. It's not either or, it's and. To bring it to life, last month we celebrated one of our teams who worked to optimize the suction pressures of all our gas processing facilities in APLNG, where the focus was on cash flow and saving power, but also led to a significant scope to electricity and CO2 reduction. And whilst that's one example of hundreds, what we're seeing is a material improvement in the center column, some of which is summarized here. So you see workover costs down by 11%, frac costs down by 11%, horizontal drilling costs down by 15%, and that's all in 1 year, and with a lot more to come. If we go to the next slide, I want to talk to you about how we're seeing FY '21 production evolve. Firstly, looking backwards, which is what the graph really helps you do. You can see APLNG dynamically adjusting production as demand deteriorated with COVID and then back up more recently and into this month where we reset the operated asset production record again. If I just draw out the 3 areas sort of underneath that orange bar versus production flexibility, so sort of in that February, March period, we had some quarantine delays on ships coming in, where our 14-day quarantine was introduced. In May and June, we originally had the downstream shutdown. And so we had scheduled less demand to occur during that period. And then really in August and September was where we saw less demand just globally. And of course, we adjusted for that. Looking forward, what we see is stronger demand, as Frank said, in the current quarter and also the second half of FY '21. And really, that's coming from a few things. It's coming from global supply outages. It's coming from increased Northern Hemisphere winter demand. It's coming from China demand recovery post COVID-19 and some nuclear outages in Korea leading to gas generation increasing. And we are -- and therefore, we are currently expecting stronger demand into our long-term contracts for calendar year '21. What all this means is increased production guidance from 650 to 680 petajoules, up 25 petajoules at both ends to 675 to 705 petajoules, which I believe is a strong outcome given the demand impacts that we saw during Q1 on production. The next slide is really to take you under the bonnet to see what's driving the improved resource base. This is not a slide or a graph that you will have seen before. So I'll try and explain it. The graph shows the Talinga/Orana field production as we saw it in June this year versus what it looked like at FID. What you can see is a significantly higher sustained plateau today. And key here is it's coming from less wells than predicted at FID. So what are we seeing? We're seeing a stronger sustained reservoir pressure and that means higher rates. We're seeing thicker coal seams particularly in the north of the field. We're seeing the impact of optimized pumping technology to optimize flow rates. And where we saw development areas with higher production, we actually accelerated these in the program. And today, we think if anything, the field is stronger than even this picture shows. For example, our gazettal block that we won over the last couple of years, which was originally called [indiscernible], which is now called Murrungama, is not in the graph, and will come on and extend the production plateau further. If we turn to Reedy Creek, which is not graphed on the slide, where much of the recent development activity has been. The key point here is that we've seen circa 100% coal connectivity from fracking versus our assumption going into fracking and Ready Creek of 80% coupled with the development completed, we have found ourselves in a very strong position in the asset. And as a result, able to pause all development activity there for a couple of years. Then when we add in the rest of the fields, all performing to expectations, plus the work to connect the field to the processing facilities through TCIP/ERIC/TOGGS over the recent years. The bottom line is that the improved field performance. Combined with the lever progress that we've made to date means that we can maintain the existing production rates with lower well count and lower CapEx for at least the next 3 years. If we take it a step further, over the past few years, we've seen the strong reservoir performance manifest itself as excess production. The point now is that for the first time, whilst holding production rates, we can confidently slow down our development activity. And so this year, if I just run you through the right-hand side, we've reduced our shallow drilling rigs from 3 to 1. We've deferred or not participated in less economic nonoperated developments. We've deferred our E&A activity and spend, and we've reduced our labor costs as we've resized the APLNG upstream team in line with sustained reduced activity going forward. This enables Origin as Frank said, to update our FY '22 to FY '24 outlook for APLNG in 2 ways. The first way is to say that the current production levels will be maintained on average, whilst importantly, at the same time, being able to say we are targeting average total CapEx and OpEx divided by production of less than AUS 3.50 per gigajoules, which represents a 10% to 20% on the previous range, which was $3.90 to $4.40. If we move to the next slide, which is sort of the full recap of guidance updates and the resetting of the medium-term outlook. If I just walk you through, we've got stronger expected demand resulting in increased production guidance of 675 to 705. That's the up 25% at both ends. We've got the cost guidance increased. And that really that's been driven by the new royalty regime. So you can see there we've gone from 2 to 2.2 to 2.1 to 2.3. Just to put the color on that. The royalty regime that's been introduced in Queensland is very new, looks to have impacted APLNG, and it's still a little bit uncertain. It looks to impact APLNG by circa $80 million. And so we're just taking that into the guidance. The breakeven has reduced to $25 to $29 really driven by higher production volumes, driven by demand, and that's even at the higher cost. And really, if you look at that, that continues the year-on-year trend down that we've been targeting strategically to drive our breakeven continuously down. You can see there another -- at the bottom, which really is that we expect the first half FY '21 distribution from APLNG to be AUD 270 million approximately. And if we go to the right-hand side, the FY '22 to FY '24 outlook, like I said before, current production levels maintained on average, whilst at the same time, reducing our total OpEx plus CapEx divided by production to less than $3.50 a gigajoule. And I'd really just put the spin on that. But the way to think about that, that is a unit cost agnostic of activity being a unit rate. So it's a very strong outlook metric. Okay. So APLNG as well as what we discussed is a strong resource base, reliability, cost and economic value levers. We've also been working on greening APLNG further as we drive into the low-carbon world. So let's begin with our starting point, which is very strong on global benchmarks When you compare APLNG to U.S. shale, our emissions are on average, in order of magnitude lower at less than 0.1% emissions intensity. Emissions intensity being methane emissions per -- divided by methane sold converted to a percentage. Then I'd like to point to progress where we're not starting -- not talking about starting an emissions reduction program. We're well on the journey. The graph shows we've already made a 30% improvement on operational emissions over the last 4 years, and we are on track for further reductions. Then as we look forward, the real secret is that actually we have a sixth lever. The sixth lever is called reduced CO2 which gets the same alignment through the team, the same structures we talked about earlier and for which today, we have a marginal abatement cost curve. The great thing is that the initial projects on the marginal abatement cost curve are NPV positive or effectively have a negative carbon price, i.e., we earn more for reducing our emissions. We bring that to life on the right-hand side with the list there, all coming from our frontline teams, ideas and their ability and ownership to convert them into solutions on the ground. If I move to the Beetaloo, I thought I might just recap where we're at. So sort of the time line is that we finished drilling in February. We paused for COVID. And at that point in time, when we paused, we had a case unfracked well, that was 1,800 meters deep, with a 1,579 meter lateral. We then recommenced operations in the Beetaloo in September with fracking the well, put 11 stages in and 100% of the planned proppant. We completed the well in late October, and we've been flowing back fracture stimulation fluid since that time. What you would have read in the announcement yesterday is that we've had gas shows sufficient to sustain a flare, but we haven't yet seen the significant gas breakthrough. What I mean is that we have an 1,800-meter deep well filled with saline water, and that's important. because saline water is salty and therefore, denser than plain water. The salts coming from the formation, which is quite normal for shales at this time, but the net effect is a large back pressure on the reservoir, which in effect holds back the gas. We're seeing