Page 20 - agl036_D9

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Economic
AGL Energy Limited 18
Ongoing profitability
Optimisation of UpstreamGas portfolio
AGL has a target of acquiring 2,000 PJ of 2P gas
reserves in the medium term to manage security
of supply.
Approach
AGL continues to be a significant purchaser of gas in the wholesale
market. AGL’s Upstream Gas group is focusing on building a
diversified domestic gas portfolio to deliver duration and flexibility.
AGL is targeting medium-term ownership of around 2,000 PJ of
2P upstream gas reserves for domestic supply
1
, but will continue
to purchase gas from the wholesale market if this achieves superior
economic outcomes.
Performance
Over the past 12 months, AGL’s gas reserves entitlement has
been expanded by 77 PJ (3.7%) to 2,166 PJ at the 2P level, and
by 342 PJ (9.4%) to 3,982 PJ at the 3P level. AGL’s share of gas
reserves in the Bowen Basin increased by 93 PJ during the year and
the first independent review at Silver Springs since the acquisition
of Mosaic Oil NL in October 2010, resulted in a downward revision
of 2P reserves by 3 PJ.
Over the next few years, AGL intends to focus on proving
up additional reserves. The potential value creation is substantial,
although the contribution to earnings will be limited until the
reserves are developed and ready for production and delivery
to market.
It is anticipated that with the investments and existing wholesale
contracts in place, AGL is likely to be able to satisfy supply
requirements for customers well beyond 2018. The combination of
remaining wholesale contract volumes plus reserves demonstrates
growth in the sustainability of the business.
Note
1 Excludes ATP 1103.
Current gas portfolio
Future gas portfolio
Legend
Contract
48%
Equity gas
52%
Gas portfolio
4,212 PJ
Legend
Contract
50%
Equity gas
50%