By Robb M. Stewart
MELBOURNE, Australia--Origin Energy pledged to pay out up to 50% of its free cash flow each year as dividends after recording a big jump in annual profit.
The Australian energy producer and retailer only resumed dividend pay outs in its latest fiscal year after wrestling its debt burden lower and as income rolled in from a flagship natural-gas export operation on Australia's east coast.
Net profit increased to 1.21 billion Australian dollars (US$821.3 million) in the 12 months through June from A$280 million the year before, the energy company said Thursday.
Underlying earnings before interest, tax, depreciation and amortization were 16% higher at A$3.23 billion, it said.
The company plans to pay a dividend of 15 cents a share for the second half of the year, for a full-year payout of 25 cents.
It resumed dividends with its first-half results, after suspending them in 2016 to focus on paying down debt. Loans built up with investments including its share of the almost-A$25 billion Australia Pacific Liquefied Natural Gas project in eastern Queensland, which counts ConocoPhilips (COP) and China Petrochemical Corp. as partners.
Origin said it would aim to pay shareholders dividends equating to between 30% and 50% of free cash flow a year. It also will operate a dividend reinvestment plan, with no discount as the company will buy shares on-market.
Origin last year finalized the A$1.59 billion sale of a basket of conventional oil-and-gas assets to Beach Energy, and this year agreed to offload a coal-seam gas development in eastern Australia to its flagship liquefied natural gas venture for A$231 million.
The company said its strong earnings over the last year were driven by a higher effective oil price, cost-cutting and stable production at the APLNG project, which delivered net cash flow to Origin of A$943 million. Still, its energy markets arm saw a decline in electricity earnings due to pricing changes for some customers and stiff competition, it said.
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