The energy behind today’s ASX gains

In a good day so far on the ASX, it’s the energy related companies that are really seeing significant gains.

At the time of writing, the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) was up 1.0% at 4,169.2 points after a strong lead from Wall Street and some positive economic data.

As my colleague Mike King has reported, better than expected retail sales and record full-year auto sales have helped put a spring in the market’s step.

Job cuts and new projects

Among the gainers in the energy space have been Linc Energy (ASX: LNC) and Origin Energy (ASX: ORG), which both updated the market this morning.

Linc has taken steps to slash its cash burn by retrenching 60 workers, mostly from its clean energy and corporate divisions. The changes are reported to be behind a halving of Linc’s cash burn from over $38m per quarter to $19m per quarter (excluding its Oil and Gas business).

‘Cash burn’ is industry jargon for the cash loss each quarter. At the moment these parts of the company leave the business with $38m less cash than it starts each quarter with, so the halving is a significant improvement.

The company is funding that cash burn from its profitable US oil business, but shareholders must be wondering when they’ll see some of that money for themselves.


Meanwhile Origin Energy has announced that the second production facility will be commissioned at its Australia Pacific LNG joint-venture plant. Origin will have a smaller proportional holding as a result of the final investment from the joint venture partners.

The market liked both announcements, with Linc shares gaining 2.6% just before the close of the day’s trade and Origin adding 3.6%.

It was a good day for all energy stocks in the ASX 200, with every company in the S&P/ASX 200 Energy (Index: ^AXEJ) (ASX: XEJ) showing gains in the last stages of today’s trade.

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Scott Phillips is an investment analyst with The Motley Fool. You can follow Scott on Twitter  @TMFGilla . Take Stock is The Motley Fool Australia’s  free  investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  Click here now  to request  your free subscription , whilst it’s still available. This article contains general investment advice only (under AFSL 400691).

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