Origin’s Grant King should consider resigning

Intelligent Investor

Independent Financial Research

Destroying billions in Origin Energy (ASX: ORG) shareholders’ wealth is reason enough. Investors should be wary of highly indebted companies operating in cyclical industries. Gearing up when conditions are favourable during cyclical upturns can prove costly when the cycle inevitably turns down and repaying the debt becomes much more difficult. Shareholders in Origin Energy (ASX: ORG) have learnt this lesson over the past year as the oil industry cycle turned downwards, taking LNG prices – which are linked to the price of oil – down with it. By my calculations, Origin’s shareholders have lost at least $7bn while and Santos (ASX: STO) shareholders have lost $6bn. And that’s after increases caused by news that Santos had swiftly rejected a takeover offer from private equity. Origin’s problems stem from the billions in debt issued to construct its APLNG project in Gladstone, which it committed to when oil and LNG prices were much higher than they are now. Continue reading article: (VIEW LINK)


Intelligent Investor
Independent Financial Research

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