Origin Energy has flagged a second-half $1.2 billion hit to its full-year results, largely relating to an impairment in its Australia Pacific LNG interest.
APLNG - a three-way venture Origin shares with ConocoPhillips and Chinese state-owned energy giant Sinopec - is facing an impairment charge thanks mainly to a fall in future oil price assumptions.
Origin, which is responsible for the operation of the APLNG gas fields and main gas transmission pipeline, expects to swallow an $815 million post-tax writedown to reflect its 37.5 per cent share in the $26 billion Queensland gas project.
Royal Bank of Canada analyst Ben Wilson said the writedown takes into account a range of assumptions - oil price, AUD/USD exchange rates, discount rates and costs - made on the value of APLNG.
"The non-cash impairments are not a surprise, with the book value of the assets running ahead of valuations mainly due to Origin's higher oil price deck and lower long-term Australian dollar assumptions," Mr Wilson said.
According to RBC, the main change in the APLNG assumptions behind the impairment was a reduction in forecast oil price from US$71 a barrel to US$67 from 2022.
Origin also expects a A$357 million post-tax impairment of its A$1.5 billion Lattice Energy assets - comprising stakes in Cooper Basin, Otway, BassGas and Kupe gas fields - which are in the process of being spun off.
Mr Wilson said the impairment consists primarily of a further six months of ongoing IPO transaction costs, consultant fees and other spin-out costs including stamp duty.
Following the company's $1.03 billion APLNG impairment taken in the first-half, the total APLNG impairments recognised by Origin this year are up to A$1.85 billion.
At 1527 AEST, shares in Origin were down 1.6 per cent, or 12 cents, at $7.03.
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