less and less water over time, but we believe that like a Mungee and like some other wells that have been drilled in the region, the well will need some help to get started. And typically, that would involve using nitrogen for artificial lift initially. Given the COVID break, and obviously, we lost about 6 to 7 months with COVID, we're now into the wet season operations, which means that it may not be practical to bring the equipment in to do the work until after the wet season. So we're just working through the plans and the options. And obviously, we'll share those as they come to light. I do want to talk about traditional owners because there's a lot said about Origin's relationship with traditional owners in the Beetaloo. So I'm pretty keen again to set the record straight and answer any questions you might have at the end of the call. Our Host Traditional Owners and I say our Host Traditional Owners are the native titleholders for the areas where our activity is taking place. First point is we do not decide as Origin, who our Host Traditional Owners are. The Northern Land Council decides by doing extensive and detailed anthropological work to support traditional owners in their claims for native title, something that then is determined by the federal court. This allows the Northern Land Council to provide us with the guidance and advice to ensure we engage and consult with the rightful TOs of the land in which we are operating. What -- and you might say, so what's the recent evidence that supports that our Host Traditional Owners support our activity. The first is that we work with them on sacred site clearances. I do want to just demystify that term. That term means that together, we show them the proposed work areas, and they go to those locations with us, they explore them and tell us whether they're okay with us working on them. And that process is then documented by the Aboriginal Protection Agency, who are the regulators for sacred sites in the Northern Territory. And without that certificate, we don't do the work. And just to be clear, there are no sacred sites or significant sites at any of our existing well locations. Then we have on country meetings with our Host Traditional Owners to explain the work program. And actually, you see those on-country meetings that's the photo on the top right to explain the work program in detail and to answer any questions and to take as much time as needed. And in each case, they supported the program, and that's that top right photo. The third part is that our Host Traditional Owners visit during the fracking operation, and that's the bottom right photo. In fact, they're welcome to visit at any time, to inspect our operations and see how we protect land and water. Again, I think all evidence that we do have the support of -- for our activity of our Host Traditional Owners in spite of what the activists continue to propagate. Okay. So I do want to move to hydrogen. And this is the first time that we've spoken in Investor Day in any detail about hydrogen. So pretty excited to talk to you about it, how we're seeing hydrogen in origin and the last couple of years of work. The left-hand side is really the why hydrogen story. And if you look at the graph, which in this case is from the National Hydrogen Strategy, 2019, you'll see some scenarios for Australian domestic hydrogen in the green shading and some scenarios that export hydrogen demand in the lines. And of course, Australia is extremely well positioned, being close to Asia and with great renewables. And when I say close to Asia, I mean not dissimilar to the freight advantage that we share where we enjoy on LNG today. First point I really want to make strongly is that Origin's approach is different in a number of ways. The first, as Frank said, is that it is customer led. And what our customers' discussions tell us is that the demand is sooner and larger. In other words, the whole graph on the left-hand side is moving to the left. The right-hand graph is a great graph to stare at as it will explain why Origin and hydrogen. Firstly, our customers want green hydrogen. And this demand for green hydrogen is perfectly suited to Origin's capabilities. This is because electricity is our core business, and electricity cost makes up 60% of the cost of hydrogen. The key to green is optimizing the renewable energy input, not just in terms of dollars per megawatt hour, but in terms of capacity factor and utilization of the electrolyzer. And all of these are things in which we have deep experience in managing today in Greg's wholesale and generation fleet. What's not on the graph is that the value engineering work that we have done plus the integrated energy approach gives us confidence that we can hit the optimized green curve for gaseous hydrogen, meaning we can hit the trajectory required to reach parity with natural gas. On the next slide, I want to draw out further the connection between Origin's capabilities as there are a lot of companies talking about hydrogen. So if we zoom in on the drawing. Like I said on the left-hand side, we see an active role in electricity supply and optimization through access to renewables, through wholesale trading, through demand response through grid services, all things we do today. On the right-hand side, we have existing Origin domestic wholesale and international customers. We already operate complex supply chains and facilities at low cost. We ship internationally. We distribute LPG across Australia and the Pacific, and we have a fantastic asset footprint to build from. It really does make discussions with customers a unique value proposition for our customers and partners alike. So let's talk about progress. Again, for almost the first time we have this discussion, like I said, our approach is customer led. And so we are seeing opportunities for both liquid hydrogen and ammonia projects and are developing parallel export scale projects for both. On the left-hand side, we've been partnering with Kawasaki Heavy Industries for a year now on a liquid hydrogen export project from Townsville with an initial scale of 300 megawatts and 36,000 tonnes per annum with a significant expansion ready approach. We've completed the feasibility study already and are currently value engineering. And we're value engineering the project to be ready for a fee decision in CY '21. The liquid hydrogen is likely to be used by large mobility customers and for gas blending by customers in generation units initially in Japan. In the center, our customers also want green ammonia. The demand is such that we are developing a program of scale export projects. Green ammonia can be used in coal blending or in marine fuels. Last week, you may have seen us announce our Tasmanian project, which requires greater than 500 megawatts to produce more than 420,000 tonnes per annum of green ammonia for domestic and export, which is targeting FEED in CY '22 post the feasibility study in CY '21. And then on the right-hand side, it's different again, where we're super excited to be collaborating with Jemena on the Western Sydney Green Gas project. This is a low-cost way to get in and explore electrolyzer operations and the connection with gas and electricity. The project will supply 800 homes with a gas hydrogen blend, produce power through fuel cells and provide hydrogen for the local bus fleet. Our role is pretty interesting. We're supplying the green power plus the demand response of the electrolyzer in effect, a mini version of what we would expect to do on our large-scale projects. In summary, on hydrogen ammonia, our approach is green, meaning renewable power and sustainable water. Our approach has and continues to be customer led. It's underpinned by strong partners, such as Kawasaki Heavy Industries and IHI, and we're developing it in 3 swim lanes, liquid green hydrogen, green ammonia and domestic hubs. And we're working closely with governments who will be critical to continued progress, and we look forward to giving you future updates. So final slide for me. So what you see is from APLNG, improved field performance and gas recovery. You see upgraded FY '21 production guidance. You see reduced medium-term outlook for unit costs by 10% to 20% on the '22, '24 period. And you see us pursuing further value creation through the APLNG lever program and greening APLNG. On the Beetaloo, we talked about the Kyalla and the Beetaloo flowing back stimulation fluid with some gas show present. Frank mentioned that we are developing Beetaloo farm-down options. And then we talked about renewable fuels where we're uniquely placed to deliver hydrogen at scale, particularly given our existing capabilities and complex supply chain and electricity. And we continue the engagement with customers and to take a customer-led approach, and we are targeting FEED on our hydrogen project from CY '21. And so to conclude, in terms of maximizing value of the existing assets, APLNG has been transformed and continues to improve, evidenced by the guidance and the medium-term outlook and our layers are focused on the levers and the pathway to green. Beetaloo is progressing, and we look forward to sharing future developments. And now at the same time, we're uniquely positioned in future fuels for the energy transition and the 0 carbon economy. I'll now hand back to Frank.

