Origin Energy has slashed its interim payout and warned it could suspend dividends altogether if oil prices remain depressed.
Australia's largest gas and power retailer on Thursday unveiled a half year loss of $254 million, after accounting for impairment charges related to the continuing restructure of its business.
It had reported a net loss of $25 million a year ago.
Origin said its underlying profit for the six months to December 31 fell 27 per cent to $254 million, following the sharp decline in oil prices.
Oil prices have plunged more than 70 per cent over the last 18 months, hitting a 13-year low under $US27 a barrel in January.
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The slide has hit Origin particularly hard, as it came near the completion of its giant Australia Pacific liquefied natural gas (APLNG) project in Queensland, which stretched the company's balance sheet.
On Thursday, Origin said it had cut its interim dividend to 10 cents a share, compared to 25 cents last year, but the challenging environment could affect future shareholder returns.
"Should the current low oil price environment persist through the second half of FY2016, the company will suspend dividends until appropriate debt levels are achieved," chairman Gordon Cairns said on Thursday.
Origin raised $2.5 billion through an equity raising in October and outlined massive cost cuts in an effort to pare back debt. It has cut 1900 jobs in the last year, sharply cut capital expenditure and pledged to sell non-core assets worth $800 million.
It said it reduced $5.5 billion of debt during the six-month period, helped by the sale of its stake in New Zealand's Contact Energy and the capital raising, and plans to further trim debt to below $9 billion in FY 2017.
"Having stabilised our business, our task is to focus on debt reduction. It remains our priority," chief executive Grant King told reporters.
Origin said its energy markets business - which includes retail sales to gas and electricity customers, as well as renewables, contributed the bulk of the earnings.
However, its gas business - which covers exploration and production activities, and the LNG project, was hit by lower oil prices and volumes, and weighed on the results.
The $25 billion APLNG project, which is a joint venture with ConocoPhillips and Sinopec, flagged off its first export shipment in January.
Origin has reaffirmed its full year guidance for underlying earnings to be between $1.45 billion and $1.55 billion, but slashed the forecast for its LNG business earnings to between $30 million and $80 million, down from the previous forecast of $110 to $230 million.
Origin shares were up 34 cents, or 8.74 per cent, at $4.23 each.
IMPAIRMENTS HURT ORIGIN FIRST HALF
* Net loss $254m vs $25m loss year ago
* Revenue of $6.13b, down 14 pct
* Interim dividend of 10 cents per share, down from 25 cents a year ago.
