Origin (ASX:ORG) share price lifts amid improved FY22 guidance

Financial year 2022 looks like it could be a good one for Origin Energy.

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The Origin Energy Ltd (ASX: ORG) share price gained today amid the company’s annual general meeting (AGM) where its CEO outlined an improved outlook for financial year 2022.

Demand for LNG and high oil prices are now expected to lead the energy producer through a relatively stable financial year.

At Wednesday’s close, the Origin share price was $5.14, 0.98% higher than its previous close.

That’s a better performance than that of the broader market. The S&P/ASX 200 Index (ASX: XJO) finished Wednesday up 0.53% while the All Ordinaries Index (ASX: XAO) gained 0.48%.

Making Origin’s day in the green more impressive is the generally poor performance of its peers. The S&P/ASX 200 Energy Index (ASX: XEJ) dropped 1%.

Let’s take a closer look at the highlight of Origin’s AGM.

Origin improves FY22 guidance

The Origin share price might have responded to optimism at the company’s AGM on Wednesday.

There, CEO Frank Calabria stated it has already sold 3 LNG cargo ships to the tight Asian spot market this financial year.

When it released its full-year results in August, the company said it expected its energy market earnings to be lower through financial year 2022.

However, Origin’s now feeling more optimistic as the expected decline looks to be offset by a strong performance from Australia Pacific LNG. Cash flows from the joint venture should see Origin with more than $1 billion of extra cash in the bank, net of oil hedging.

The additional cash flow means Origin can invest in the energy transition.

Calabria also noted the oil price is currently sitting at more than US$80 per barrel. Since Origin has a breakeven price of between US$20 and US$25 a barrel, it’s looking at a healthy upside.  

However, the company hasn’t changed its guidance for the energy market’s underlying earnings before interest, tax, depreciation, and amortisation (EBITDA).

Previously, Origin stated the energy market’s EBITDA for financial year 2022 will be between $450 million and $600 million. Origin expects its Energy market earnings to improve by another $150 million to $250 million in financial year 2023.

Origin Energy share price snapshot

Today’s gains were much needed by the Origin Energy share price which has rallied more than 17% in the past month.

Origin shares are almost 8% higher than they were at the start of 2021. They’ve also gained 14% since this time last year.

Should you invest $1,000 in Origin Energy right now?

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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