Okay. Thanks very much, Mark. What we'll do now is we'll take a 10-minute break. So we'll come back at 9.25, if that's okay. So we'll pick you up then. Thanks very much, everyone. [Break].

Good morning, everyone. I'm Greg Jarvis, I'm the Executive General Manager for Supply and operations. It's good to be here today. Look, I've spoken to this forum for many years now, but there's going to be similar themes in my presentation to previous years, but there is no doubt that this market is moving at pace towards a low-carbon future, with renewables, both small and large scale coming into the market every day, and that's having a very big effect on the market. Origin is well placed with strong foundations to move to a low carbon world for the following reasons. Today, we have over 3,000 megawatts of peaking generation assets to provide firming to the grid. And this is very important when we have increased renewables. We also have a coal-fired power station being rearing energy that is flexible today with opportunities in the future to be even more flexible, which I'll discuss in more detail later in the presentation. We also have a number of development options, which I've spoken about before for firming assets, and we can bring those into market when the market or policy requires. We also have a competitive supply and storage options. Storage is very important in gas. And gas is going to be very important in the -- to back up the renewables in the system. We are also looking and working very hard on additional supply options, and we're talking directly to producers and LNG import terminals, and we're making real progress there as well. Backing all this up, though, in a market that is rapidly changing. I have an awesome operational and trading team, bringing all this together, which is really important because it is a very volatile market. Okay. So I don't want to labor the point here, but this market is quickly transitioning to a low-carbon world. And I just really want to talk about these 3 charts here. So the first chart shows in the last 3 years, we have seen over 10 gigawatts of renewables coming on to the grid. And we don't see this slowing down. There's a number of other projects which have been committed to, which will come on grid in the coming years. And renewables are just a lot cheaper when they used to be. So I really don't see this stopping. So it really is very much a renewables world. The second chart is really interesting. It shows the investment in reliability or the dispatchable assets has not matched the investment in renewables. In fact, we've seen a decline in dispatchable assets when Hazelwood closed down some years ago in Victoria. The third chart is, again, I think, a very interesting chart, but it forecasts the closure of coal-fired power stations over the next couple of decades. But what this chart doesn't show is just that the coal fleet is aging quite quickly. And the reliability of these assets looking forward may become more unreliable. So what does all this mean? It really means that there is a significant opportunity for Origin to invest in reliable, dispatchable assets, which include pumped hydro, fast-start gas plant or resets and batteries, and we're making progress on all those technologies. So just a bit about the origin portfolio. And again, it's a slide which I've showed before, but I will walk you through this. The first chart is our assured energy position. And essentially, what I'm saying here is that our generation position is shorter than our 35 teras of customer load. And this is, I think, a very important position to have in today's market. Today, we are turning down our assets or turning our peaks off with all the renewable assets coming into the system, we are able to buy from the pool at very low prices. And when I say low prices, at sometimes in some states, we're seeing prices at 0 and at times negative. So we actually get paid to take that energy. So flexibility in your power stations is very important. And coming from the short energy side, is incredibly important, and we can add value to the portfolio. Equally, if the market does change, we can actually add more renewables or more energy into our portfolio. So we'll still ensure that we have a number of options to bring more renewables to bring more energy into our portfolio. So we have choice, which is really important. The second chart, again, a similar chart to what I showed before that we are long capacity. And that means we have more dispatchable assets to our customer load. Again, I think this is a very important decision to have because I've been saying for some years now that just with the transition with intermittent renewables, I really do see that there will be a lot more volatility in the marketplace. We're seeing signs of it just last week or 2 weeks ago, we saw prices in New South Wales reach $15,000. So you need to have those very fast start plant, reliability to capture those prices. In our capacity position, we also do a number of contracts with third parties. So we can turn down those contracts and build our own assets such as batteries or pump hydro or we can change the way we run a Eraring, which I'll move to now. So the Eraring power stations many of you have been there. It is an absolutely fantastic power station and has been important for New South Wales and the whole grid really. It's a great team, and they operate it very efficiently. And we've adapted Eraring over the last few years to be flexible to coexist with renewables. Today, it's 4x 720-megawatt units. So it's the largest coal-fired power station. But importantly, without any additional investment, we can run Eraring at min gen, so a minimum load of 210 megawatts per unit. So in the middle of the day when solar price -- solar power stations are at its highest, we turn down these units right down to 210 megawatts. So that flexibility is very, very important. But equally, the rent rates of Eraring are important as well. So we can ramp up Eraring 10 megawatts per minute per unit. So very, very fast ramp rates. So we can capture those high prices when some of these intermittent assets are not working. However, Eraring isn't the perfect gas asset with renewables. We spent a lot of CapEx to keep Eraring in place. We spend a lot of CapEx to keep Eraring in place. And so what the team is busily doing is looking at how we can reduce our CapEx and OpEx costs and redeploy that capital into other technologies such as batteries. There's a number of choices we have here, and we are looking at things such as moving major outages from 4 years to 5 years. Once upon a time, we did major outages every 2 years. So the team have got incredibly efficient. But we're looking at that -- We're looking at running potentially 3 units in the shoulder periods, we could run 2. But we still have the capacity available in summer. And we can look at 2 shifting, like turning it off in the middle of the day and ramping it up in the peaks. There's a number of choices, and we're busily working through all that, and we've made real progress. But the simple message here is that the more CapEx and OpEx costs, I can take it over it Eraring and redeploy into other technologies is better for the portfolio. So I really can see a Eraring next time you are out there, having a fleet of batteries alongside the existing asset. Clearly, the timing of all this is dependent on market and government policy settings, but the important message is we can pivot very, very quickly. So just moving to our peaking fleet. Yes, that's it. Sorry, That's it. God, these guys are killing me. But we've already made a very large investment in our peaking assets. And again, I've sort of spoken to about volatility in the market and having a very flexible peaking fleet with flexible gas supply behind it is really, really critical. But interestingly, we have with all these sites have really good brownfield expansions. Most of our sites have excess transmission capacity, and we have spare gas capacity as well. so we can expand these assets. So just to give some examples here, our Shoalhaven pump hydro scheme, we can double the capacity from 240 megs to 480 megawatts, which could be a project we couldn't consider under the New South Wales government policy. I just want to talk about some of the advancements we've made in the battery space. We have really pursued some of the battery opportunities in the market recently. So just by way of example. The Victorian government came out with a System Integrity Protection Scheme, and we participated in that auction. And we often a proposal for a 300-megawatt battery at Mortlake in Victoria. Now we weren't successful in that, but that is just an example of how we're pursuing the opportunities as they present themselves. But there's no doubt, I can see a massive role in batteries alongside our assets with the spare transmission capacity that we have. What we are really focused on is just making sure that because we see battery costs falling considerably, and we keep on seeing it. We just got to make sure we pull the trigger at the right time and get the optimal cost for those batteries. But batteries will be a very important feature in our portfolio moving forward. So again, just I've talked -- I've had this slide in previous presentations. But we have brownfield options right through the states. And what we're doing today is spending a bit of capital -- a small bit of capital to make sure that all our opportunities are shovel ready. So recently, you probably saw an article in the press around Morgan Solar Farm in South Australia. And we bought that land some years ago that we're just going through the process of getting it permitted by government. So we're doing that with all our choices -- with all our brownfield sites. So for example, in New South Wales, we have 3 excellent options. We have Shoalhaven which I've already spoken about, Eraring, I can easily see more batteries and potentially fast start gas plant on that site. We would have to look at our gas portfolio and how to get gas to Eraring, but that's an option for us. Equally Uranquinty power station, which is located down near Wagga, we could -- we have lots of land around Uranquinty, where we could put a solar farm equally, we have land for more fast-start gas plant and potentially batteries. So that's just a good example of us pivoting very quickly when policies or market demands reliability. Outside of New South Wales, we have lots of other options as well. So if I move to Queensland, Darling Downs, it's a wonderful site. We buy all the output from the solar farm, which is right next to Darling Downs. It has spare transmission and we can increase our fast-start gas plant on that site or equally, we can put batteries when the market demands it. Mortlake in Victoria, I've spoken about we can definitely put more batteries and we can also put more far-side gas plant there as well. South Australia, we're already putting in some fast-start gas plant at the Quarantine Power Station, we're putting in -- we've done 1 unit already, and we're looking to do the next 3 over the next year or 2. And we can also put a battery on that site, too. So I'm just telling you just how many options we've got. And again, we'll come to market when the policies and market presents itself. I'm going to get Lawrie to talk about how we fund all this. That's an important consideration, but I think there's some real choices we have there as well. So thank you. Just -- I need to just briefly talk to you about our gas supply. There is no doubt our gas portfolio is the envy of the market. It is a competitive strength for Origin. It continued to play out, and we can move gas right around the lease and seaboard. We have a lot of options to store the gas, and we're working on further options with our small investment in Golden Beach to have more storage options in the portfolio. You can see the graph, you'll see a bigger sort of lighter blue contingent in the graph, which really means we've just settled 2 of the 3 arbitrations that we settled our price arbitration with BHP and Exxon, and we only have 1 price arbitration continuing, which is with Beach, which we are hoping to settle in the first quarter of next year. We are deep in discussions with long-term supply post 2023. We're talking to all the producers and the LNG import terminals. And again, we've made real progress there, and we're hopeful of an outcome sort of in the new year. We remain in a good position on gas, and I think gas is going to be a very important fuel to ensure the grid stable moving forward. So just to recap, today, in the current market, we're well positioned in what is a very tough market. We're maximizing the position of our portfolio with our short position. So we are taking the opportunity to buy these low prices in the pool by changing our portfolio. So we come from the short side. And we're taking the opportunity to buy sort of long-term forward contracts at what fairly low prices. We've seen a sort of a bottom out in the forward contract prices. In fact, we're seeing New South Wales live from sort of the low 50s up to getting closer to 60% or around those levels. Gas remains a competitive strength with more price certainly in the portfolio. And again, we're negotiating for long-term gas supply. Looking forward, there is no doubt we can pivot more -- with more renewables coming into the system, and we can add more reliability and firming capacity, again, when conditions present themselves. At Origin, we are delivering a better reliability, more affordable supply, but importantly, a more sustainable supply for all our customers. So we're making real progress. So on that note, I'll just say thank you, everyone, and I'll pass on to Jon Briskin.

