Exploration & Production

In FY2011, the Exploration and Production business delivered record annual production of 135 Petajoules equivalent (PJe), an increase 
of 30 per cent on the prior year. Commodity sales revenues also increased to a record $835 million⁽¹⁾, an increase of 32 per cent on the prior year. The record performance was achieved amid a challenging operating environment with extreme weather conditions impacting 
a number of the Company’s assets.

Notwithstanding these external factors, Underlying EBITDA for Exploration and Production was $325 million, 30 per cent or $75 million higher than the prior year. The increase was driven by higher average commodity prices, together with a full year contribution from Kupe, Origin’s increased share of Otway and higher production from BassGas and Australia Pacific LNG. The strong performance by Origin’s offshore operating assets was partially offset by lower production from onshore assets in the Cooper, Surat, Perth and Taranaki basins, along with higher exploration expenses from an expanded greenfield exploration program.

The 2P reserves attributable to Origin across its areas of interest as at 30 June 2011 totalled 7,041 PJe⁽²⁾, which is an increase of 13 per cent 
or 834 PJe on the prior year. The uplift in reserves was driven by increases in CSG reserves held through Australia Pacific LNG and 
also in the Ironbark area in Queensland.

Origin employees at the Spring Gully Gas Plant

During the year, Origin undertook an expanded greenfield exploration program both domestically and internationally. This included three offshore wells in Australia and New Zealand, four wells in South East Asia and a substantial seismic exploration program.

In New Zealand, two offshore wells were drilled in the Northland Basin, though these failed to encounter commercial hydrocarbons. Looking ahead, planning is continuing for the drilling of a deepwater offshore well in the Canterbury Basin off the east coast of the South Island with Origin’s partner Anadarko Petroleum Corporation, which is currently expected to occur in the 2012 calendar year.

Origin is also pursuing exploration activities in a number of international regions where the combination of geological prospectivity and market opportunities provides an incentive to explore. Efforts to date have focused on a number of countries in South East Asia as well as Kenya on the prospective east coast of Africa.

Origin drilled four exploration or appraisal wells as part of farmin arrangements for a portfolio of five exploration blocks across north-east Thailand, Lao PDR and Vietnam. None of these wells encountered commercial hydrocarbons and all wells were plugged and abandoned. Origin also operates Block 121 in the Song Hong Basin in Vietnam where additional seismic data was recorded and evaluation continued. Planning for a well in 2012 is continuing, and Origin is seeking to farmout some of its interest in this permit.

In Kenya, Origin completed an agreement with Apache Corporation to direct its 50 per cent share in the permit, with Apache reimbursing Origin’s historical costs accounting to US$13 million and agreeing to meet a component of Origin’s cost of the first well to be drilled in the area. Apache has also assumed operatorship of the permit. A well is due to be drilled in the permit prior to January 2013.