Source: Kapitales Research

Highlights

• Integrated Gas revenue declined 12% quarter-on-quarter due to lower LNG prices and reduced sales volumes.
• Natural gas sales volumes dropped significantly, reflecting weaker trading activity and lower demand for power generation.
• Octopus Energy earnings guidance downgraded, driven by regulatory changes and rising cost pressures in the UK.

Origin Energy Limited (ASX: ORG) declined 2.740%, with its share price falling by AU$0.299 to AU$12.420. The decline follows the company’s March 2026 quarterly update, which highlighted mixed operational performance alongside softer earnings trends across key segments.

Revenue Pressure from LNG Pricing and Volumes

The Integrated Gas segment reported revenue of AU$1,855 million for the quarter, down AU$247 million from the prior quarter. The decrease was largely attributable to weaker realized LNG prices and lower sales volumes, partly influenced by the strengthening of the Australian dollar against the US dollar and subdued contract activity.

Declining Gas Demand Weighs on Volumes

Natural gas sales volumes fell 32% compared to the previous quarter, largely due to reduced trading activity and lower demand for gas-fired power generation. Increased penetration of renewable energy and battery storage also contributed to lower gas utilization across the energy mix.

Production and Commodity Trends Remain Soft

Production declined 3% quarter-on-quarter to 164.5 PJ, impacted by natural field decline and fewer operational days during the quarter. Additionally, realized LNG prices remained subdued at US$9.51/mmbtu, reflecting weaker global pricing trends.

Octopus Energy Guidance Downgrade Adds Pressure

Origin revised its FY26 EBITDA expectations for Octopus Energy to a range of -AU$70 million to AU$30 million, down from earlier guidance. The downgrade reflects regulatory changes in the UK, higher gas capacity costs, and adverse weather conditions impacting performance.

Outlook Influenced by Market Volatility

While electricity sales volumes showed moderate growth, broader energy market volatility, declining gas demand, and margin pressures are expected to influence near-term performance. Recovery will depend on stabilization in commodity prices and improved demand conditions.

Note- All data presented is based on information available at the time of writing.

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