Okay. Thank you very much, Greg, and good morning, everyone. I've got Tony Lucas, who's going to join me here today and will present how we've set up our retail business to grow into win as the future energy market transition. So with that, I think I can get you to go to the next slide, Page 39. Now -- what you can see here is that we have a quality retail business. And when I spoke to you last year, I committed us to delivering the foundations that were necessary to set ourselves up for the future. Firstly, a large and growing customer base, we're able to defend, share and create value. And to that end, you'll see we've grown our customer accounts overall, but we remain disciplined in our pricing, our product construct, our retention strategies in order to make sure we maximize customer lifetime value. Our churn rate remains significantly lower than the market. And you know we've got a market-leading brand. We have strong sales channels, and we underpin all of our acquisition and retention strategies with increasingly sophisticated data and analytics capabilities. Secondly, we've got a leading customer experience. And however you measure it, whether it's strategic NPS, whether it's reputation, mobile app ratings or complaints, the experience that we now have with our customers has vastly improved -- now one of the keys to that has been our investment in digital capabilities and the way customers interact with us is different, and it's especially different in a COVID environment, where our digital platforms, our app, our web, chat, messaging, they're all now the dominant ways that customers choose to get in touch with us. The other part has been the simplification of our product set where customers can get value in being with Origin and whether that's through everyday rewards, the certainty of rate bundling or even home assistance products. The third key attribute is a low-cost operator are committed to reducing our cost by $100 million, and we're on target to do so. Our business now has 34% less FTE than in FY '18. And just to give you one example, the impact of our digital transformation, our core volumes are almost 40% lower than what they were in FY '18. And we're going to go again and you'll see that we're targeting another step change in our costs. So if I can get you to please turn to the next slide. So at the same time, we've been able to establish and grow new sources of value. Now our community energy services business has grown profit by 70% since FY '18. The business services the energy needs and hot water needs of residential apartment developments primarily -- and we're #1 in that market, and we're increasingly being asked by developers and body corporates to supply their future energy solutions such as solar, storage, EVs or broadband. Now solar and storage business has seen gross profit grow by 40% since FY '18, and we've made significant improvements in net profit by lowering our cost of sales and fulfillment. In terms of broadband, it's still very early days. But overall, I've seen a positive impact on churn. My focus has been very much on getting our customer experience right before scaling, but I definitely see that there's opportunities over time. And earlier Tony talk shortly about the work that's being done in our future energy products and solutions, and I see plenty of opportunity there, too. I remain very pleased with the progress and growth opportunities through our partnership with Octopus energy, they continue to grow exponentially, both in energy customers and technology licensing, and I'm just going to touch on that over the next couple of slides. So if I can give you just to turn over to Slide 41. Now just a reminder here, the deal with Octopus is the next step in our strategy, and we believe it's going to set ourselves apart from the pack because it's going to deliver another radical improvement in our customer service. A material reduction in our costs and that will extend our leading cost position. And we're committing to cash cost savings of $100 million to $150 million annually from FY '24 and those savings are in addition to the $100 million cost out target that I mentioned before. We see further growth potential in our own retail business through the products and offerings that we can use that to apply the technology platform with as well as an enabler for the future business models that you'll hear Tony talk about shortly. And importantly, and I want to stress that we do see continued upside through Octopus own U.K. and international growth prospects, and I am very excited about those prospects. So as a reminder, there were 2 parts of the deal with Octopus. The first was a perpetual license to their cutting-edge technology and a collaboration to adopt their operating model. And the second was a 28% interest in Octopus as a fast-growing technology company and energy retailer. Now in terms of those prospects with Octopus, they do continue to grow from strength to strength. The energy business in the U.K. now has almost 1.8 million customers. And in our language, it's around over 3 million customer accounts. And they're growing by circa 40,000 to 60,000 customers a month, and they continue to dominate customer experience, awards and they've accelerated to future energy propositions with the recent acquisition of Upside Energy, and they've also launched a great new EV charging solution for that market. And they made a modest acquisition in the U.S. as they look to tailor their Kraken platform for that market and look at further growth opportunities there. And then the technology business now as contracts for approximately 17 million customer accounts onto the Kraken platform, which will progressively go over time, and they have a strong pipeline of future opportunities, and they've got a very clear target to get 100 million customers onto that Kraken platform by 2027. So if I can get you to turn on to the next slide, Page 42, please. And I'm pleased with the progress we've made so far in implementing our Kraken platform and operating model into the Australian business. Now we've set up a separate business unit, we call it Retail X, and we're working side-by-side even in a COVID environment with the Octopus management team. We've had our first customer migrated onto the platform within 3 months of starting and we currently have just under 10,000 customers, and we're scaling up each week. We're tracking to a target of 50,000 customers by the end of December. And then you're going to see us progressively migrate all customers across all states over the following 24 months before we then decommission our legacy systems. So with that, I thought what I'd do is just play a short video that can highlight our progress. And then I'm going to hand over to Tony and he's going to talk about the work we're doing collectively to take that customer experience and those products into the future energy world -- So if I can get you to play the video, please. [Presentation]

Thanks, Jon. Good morning, everyone. I want to cover 4 things today. I want to retouch on our trends. I want to touch on implications on business models of those trends. I'll touch on our progress. And finally, I'll wrap up with a little bit of an insight into what that might mean for the customer. So at your last Investor Day, we talked about changes in the market. We talked about the changing landscape on both the grid side and the customer side. On the grid side, you've heard Greg talk about the acceleration with renewables, distributed assets. We've got a 5-minute settlement market coming, increased digitization and data flows. On the customer side, we talked about one-way electron flows becoming 2-way increasing connection of distributed and IoT devices and a general theme of electrification. And on both those sides, that's leading to higher fidelity and higher frequency of data. And we talked last year about how we had to become as good with data as we are with energy, and we coined the phrase data and energy converging, which Frank talked about earlier, so a year on, what does that look like? Well, we say it's accelerating. Certainly, on the grid side, there's been a lot of debate this week, how you can see that. But on the customer side, technology costs continue to flow COVID-19 has seen customers increasingly access digital channels, which Jon has touched on, and customers are generally pulling more technology. And in this changing landscape, our key asset is our access to customers and our scale. So in terms of business models, we think this changing landscape requires a reimagined business model. In the future, the customer will interact with the energy market in a much more sophisticated way than the dollars a kilowatt they do today. But this has to be encapsulated in a simple and engaging interaction tailored by the customer. It won't be 4 paper bills a year and a couple of commodity products, that will become the old world where a static SAP deployment is the viable technology. What we think you need in the future landscape is a platform model. So why do we think this? We think that people's homes and businesses will continually interact with the energy market. The level of engagement of this interaction will be tailored by the customer. It can be either very engaging or not engaging at all in terms of their level of desired engagement. But we must deliver this in a simple and most appealing way. Done well, then the relationship shifts from a grid energy sales, but becomes a richer, deeper and stickier relationship that centered around a broad set of products and assets that sit on that platform. For the home or for the business. So on products, today, customers are demanding an increased range of distributed assets and IoT devices and their energy offerings. These must be tailored to specific customer consumption and to their lifestyle. The platform allows the ecosystem to grow not only in products but in customization and the marginal cost of delivering this will fall. Finally, control, even today, energy companies must offer control. Coordinating and controlling various devices, either in the business premise or in the home is becoming a requirement now that has to be simple and seamless and outcome-focused for the customer, whether the outcome is a lower cost of energy or a lower carbon footprint. So bringing all of this together, -- it isn't -- we end up with empowered customers that are participating in dynamic and personalized product offerings. And that's why we're moving from a static SAP-based deployment to what we're calling a platform. So the key ingredients of the platform really are a simplified digital layer, an AI orchestration layer and supported by a low-cost flexible billing layer. The commonality amongst these layers is the data. And so that's why you require cloud-based data and analytics capability to stitch it all together. The combination of these 4 layers are what we mean by a platform business. And this is a place where we interact and transact with our customers and a way for our customers to develop a relationship with energy and their home or business in a way that's tailored for them. So last year, we talked about building blocks, I just want to touch on this. This has been a multiyear journey. So I started back in 2017, where we stand the local and international ecosystems for the latest technology that we thought would appeal to customers and would help us participate in this changing landscape. Early on, we did low cost and agile trials to learn what appeals to customers and learn what technology might work. Then once we develop conviction on these, we would move into a build-out phase or a deployment phase where we are now. So let me touch on each of these quickly. So first, we knew we needed a flexible and low-cost CRM and billing system. We moved SAP to the cloud. We've got benefits in terms of cost savings, but we didn't get the flexibility we think you will need in the future. To do the trials, we spun up agile retail capability and that gave us the conviction to move it a step further, and you've heard Jon talk about Kraken, which will take us a step further in both cost and flexibility. Secondly, we spoke last year about data and analytics. We believe we have a world-class data and analytics platform. We gave you some examples last year. But just to touch on that again, 25 systems consolidated, over 700 data sets consolidated, simplified the business, massive operational and cost benefits. So that you've heard Jon talk about supports the day-to-day, not only today, but also supports the development of new products in this space. Next came out orchestration layer. So very early on through the Free Electrons program. We trialed some VPP programs. And then we realized that we have core IP and Greg's business of settling demand and supply and balancing the market. And we needed to codify that for a digital and distributed world, and we went about and did that. It's now connected into Greg's business. and we're scaling it and there's 85 megawatts on that platform today. Finally, the digital engagement layer. Luckily for me, Jon has a fantastic team in his digital team, and they've created what I think is the industry-leading digital capability in app. And what we can now do is leverage that in the connected energy space to bring that to life for customers. And this will move us from passive linked kilowatt hour margins to highly engaged customers where the margin comes from a broad ecosystem of assets on the platform as well as products. So I'll just touch on what this might look for the customer. And you see this various -- we've picked 4 here, but there's other products in the pipeline. And what I'll do is I'll just dive a little bit into Spike. So we're taking our first steps for Spike which we did a soft launch in August. This is gamified behavioral demand response. And this is not just about demand response, but it's about driving engagement. So we've got 20,000 customers since August, and that was only a soft launch. We've run 1,600 Spike hours with a 70% participation rate of customers enrolled in that program, and we've seen those customers reduce energy by about 50%. We don't run this once a quarter when it's hot in Q1, we run this more frequently. We learn every day what engages customers, what day they're engaged, what time of the day they engage. It's a constant interaction. We'll look to roll out more features progressively including increased connection of IoT devices that then automate that and make that simple for customers. But initially, we're very excited about how customers have engaged with this. The second proof point that evidence platform is the right direction, is how fast we are able to do this. We met this company through Free Electrons, that's called OhmConnect and based in California. They have about 400,000 customers on their demand response. We took that behavioral demand response. We Australia noise it, plugged it into the platform in a matter of months. And all through a lockdown, well, the lockdown was in Australia anyway, but that just shows how fast we could roll out. So these products are just the beginning. We've got a broad pipeline of compelling engaging products to come at various stages of testing and deployment. And as we learn more about what engages customers and what they want in their homes and businesses, we'll continue to evolve and grow that. But really, at the end, all we want the customer to see is a fully integrated and simple connected experience that's tailored to their specific needs. So with that, well, thank you and hand to Lawrie.

