Origin Energy Limited released its Quarterly Production Report for its exploration and production business, reporting record production of 68.2 petajoules equivalent (PJe) and sales revenues of $424 million for the half year to 31 December 2010.

Origin Executive Director, Finance and Strategy, Ms Karen Moses, said: "The Exploration and Production business achieved record production for the half year of 68.2 PJe, a 38 per cent increase on the same period last year. Sales revenues for the half year of $424 million represented an increase of 48 per cent compared with the prior corresponding period.

"The strong result for the 2010 half year period is the result of increased contributions from the Kupe Gas Project and the Otway Gas Project in which Origin increased its interest during 2010, as well as a significant increase in Australia Pacific LNG's production.

"Australia Pacific LNG increased production by 44 per cent for the 2010 half year. Production capacity reached levels in excess of 320 terajoules per day (TJ/d) during the period. Notwithstanding severe weather conditions late in the December 2010 quarter, Australia Pacific LNG has continued to meet all of its domestic customer requirements," Ms Moses said.

Production for the quarter to 31 December 2010 was 31.1 PJe, 16 per cent lower than the September quarter 2010. This result was in line with expectations and reflects seasonal demand, planned shutdowns at the Kupe and Otway gas projects and adverse weather conditions in Queensland and the Cooper Basin. For the December quarter, sales volumes and revenues were 14 per cent and 15 per cent lower respectively, reflecting the reduced production.

Australia Pacific LNG continues to make substantial progress on its CSG to LNG project which is underpinned by Australia's largest and highest quality CSG reserves base. Commonwealth approval is the next step in gaining the necessary regulatory approvals for the project with a determination on the EIS expected by Tuesday 22 February 2011.

In the Half Year to 31 December 2010 expenditure on exploration and evaluation activities amounted to $121 million. A significant portion of this expenditure was associated with an expanded offshore and international drilling campaign which was previously advised to the market. This included the drilling or testing of five greenfield exploration wells which have not encountered commercial hydrocarbons. It is expected that the majority of expenditure associated with this exploration program will be expensed in Origin's accounts for the Half Year to 31 December 2010.

The expanded exploration program will continue into the second half of the 2011 financial year and drilling of the first of two appraisal wells on an existing discovery in Thailand commenced in the New Year.

Highlights • Half Year 2010 (July to December) production of 68.2 PJe, up 38% on the comparable period in 2009. • Half Year 2010 (July to December) revenues at $424.3 million, up 48% on the comparable period in 2009. • Production for the Quarter of 31.1 PJe, 30% higher than in the comparable Quarter in 2009 but 16% lower than the previous Quarter.

Exploration and Evaluation Expenditure In the Half Year to 31 December 2010 expenditure on exploration and evaluation activities amounted to $121 million as detailed in Section 6 of this report. A significant portion of this expenditure was associated with an expanded offshore and international drilling campaign which included the drilling or testing of five exploration wells. These wells have not encountered commercial hydrocarbons. It is therefore expected that the majority of expenditure associated with this exploration program will be expensed in Origin's accounts for the Half Year to 31 December 2010, compared with an expense of $22 million in the Half Year to 31 December 2009.

Production and Sales Summary Production in the half year to 31 December 2010 was 68.2 PJe, 38% higher than that in the comparable period in 2009 when it was 49.5 PJe. The main contributors to this significant increase in production were the Kupe Project which came on stream in December 2009 (+7.4 PJe); the increased share of the Otway Gas Project following completion of the acquisition of part of Woodside's interest in March 2010 (+8.3 PJe); the increasing CSG production now supplying gas to the Rio Tinto Alumina and Darling Downs Power Station supply contracts (+7.4 PJe); and a marginally higher contribution from the BassGas Project which undertook a planned shutdown toward the end of 2009 (+0.2 PJe). These increases were partially offset by lower contributions from the Cooper Basin due to adverse weather conditions (-1.5 PJe), lower recorded production from the Surat Basin due to the sale of stored gas in late 2009 (-1.9 PJe) and declining production in the Perth Basin (-0.9 PJe) and the onshore Taranaki Basin (-0.3 PJe).

Sales volumes were 49% higher at 81.1 PJe reflecting the higher production and higher product purchases on-sold. Sales revenues increased 48% to $424.3 million further reflecting higher sales volumes.

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