AGL profits fall amid $1 billion assets review

AGL Managing Director and CEO Andy Vesey

AGL Managing Director and CEO Andy Vesey

AGL Energy gas reserves decreased almost four per cent over the past financial year to 1817 PJ, the company’s end of financial year results show.

The company cited a reassessment of the Gloucester Gas Project reserves and adjustments in production levels at the Camden, Moranbah and Surat projects for the decline.

The reserves re-assessment came alongside AGL’s 2014-15 financial statement, which showed net profit after tax at $218 million, down 61 per cent year-on-year.

The company said the 61 per cent downturn was due to a $578 million bill associated with the $117 million Macquarie Generation acquisition, which was finalised in September last year, and a $435 million impairment of the company’s upstream gas assets.

AGL in February announced it is undergoing a full review of its upstream gas assets amid consistently low oil prices. The company has shelved long standing plans for the Camden Northern Expansion Project and is looking to sell off its interest in non-core operations at Hunter Gas Project, the Cooper Oil Project, Spring Gully and Moranbah assets.

The company’s 50 per cent stake in the Macarthur wind farm, estimated value of $500 million is set to be sold off by the first half of 2016.

The asset sale aims to raise $1 billion from the sale of underperforming assets by FY17.

Additionally, the company is reviewing its management structure and operational practices with an eye towards reaching a $200 million reduction in the operating cost base and a $100 million reduction in CAPEX by FY17.

And finally, AGL confirmed the closure of all Smarter Living Stores to focus on connected services.

In a recent conference call, managing director and CEO Andy Vesey insisted the company will now focus on its Camden Gas Project, Gloucester Gas Project, Silver Springs underground storage facility, Wallumbilla liquefied petroleum gas plant, and the Newcastle Gas Storage Facility.

“The gas business has the potential to provide vital gas resources for our NSW customers and is set to contribute significantly to our balance sheet and deliver solid returns for our shareholders,” Mr Vesey said.

“It is important that we get the structure right.”

Despite the significant fall in profits, the company’s latest financial statement remained optimistic, citing after tax underlying net profits of $630 million for the year ending 30 June, up about 12 per cent year-on-year.

The company also confirmed a dividend payout of 34 cents per share.

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