Good morning, everyone, and thanks for joining us at our investor briefing. I'm Lawrie Tremaine, Origin's, Chief Financial Officer. Mine is the last presentation this morning before I hand back to Frank for a wrap-up and Q&A. And my presentation today focuses on capital management as it often seems to. Right, so our view of our financial position in the medium term, and therefore, the way we should be managing capital is largely unchanged. We continue to believe that our businesses will generate substantial free cash flow across the business cycle. Our asset portfolio is well positioned for the energy transition. What that means is that we're not under any pressure to invest in the short term. However, as Greg said, we're readying opportunities for investment when those opportunities and the time is right. We continue to expect to pay a dividend consistent with our payout ratio of 30% to 50%. We do have an established hierarchy for allocation of our free cash flow and it starts with that base level of dividend. We continue to target debt-to-EBITDA of 2 to 3x in support of our credit rating. And finally, we continue to measure and weigh further debt reductions against the quality of our growth projects and the potential to return excess cash to shareholders. The pandemic, the resulting economic impacts, including lower commodity prices. The abundance of low-cost capital and also the willingness of governments to intervening markets are shaping our business and investment environment today. As we develop a response to that changing environment, we've -- we adopted the mindset of lower for longer. And what that means is we're not waiting for the oil price or for a vaccine to move us forward. Rather, we've acted decisively to reduce costs, both capital and operating costs. And in the case of APLNG, we've taken significant steps to reduce our development spend. We've added to our oil price -- sorry, our oil hedging position in order to further protect balance sheet from downside risk. We continue to manage our debt book to lower cost and to eliminate funding risk. As we look at the changing environment, we find that the propensity for governments to intervene and that low cost of capital means we've got to start to look at different business models in order to compete successfully. And those business -- those new business models may include partnering or co-investing with others. As stewards of shareholders' capital, we need to continue to assess our asset portfolio and be prepared to recycle capital into more attractive opportunities. In recent years, we've developed a muscle to drive transformational cost and organizational change across our business. This has been evidenced by Mark's achievements in APLNG to drive cost out programs over multiple years. Also, Jon, with the retail initiatives to deliver $100 million cost reduction and more recently with the Kraken implementation. We're also working to build the capability and the mindset for continuous improvement. Now just focus on the middle chart here for a moment. This analysis starts with our total operating cost base and it adjusted for a range of one-off factors and including our generation OpEx in order to get to what we consider to be the true reflection of productivity and cost performance in the company. And what you can see there is a reduction of about $80 million across that period. Now that reflects what it really feels like within Origin. We see from inside of origin today a simpler, lower cost and leaner organization. Now that's not to say that the job is done. And we still see plenty of opportunities for improvement. And in fact, we're investing in that improvement now. So we have an oil hedging program that exists for the one reason, and that's to protect our investment-grade credit rating against an extreme low oil price or an extended period of low oil prices. Our exposure to oil comes through our contracted LNG sales at APLNG, and it represents the largest financial risk that we have at Origin. The annual exposure being around about 24 million barrels of oil equivalent. As a consequence of the LNG pricing lag and also the benefit of hedging gains in this current year, we're now in a position where 77% of our oil exposure for the FY '21 year has already priced out at a price of -- an average price of USD 45 a barrel. And looking forward, we currently have around about 6 million barrels hedged in '22 and about 3 million barrels hedged in '23. In '21, we expect our businesses to again generate significant free cash flow enough to be able to confidently pay a dividend in line with our stated policy to fund continuing investment in growth, this year, in particular, the ongoing obligations with Octopus Energy, and also further reduce our debt. We are expecting a free cash flow yield, as Frank said earlier, of between 12% and 15%, which is well above the ASX 200 average. Our successful efforts, particularly APLNG to lower our breakeven costs. The strong cash flow generating nature of energy markets and continuing good cash conversion and our flexibility to manage spend are all factors that deliver this resilient cash-generating company. Maintaining an investment-grade credit is the top priority, and it informs decisions and actions in our management of capital. We target BBB, Baa2 credit rating in order to provide a buffer over sub-investment grade in the event that we're at the low point of an economic cycle, or if we make a larger capital investment. We ended FY '20 at the low end of our target capital band and that was caused for us to celebrate. That really was the culmination of a long journey of recovering our balance sheet after a substantial investment in APLNG. With lower earnings forecast in FY '21, We fully expect to move back up towards the top end of that band, of course, driven by short-term factors, but particularly COVID and its impact on commodity prices. Despite moving back towards the top end of the band, we don't expect that we will come under any ratings pressure even at the oil prices we've seen over the last few months. We've managed to further reduce -- we expect to further reduce our interest cost by another $50 million to $70 million this year. And if we look over the longer term, we've reduced interest by annualized interest by $350 million over the year since 2016. We continue to manage our debt book and look to reduce refinancing risk by moving out the tenor of our debt and reducing those refunding towers. We remain committed to returning cash to shareholders in the form of our base dividend. We're proud to have paid $880 million in dividends to our shareholders since dividends returned with the interim dividend in 2019. As we all know, at the end of 2020, our Board elected to pay a dividend just below our stated guidance range of 30% to 50% at 27%. This came about simply because of the uncertainty that we faced in a COVID world with continuing lockdowns in Australia and around the globe and the impacts that, that had on demand and commodity prices. Nevertheless, that 2020 dividend still represented a 5.6% yield, which once again is well above the ASX 200 average. As I foreshadowed many times before, we expect dividends over the next 2 years to be either partially or perhaps even unfranked. Now that comes about because of some very significant but one-off tax deductions that are available in our FY '20 tax year. Now it's difficult for us to forecast far beyond those 2 years because there's too many variables. However, longer term, Origin expects to be a large payer of tax, of corporate tax. And for that reason, we do expect to be able to fully frank our dividends out into the future. Now I've talked before about our framework for allocating capital. Now this is some framework has been in place for about 3 years now, and it's quite mature. And so we're able to assess its effectiveness by looking back on the decisions that we've made in the past and the decisions that we face as we look forward. If we take Octopus as an example, now that decision was taken right in the midst of COVID lockdown in Australia. It was a very tough decision from a timing perspective. But from a -- from the perspective of clarity in terms of the alignment of that investment with strategy and also the investment returns that it promised well above our cost of capital, it was actually quite an easy decision. As we look forward to Beetaloo, we recognize that any Beetaloo decision would be made in a decarbonizing world. And therefore, as we consider those investment decisions we know that we'll have to factor in the potential for a carbon tax, and we'll have to measure that project against an appropriately risk-adjusted hurdle rate. And finally, as governments look to underwrite or otherwise support our projects, and I'll use the recent 250 megawatt battery opportunity in Victoria, which is underwritten by IMO. As governments look to do things like that, clearly, we'll have to consider different options to fund those projects, as I said earlier, considering partnering, considering core investing so that Origin can play a role in those sorts of investments that matches Origin's capabilities and asset position. while others could perhaps bring their lower cost of capital. So with that, I'll pass on to Frank for wrap and Q&A. Thanks.

