Origin Energy Ltd (ASX: ORG) has been booted out of the S&P/ASX 20 (Index: ^AXTL) (ASX: XTL) and replaced by Transurban Group (ASX: TCL).

Origin Energy’s share price has hardly moved in trading today, down 2 cents at $5.06. But much of the damage had already been done. Origin’s share price has dropped 56% since a year ago and is a long way off the highs of $14.18 reached in early September 2014.

Back then, the oil price was trading above US$100 a barrel, and Origin was expected to make billion of profits not just from its oil assets but its 37.5% share in the Australia Pacific LNG project.

Unfortunately for Origin, it had taken on too much debt to fund its share of the project, the oil price crashed down 70%, and the company was forced to raise billions in equity to prop up its balance sheet, and sell its 53% interest in New Zealand company Contact Energy for net proceeds of NZ$1.8 billion.

The falling share price meant Origin’s market cap has also plunged significantly to $8.9 billion. Transurban’s market cap is currently $22.8 billion.

Origin still faces a multitude of issues, particularly if the oil price remains under US$40 a barrel into the 2017 financial year. The company was forced to buy put options to provide a partial offset to any additional contributions Origin might need to make to the APLNG project if oil prices are under US$40 a barrel.

Rather than making billions of profit, the APLNG project may only just breakeven, with Origin estimating breakeven prices between US$38 and US$42 a barrel.

The other major issue is the company’s level of debt. At the end of December 2015, Origin had $9.3 billion in net debt – which you may note is above the company’s current market cap.

Foolish takeaway

Origin is a highly risky proposition currently unless oil prices regain and stay at a higher level – something which appears unlikely.

Forget Origin and discover the 'new breed' of blue chips that could take your portfolio higher in 2016

These 3 "new breed" top blue chips for 2016 pay fully franked dividends and offer the very real prospect of significant capital appreciation. Click here to learn more.

The report is free! No credit card required.

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.