Origin Energy is raising $2.5 billion in equity

A LNG tanker.

Origin Energy is preparing to raise $2.5 billion in a rights issue.

The four shares at $4 each for every seven offered will raise cash to strengthen the energy producer’s balance sheet in the face of falling oil prices.

The offer is a 34.4% discount to yesterday’s closing price.

Part of the company’s plans for survival in a low commodity price world is to cut 800 jobs by the 2017 financial year, reduce cash costs by $200 million and selling off $800 million of non-core assets.

Origin last month announced a $658 million annual loss. Before writedowns, underlying profit was $682 million, a 4% rise.

Managing director Grant King says Origin has narrowed its focus to its two core Australian-based businesses, Energy Markets and Integrated Gas.

“Origin’s energy markets business has a track record of producing strong and stable cash flows,” he says.

Australia Pacific LNG, in which Origin has a 37.5% interest, is on track to produce its first LNG in November.

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