Okay. Thanks, Lawrie, and thank you for all your patience. I just got 2 slides to finish on the wrap up. The first is really our guidance update in the form that you would have seen previously. And as I should also be clear is that it's obviously FY '21 guidance update. And it's given on the basis that market conditions and the regulatory environment do not materially change. And we've also noted this year clearly that considerable uncertainty exists just relating to potential on our impacts of COVID-19. But we update that guidance. And you can see that we have maintained the Energy Markets earnings guidance. We've spoken before, there are headwinds in the underlying commodity markets of that business that continue to put pressure on earnings, and we are entering the summer period, and so they remain key things that drive the earnings this year. We've upgraded the guidance for APLNG productions up. I won't go through the numbers. The production is up. The CapEx and OpEx is actually up. It's nearly -- it's almost entirely driven by that royalty, updating for the latest royalty regime. Otherwise, you would see the same cost base underpinning that increased production. So I think there's an underlying productivity, but offset by some increase in those royalties. And that translates really to that $3 to $3.40 a gigajoule. Distributor breakeven reduces to USD 25 to USD 29 a barrel. And you can see there the impacts of the LNG and hedging and corporate costs, and they're really all broadly in line with what we've previously guided. And that brings me just to the last slide, which takes us back to the beginning message, which Origin is a customer-focused energy business positioned for a low-carbon future. I hope you've seen through this morning how we're focusing on both maximizing value and also growing the organization. And if I see -- if you look at this slide across those 2 businesses really firstly, in Energy Markets growing that customer scale leveraging a distinct platform, a low-cost position, a better customer experience and hopefully you can see an evolution of new products and services. At the same time, we've got exposure to Octopus' Energy's growth prospects, and we've seen that growth outstrip even our own expectations 6 months ago, and that growth is both in technology and also retailing across various markets. Clearly, you've seen announcements this week, and you've seen more broadly announcements regarding energy policy -- We do see an opportunity to work with government and other parties and partners to invest in generation through the transition. Clearly, we call for just a smooth orderly transition, but also just a coordination. And on that basis, that we'll find a way to actually participate and create opportunities for Origin. And the last is really that broader trend of electrification is going to drive demand and growth for electricity for many, many years to come. When I turn to integrated gas, I hope you really appreciate just the strength of the reservoir, the underlying performance of the fields, but also the operating performance and capability that's now in existence at APLNG, that's driving that unit cost base lower again. We have a focus on 5 key value levers of which we're delivering against at APLNG with more to come. And clearly, we're looking at the opportunities to realize value as we go through appraisal and farm down at Beetaloo. And we've introduced today for the first time to our investors the progress and the work that's been underway over the last 12 to 18 months in relation to renewable fuels, particularly that it's customer led, it's commercialization. It's both export markets and domestic opportunities, and I hope you can see that brought to life. I'll probably just leave with another overarching theme that probably weaves its way through this slide. And that I think over the last several years, Origin's become a partner of -- there's a broader ecosystem of companies that we work with. It started, I think, with a journey where we've got very strong partners in APLNG and ConocoPhillips and also Sinopec and good customers with Sinopec and Kansai and that's really gone from strength to strength. You can see that it's emerged through investments in companies like Octopus pursuing its goals. And I think you can see through Tony's presentation, we've established a capability to be partners with smaller start-up organizations. And we believe that you will need to work with your own capabilities but also those partners to continue to create value. So on that note, I will finish the presentation, and we will now go to questions. And as I understand the process is the questions will come through. I'll stay here at the lectern, but alongside the camera move to the relevant team member. And hopefully, that works as a really smooth process for you. And now I'm going to hand over to coordination for questions coming in.

[Operator Instructions] Our first question comes from Tom Allen with UBS.

Firstly, on the future for Eraring. Can you clarify how the New South Wales electricity infrastructure road map might influence the future earnings from Eraring? And also provide some more color on how you might increase gas to the plant, which you've been doing so and can retain the same capacity. Am I right to presume that it might mean you accelerate the shutdown of the coal units there?

Okay. So we'll take that question in 2 parts. One is a much broader transition question and the second gets to the sort of operating regime. I'll start off on the first one, Tom, and then I'll ask Greg to make some comments as we get into the operation of the plant. And hopefully, we address them adequately. The first one really is in the electricity road map. It really does all come down to the detail. And the reason I say that is that anyone introducing 12 gigawatts of renewables and also long-duration storage, the pace by which that comes in will have both an impact to both market and also timing of transition for existing plant. So from my perspective, anything that brings additional supply in, if it's done in an orderly way, you would expect that to have a smoother transition for customers. But if it comes in, in sort of a more chaotic way forcing closures earlier, then you could see a lot more volatility on that journey along the journey. If your broader question is, with more renewables coming in, underpinned by government, let's say, contracts and let's be clear, the detail of those would also need to be understood to understand the risk-reward relationship, then all things being equal, more supply coming in, puts downward pressure. And then it's all about how does the orderly exit of the existing plant that really will determine how that plays out. We might then go because I think you -- your second part of your question, really does then talk about how we might operate Eraring through that transition. And so I might pass over to Greg to give you an answer, and then we'll see if that answered your question.

Thanks, Tom. Yes, look, there's a few points here. One, Eraring is in very good shape today. So quite good reliability with those units. But regardless of government policy, there's just enough renewables to ensure that we adapt to the changes, right? So again, the more deployment of stay-in-business CapEx into other technologies, we'll pivot on that. So again, we're looking at all options. But the first one is just the major maintenance cycles. We've already gone out to 4 years, we can increase that prudently. So we make sure we're within our regulatory guidelines, but we can go out to 5 years. And that's a big saving cost. There's many other things we can do. Already, it's getting to a point where we have so many renewables today that we could take a unit out in the shorter periods. And just be a lot more entrepreneurial with our power station. But the challenge for the team is really to get that stay-in-business CapEx out, get it lower and put it into the new technology such as batteries. The other thing, too, the other point I made in my presentation was just the amount of options we have in other technologies such as Shoalhaven and Uranquinty as well. So we really are focused on getting the newer technology into our portfolio.

So Tom, did I hear you reference gas as part of that question? I just want to make sure we pick that up, yes.

Yes. Let me talk about that.

That's correct, Frank. Just a reference to potentially getting additional gas into the plant and potentially accelerating the phaseout of coal.

Yes. Tom, just a few comments. We're looking at all our sites. I mean, Uranquinty straight away is probably a place where you can put in gas now. We have gas to that site. We have spare gas transmission. So that would be a first option. Longer term, though, if we wanted to bring in more, there's the potential of bringing -- getting gas in the system up to Eraring. There's a pipeline that goes past. It's too small today, but we could potentially expand that pipeline up to Eraring and run fast in cycles. So that is something we are looking at. Certainly, you can probably see the Jemena comments. I think they released something to the media a few weeks ago about that potential. So again, we're looking at all those options.

