Why is the Origin Energy share price having such a dire day?

Origin Energy falls prey to a weak utilities sector…

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Key points

  • The Origin Energy share price is down 1.2% this afternoon
  • Investors are still selling off the company's shares despite it being cleared of Russian sanction concerns
  • Origin's chair has committed to seeking further advice around the matter in the event circumstances change

The Origin Energy Ltd (ASX: ORG) share price is struggling to find its footing today. Shares in the Australian electricity and gas retailer are slipping into the red along with the utilities sector on Tuesday.

In afternoon trade, we can see that the utilities sector is one of the worst-performing, down 0.76%. However, there are other sectors worse off, including tech shares and energy.

Meanwhile, the Origin Energy share price is receiving more than its fair share of the sell-off. At the time of writing, shares are down 1% from their previous close.

Russian oligarch won’t land Origin in hot water

In a positive determination for Origin Energy, the energy retailer has not been found of any sanction breaches with Russia.

According to Reuters, the Australian Sanctions Office shared the verdict this morning after concerns were raised around Origin’s involvement with Russian Viktor Vekselberg. The billionaire was pinned up on Australia’s sanction board last month as Russia continues to press forward with its attack on Ukraine.

For context, the affiliation between Origin and Vekselberg comes about via a joint venture (JV), by the name of Falcon Oil and Gas, that the pair are involved in together. Last month the Australasian Centre for Corporate Responsibility (ACCR) called for the JV to be suspended.

However, today the ASO noted that Vekselberg is currently not making any financial benefit from the asset. This is as a result of no gas being produced, and therefore no revenue being realised.

In response to the decision, Origin Energy’s chief Andrew Thornton noted:

While no gas is currently being produced and no revenue is being generated, Origin will continue to exercise diligence in this matter, and seek further advice should joint venture structures change or should the project progress beyond exploration.

Where does the Origin share price go from here?

Having laid immediate concerns regarding Russian sanctions to rest, where might the Origin Energy share price be heading next? Well, recently analysts have been fairly split on estimates for the Australian energy giant.

Following a 20% run since the beginning of the year, some brokers are cautious that any near-term growth might already be priced in. This is a perspective shared by analysts at Bloomberg, holding a price target of $6.43 on the company.

Nonetheless, the Origin Energy share price has been a winner for shareholders over the past year. Over the past 12 months, Origin has returned 45% once dividends are taken into account.

Motley Fool contributor Mitchell Lawler 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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