Origin Energy has flagged a hit to profitability a day ahead of its half-year earnings, announcing it will take a $1.9 billion impairment charge against the value of some of its major assets.
The energy producer and retailer has, however, firmed up its full-year earnings guidance, with the bottom end of its forecast range now raised to $2.45 billion, from $2.37 billion previously.
It has kept the upper end of the guidance range at $2.62 billion.
The major portion of the impairment includes a $1.03 billion writedown in the book value of its stake in the massive Australia Pacific LNG project in Queensland.
Origin, which owns 37.5 per cent in the ConocoPhillips-operated project, said the writedown was the cumulative effect of several factors but mainly because of an increase in US dollar-denominated interest rates.
"The impairments are not a surprise, nor do we think Origin should be marked down for them," RBC Capital Markets' analyst Ben Wilson said.
The APLNG writedown comes after similar impairments by rivals including Santos and BG/Shell on their Queensland LNG projects last year following a slump in oil prices.
The $26 billion export-focused APLNG project shipped its first cargo in January 2016, and has quickly ramped up production, driving earnings and revenue growth for Origin.
Origin will also take a $578 million impairment on the Poseidon oil and gas asset in the Browse Basin - which it acquired from Karoon Gas in 2014, with the block now not likely to be developed anytime soon for supplying ConocoPhillips' Darwin LNG plant.
It will take also $170 million of impairments against some conventional oil and gas exploration assets that are to be included in the new company that is being spun off from Origin.
Origin will take a further $114 million charge on its 33 per cent stake in the Energia Austral hydroelectric business in Chile.
The company said the non-cash impairments would have no impact on cash flow or earnings for the half year.
Origin in January said its half-year oil and gas revenue had more than doubled, thanks to a sharp lift in production from APLNG and higher prices.
At 1355 AEDT, Origin shares were down 0.4 per cent at $7.265.
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