Yes. So I think just wrapping that up, Tom, I think, clearly, I made some comments earlier in the week at the Energy Summit that the policy will send a strong signal. The details are important to make sure it happens in the right way. It, therefore -- and I think what you're hearing from us is that, therefore, we're seeing this as a moment in time as to weighing up do we continue to invest what level of capital into a Eraring versus the smooth transition and its operation changing more rapidly and then we deploy that capital into new technologies, and that's a live -- that will be a live discussion as we learn more about their policy.

Yes. Okay. And it sounds like the pace of that capacity coming into New South Wales will be key in the future for Eraring. Just my second question on your hydrogen strategy. Very interesting to hear the 3 channels that you're pursuing through liquid green hydrogen, green ammonia production in the domestic hubs. Can you provide any indication of a target ROCE for these investments and the time frame expected to achieve that? I didn't see any detail on your target ROCE like in previous years.

Yes. I'll -- we can certainly talk about. We started to talk about ROCE more broadly. I can get Lawrie to give you a view on that. And the only thing I would say about that on target ROCE, and it was probably embedded in Lawrie's presentation to be very clear about it. The risk reward for every project, Tom, will be different depending on both counterparty construction and market risk, and we will assess the risk. And a good example would be that if you're in a project that's putting in relatively simple technology, all our batteries that have got underwritten contracts, we will adjust our view on what the returns are for that and how we might introduce capital versus the higher-risk projects that might have construction and longer-dated commodity risk. So that's what I'd say, overall. But you're right, we didn't put the target in there, but it increasingly it's -- you can't give an average to the world anymore. And I might ask if Lawrie's got anything. You're happy with that, Lawrie. Yes. So that's the way we think about it. So we haven't -- and in relation to hydrogen, we would therefore have to assess that in terms of both counterparty construction and technology risk, and we would make that assessment, you would expect, in a simple way. Did you want to...

I will add, Frank. So I think our approach into hydrogen projects, like Frank said, there's no target as well as in sort of value engineering at the moment. But what I'd also say is it would need to include trading and portfolio benefits when you think about it from the electricity side.

But yes, so we haven't got to that point. Yes, we do the value engineering, but it is progressing well, and we'll -- we're certainly happy to share with you at the appropriate time when we get to that stage, but it's earlier than that at this point.

Our next question comes from James Byrne with Citi.

So firstly, just for Mark around APLNG production with the upgrade there. Where are you expecting to monetize that extra volume? And if you've got your annual delivery plan yet, how should we think about DQT calendar '21?

And so, I mean, if I go back to what I said which was -- we expect with that increased demand that we'll see it come through in our long-term contracts. So I think that's the sort of the hint there for -- and if you remember, for CY '20, the current year, remember, these ADPs are calendar year. So for CY '20 DQT was declared. But CY '21 is obviously the live discussion at the moment. But what we're saying is we think the long-term contracts will be strong, and the demand will be strong inside those contracts. So you should expect it to go there. And the other point you should expect it to go is we are selling a number of spot cargoes. I won't give the exact number, but we sold a number already through this winter period, as you see that our demand coming on in the Northern Hemisphere.

Yes. Okay. That's really helpful. Okay. My second question is just around this pivotive language in terms of talking about partnering with government and some of the off-balance sheet participation in new generation. Look, I totally appreciate that this is early and it's evolving. So maybe you can't really provide a particularly clear answer yet. But I'm just wondering what kind of form those deals could take. For example, you talked about the government's lower cost of capital can make deals in on where Origin operated because if I put my consumer head on for a minute then that sounds like a pretty happy median to me, but if I get into my analysts' hats on, I'm worried about the kind of returns that you can get in electricity over the medium to long term. So just trying to pick that apart a little bit. Then, as Tom mentioned earlier about ROCE targets, I just fear that where government intervention is going today is going to be a fairly material headwinds to ROCE.

Yes. So I think -- well, it is a little early for that. I think we need to understand that we have got both sort of a NIM market design going on at the same time as state governments looking to put contracts, which "have" put options and a whole range of terms around them as to how that risk gets managed. So it is a little early to be more specific than that. But I think it's also fair to recognize that depending on those arrangements, we'll be flexible about how we deploy capital to that. We will be absolutely focused on what that return is underlying for Origin in either the equity and/or the average return over those assets. So we're certainly aware of that. At the same time, we're going to see a market that's going to evolve, and therefore, how the returns come back to integrated players over time. I think they're going to increasingly be across both customer trading and the underlying asset position, and that's the way we think about it at the moment. But just, James, it is a little early in that regard and how this will play out, but that's directionally how we see it going. And you're right, we'll have to demonstrate to you and all investors that they're good investments for us to make, that's -- that goes without saying.

Our next question comes from Ian Myles with Macquarie.

Just a couple of things. First, on APLNG, can you maybe give us a bit of color on the cost reductions, which you're achieving in the very near term, but also in the medium term? How much do you see it being structural or -- versus maybe a deferral or development CapEx or -- of drilling and requirements because you feel to just be -- materially it's better than what you had originally expected?

Yes. So I mean, I'll give you the high level that Mark could be delighted when I say there's no wall of CapEx sitting beyond '24, okay? That's the first message to be very clear. And nor would it have been the right thing for us to say there'd be some step change there and give you guidance in the next years. We're just giving you horizons where we're getting more and more confidence. So it's more associated with underlying performance of fields and structural change. So I -- we'll just get Mark to just fill that in a little bit further for you, Ian?

Maybe Ian, the color might be, I think Frank is right. If we think about just the drop in medium-term outlook that we've given, the way you think about that drop is sort of 80% of that is coming from the field performance and probably 20% is coming from existing sort of improvements in the levers. And so then the game then becomes really keep nailing the levers hard so that then we can drive that number further, if that makes sense.

So that productivity stuff when you talk about levers, Mark, would be around worker -- I'm sorry, Ian. Go ahead, Ian, sorry.

No, sorry. Okay. And in terms of the LNG market side, we hear -- I would have said for 3 years, you talked about you had lots of options. But we've really seen you actually exercise any sort of development option in a battery gas plant or the like. I guess what I'm trying to get to understand is what do you need to see Or what catalyst can we see, which will actually see Origin commit to one of those sort of moves?

Yes, that's a good comment and have an equally strong answer. If you looked over the last 3 years, I would say you would not expect us to invest in chaos unless we needed to. And we haven't needed to, so you're better off preserving that capital. And it has been a rapid transition over the last 12 months, Ian, but it's only not just 12 months ago that wholesale electricity prices were also sitting at $85 and so you're in a different place, and the shape was coming. And so it really has all been around confidence around the settings. And that's why I say not having that requirement in the early part is it's got to be a trigger to see that you can actually, therefore, going back to the earlier question see a reasonable return for those assets over time. Now what has happened in the last 12 months, there has been progress. It came in the form of the work that the ESB has been doing for NEM '25. And the number one item on that agenda, I think, across the industry is what they call the resource adequacy mechanism because the key question is about firming generation. Now it's been reported in the press and everything else about everyone's got slightly different submissions about the strength of that signal. And we felt that needed to be strong enough signal to warrant the investment. And for that, we thought it should be a targeted capacity mechanism, which is not the same as necessarily where New South Wales has gone, but it should be for new capacity. Other alternatives such as reliability obligations being strengthened can potentially work. We think that just probably is a little less direct. So what you're seeing right now, Ian, is, and also now you see in New South Wales, so you wouldn't want us to pull a trigger last year and then find that New South Wales comes in with this policy. And so as a result, we're now starting to see that firm up. And we just felt that the risk was too great under the variability of outcomes. And what we're seeing now is that those outcomes will probably narrow and then it comes back to getting the appropriate return. So that's really the key signal. I don't think -- I think everything else about understanding markets and so forth leave that we can absorb that, but it's really just around the settings and that there's not a surprise that comes from it. And we just need the coordination there. That's the key message, Ian. It's nothing more fancy than that.

And can you give us a little color on the battery opportunity missed out on how far you're off? And are you getting to a point that batteries are becoming an infrastructure item, not a integrated energy item in terms of investing that it has to be done with the infrastructure investors?

