With Origin Energy Ltd (ASX: ORG) rising by 25% since the start of the year, the company’s investors may feel more optimistic than they were just over six months ago. Sure, the improving outlook for the oil price has caused sector peer Santos Ltd (ASX: STO) to move 33% higher, but Woodside Petroleum Limited (ASX: WPL) is down by 4% during the same timeframe.

Although Origin’s future is uncertain and a falling oil price would hurt its financial performance and valuation, here are four catalysts which could keep its strong share price run going.

Improving balance sheet

With Origin increasing its debt levels to record highs in order to finance the Australia Pacific LNG project, its leverage rose to levels which caused investors a degree of concern. However, in the first half of the current year it cut debt levels by $5.5 billion, with its debt to equity ratio now standing at 63% versus 84% at the end of the 2015 financial year.

Further, Origin has initiated cash preservation measures to cut net debt to less than $9 billion in FY2017. While such measures have caused asset impairments of $244 million in the first half of the year through restructuring initiatives, discontinuing geothermal activities and the deferral of large-scale IT projects, I believe that short term pain will equal long term gain in terms of Origin having a better financial position further down the line.

Cost reduction

In tandem with an improvement in its balance sheet, Origin is also cutting costs and this should help it to return to profitability faster than it otherwise would. For instance, Origin realised a $1 billion planned reduction in Australia Pacific LNG’s upstream operating costs in the first half. A full six months ahead of schedule. Its Energy Markets segment is expected to achieve $100 million in cost reductions in FY2016, while functional cost savings of $200 million are due to be recorded from FY 2017 onwards, with headcount reductions of 1,900 already being implemented.

Pragmatic strategy

While Origin would clearly benefit from a rising oil price, it is taking a pragmatic approach to its operating environment through the purchase of put options. They will protect Origin from falls in the oil price to below US$40 per barrel by partially offsetting any additional contributions to Australia Pacific LNG. In my view, this seems to be a sensible strategy since the demand/supply imbalance in the global oil market is showing little sign of correcting in the near term.

Asset sales

Further, Origin is also making non-core asset disposals in order to improve its financial position and allow it to focus on its core business. For example, it has announced the $110 million sale of Mortlake Terminal Station, as well as the sale of its interest in Contact Energy. With Origin targeting at least $800 million from asset sales, investor sentiment could strengthen further as the company’s financial standing improves.

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Motley Fool contributor Robert Stephens has no position in any stocks mentioned. 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.