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Is the Origin Energy Ltd share price a bargain?

Shares in Origin Energy Ltd (ASX:ORG) finished last week down a whopping 9% including a fall of almost 4% on Friday.

The share price of Origin has now backtracked approximately 17% from its recent March high around the $5.40 mark.

Last week’s slump in Australia’s leading vertically integrated energy company could reverse course this week however, with a number of potential positive catalysts…

Firstly, the price of a barrel of oil actually rallied around 8% last week with 6% of this gain occurring on Friday night after the local share market closed.

This arguably sets the scene for a strong performance by ASX-listed oil and gas stocks on Monday.

The 8% gain in the oil price, marked the strongest weekly gain since February and came as reports surfaced that there had been a reduction in the stockpile of US crude oil.

Secondly, all eyes will be on an OPEC meeting which is scheduled to occur this week. The latest reports suggest that there is increasing agreement amongst OPEC members to reach an agreement and stabilise the oil price.

Thirdly, energy sector asset sales are once again in the picture, reminding investors of the potential for shareholder value to be realised.

Last Friday, Origin announced the sale of a non-core geothermal asset in Indonesia for $30 million. Meanwhile, The Australian newspaper last week also reported that the sale of GLNG’s pipeline, partly owned by Santos Ltd (ASX: STO), could be gaining support amongst the joint venture partners with a sale tag of $6 billion being touted.

Foolish takeaway

Renewed talk of asset sales such as the GLNG pipeline could bring the scale and value of these major LNG projects back into investors’ focus. Coupled with the potential for an agreement by OPEC to put a floor under the oil price and energy stocks could be set for a better period ahead.

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Motley Fool contributor Tim McArthur owns shares in Origin Energy Ltd. 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.

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