Despite having massive coal reserves in its eastern states, there is a growing trend to use alternate energy sources to provide power for Australia.
Origin Energy (ASX: ORG) is a vertically integrated company involved in exploration, development, production and distribution of energy in Australia and New Zealand. Its key operating segments include oil and gas exploration and production of conventional oil and gas; coal seam gas (CSG); liquid natural gas (LNG); and power generation and energy retailing. Regarding conventional oil and gas, Origin has several offshore exploration permits in Australia, New Zealand and the Pacific region and onshore gas permits. Production basins include South Australia and South West Queensland Cooper, Otway, Bass, Surat, Perth, and Taranaki.
Origin holds 37.5% of Australia Pacific LNG. Australia Pacific LNG is a CSG to LNG joint venture partnership between Origin, ConocoPhillips and Sinopec. Woodside Petroleum (ASX: WPL) already produces LNG for export on the west coast. Another Australian listed company active in developing a soon to be completed LNG project on the east coast is Santos (ASX: STO), with Gladstone Liquefied Natural Gas (GLNG). On 19 December last year, Santos announced that an agreement with Origin Energy had been made for supply of CSG to their GLNG project.
Origin is the owner and developer of gas-fired power generation in Australia. Origin operates eight power stations across NSW, QLD, SA and VIC. Also, Origin generates renewable energy from wind, hydro and geothermal sources.
Origin operates as an energy retailer with approximately 4 million customers in Australia and New Zealand, focusing on electricity, natural gas and liquified petroleum gas (LPG) in NSW, QLD, SA and VIC and is a major supplier of LPG in the Pacific. It provides retail automotive LPG through more than 800 service stations throughout Australia.
Origin looks towards a sustainable approach to developing growth. The focus is on maintaining its position as a leading Australasian integrated energy company that participates both up-stream (i.e., exploration, development and production) and down-stream (ie electricity, LPG and LNG distribution and sales). It focuses on developing and procuring competitive sources of energy and related products and services to better meet customer energy needs.
With increasing concern about global warming due to excessive burning of coal, use of alternate energy sources with lower environmental impact is the way of the future. Burning coal seam and natural gas has a lower carbon output than burning coal and other alternate sources, such as wind solar and geothermal, have little or no carbon emission.
Foolish takeaway
Invested in many ways to serve the domestic electricity and LPG markets plus overseas LNG markets, Origin has positioned itself for substantial earnings growth for decades to come. LNG production starting in 2015 will be a game changer for Origin. It is recommended as a buy between $13 and $15. It's currently trading at $14.75.