We know we won't. We know we were very close because we're into the final shortlist. So we know we are very close. It will come down to what's stimulated and what's supported by underlying contracts, Ian, versus what's left for market services. And as you know, you've got essential systems services now being designed by the ESB as well as part of their market design. So it really will depend on those. And I'll ask Greg just to add a few more comments more specifically. But yes, we do see different risk profiles depending on those arrangements.

Yes, an excellent question, by the way. But I'm delighted that we're finally moving on some of these options. But with the Mortlake, there was a specific service that the Victorian government through IMO wanted, which is a system integrity protection system and that was one of the services, but we built the battery to also use it for our own purposes to arbitrage, provide FCAS services and capacity for the portfolio. So it was a dual purpose. So again, we're all in the running. We learned a lot about batteries. It was an excellent process, and it puts us in good stead for the next opportunity that comes around.

Your next question comes from Gordon Ramsay with RBC.

My main question has already been asked. But Lawrie, just on the dividend policy. So your free cash flow yield for FY '21 is expected to be 12% to 15%. Your policy is to pay out 30% to 50% of free cash flow. I just want you to go over your priorities first. It sounds like the debt metrics are going to get in the way of this in terms of paying what I consider to be a good dividend.

Obviously -- good morning, Gordon, by the way. Obviously, the Board's got to make a decision about a dividend from time to time. And so it's difficult for me to preempt the Board other than saying, hey, look, I think we should be able to pay a dividend within the policy this year and meet all of our other obligations. One -- as I pointed out in my speech, one of those obligations is the continuing payments we need to make for our Octopus equity investment, continuing to roll out the Kraken platform. And so we'll be able to meet that. And in addition, we expect to reduce our debt somewhat during the year, probably not to the same extent we have in recent years. But we still want to see our debt heading downwards, particularly given trending towards the top end of that range.

Okay. And just one other one from me. In the Beetaloo, it looks like a delay is possible because of the wet season. Understand that. Could you just comment on -- and it's probably for one of the technical guys. What gas flow rate and composition you're targeting once you do get significant gas breakthrough at Kyalla 117? And this is presuming you undertake nitrogen lift.

I feel I just have to pass you on to Mark.

Yes. I'm one of the technical guys.

Today.

Today. So yes, we haven't actually shared those details. And we probably won't in this meeting either. I think we've got a detailed sort of success criteria. You are right that we will be bringing in nitrogen lift. We're just working through the wet season. I think I've said before, Beetaloo is pretty remote. It's sort of like offshore, onshore. And so we just need to work through that. It might be possible, but it might not be as well, and we really go to HSE and costs, and we'll have to look at both of those very carefully.

We haven't communicated publicly those target flow rates, Gordon. That would need to be a conscious thing. We did more broadly. So we haven't done that yet.

Particularly with joint venture partners and things like that.

Yes, yes.

Maybe a more general question then. Liquids would obviously play a key role, would you associated liquids with the gas well?

It definitely plays a key role into it.

And I think, though, what we have said and I think it's sort of -- it's embedded in the slide, maybe in the footnote, is that we do see liquids-rich gas. So the gas is coming out when we test it. We see, obviously, methane. We see ethane. We see propane. We see butane, and we see a light condensate stream. So exactly what we want to see we're seeing. We've just got to help the 1,600 meters of dense water that's sitting above the reservoir. We've got to help that get moving a little bit.

Yes.

Next question comes from Rob Koh with Morgan Stanley.

Can I maybe draw together 2 slides from the presentation? Slide 25, which is the kind of routes to market for hydrogen and ammonia. And then Slide 35, which is Mr. Jarvis' development options book. Can you comment on the ability to put hydrogen and ammonium into the existing fleet and whether those development options -- what's involved, I guess, in diverting new gases into the generation?

Yes. So...

Yes, yes. So Rob, yes, the team is looking at -- typically, these gases get blended, right? But we've actually looked at blending -- putting hydrogen into Eraring, for example. So you could do it there. But the reality is you're probably better off putting it through our existing gas plant. It can cope with it. Again, I need one of my more technical people. But at this point, there's probably a bit of capital you need. That's a small amount of capital you probably have to put on the plant, but it can cope. So we could burn that hydrogen through our existing plant. You could easily see hydrogen being a bit of a storage option for gas peakers, so -- but it can do it.

Do you want to add some comments, Mark, distribution systems and so on?

Yes, exactly. So I mean, for coal, I mean, there's 2 ways to do it right. We either put hydrogen into the gas stream or we put ammonia into the co-firing into existing coal-fired technology plants. In that case, it's a burner retrofit. In the case of gas turbines, it's an additional chamber. It's all technology that exists today. When I was in Japan last year, we saw hydrogen going into gas-fired power stations, and we saw ammonia going in. And really importantly, with ammonia, we saw ammonia going in without NOx being generated, which would be obviously the risk once you introduce the nitrogen-based compound in. And actually, that's all controlled basis where it goes in. So I think it is early days, but it is -- there is technology available.

And then there would be -- clearly depend on the grade of steel for the pipeline distribution as to the percentage blending, but that's -- I'll give you an overarching, but I'm sure there are differences around the system in terms of that plan.

Yes. Okay. Great. Maybe if I can ask a question, maybe for, Mr. Briskin. If you could just get some color on how you're seeing hardship rates and retail bad debts in this terrible of years? And if that's, economically speaking, tracking where you'd like it and if you've got any feel for the coming months?

Yes, sure. Good morning, Rob. I mean, it's like that our customers are doing it tough, and we've put a range of measures in place to support them. Within the context of our provision that we took out before the end of the last financial year, we are now tracking within that. So they are within expectations. We've extended the freeze as the whole industry has on not disconnecting customers that engage with us and that goes through to March. So we are seeing a little bit more in that active book, but we are finding customers broadly are keeping to similar levels of cash payment as pre-COVID, albeit there is still a class of customers that are creeping up a little bit, but I said it's well within our guidance and provision.

Your next question comes from Baden Moore with Goldman Sachs.

Just a quick question on the different business model going forward. Can we think about that as a funding structure for just new growth projects? Or can we take it that you will be looking at the existing portfolio and considering infrastructure monetization? And how to release capital from your existing portfolio?

Yes. I think probably, maybe that question -- it was a high level one, Baden, but let me get conceptual. If it's a question around infrastructure, as you can see that's occurring in, for example, the APLNG assets or infrastructure where you've seen activity by QCLNG and Shell alongside us, that will really be dependent on the joint venture. The joint venture would need to make decisions. To date, the joint venture partners have been -- it hasn't been a focus because they've seen it as a higher cost of debt going in or a higher cost of an obligation or fixed cost payment, and therefore, have taken a very disciplined view to that. We are obviously continuing to go into extraordinary times where that gets lower and lower that cost. So it is something we consider from time to time with the joint venture, but it really is a joint venture decision so we're not completely in control of that. But we're working constructively with them. So there's no question there, but I'm sure that I'll look that from time to time. On the balance of the assets we have, you really -- I think if you go to the core business, you'll say, what would you monetize, then you would be really looking at generation plant, if I -- that's the biggest set of infrastructure that we've got sitting in our business. And the challenge always for that historically has been that you want the operational flexibility to be able to run when you need to run versus sort of a fixed operating regime. And that's always been quite a difficult thing to square off. Maybe -- so I would probably leave you with a view that maybe in this changing world there could be some opportunities there, but I'd largely see that into the new assets, whether that overall changes your business model over time as the weight of those assets gets greater, Baden, that's something yet to be determined. But Lawrie, did you want -- you're okay? Yes, that's fine. Yes, so that's probably it. I think it's -- there's some potential, but it's always been one that has had a different operating risk and operating profile that's made that, but we do assess it from time to time.

Your next question comes from Peter Wilson with Credit Suisse.

Can I follow up the questions on the state government tenders for firming capacity? In your discussions with government and perhaps in your Victorian experience, is it your view that Origin will be treated on an even basis? Or do you feel that you'll be discriminated against in the name of introducing more competition as some of the governments have suggested?

I don't believe we'll be discriminated against by state governments. There's no doubt that the LNG program federally didn't seem to -- it didn't seem to focus on the large players. But I don't by practice, but I have -- in my discussions with the state government in New South Wales over recent weeks, I would expect to be treated equally. In fact...

Okay, good. And then...

Yes, go ahead, sorry.

Sorry, go on.