The Origin Energy Ltd (ASX: ORG) share price spent today in the green despite the company announcing it has been hit with a non-cash impairment charge after it agreed to sell a 10% stake in Australia Pacific LNG.
The impairment charge is worth between $190 million and $200 million. It will be recognised in the company’s results for the first half of financial year 2022.
As of Thursday’s close, the Origin share price is $6.19. That’s 0.32% higher than it was at the end of Wednesday’s session.
For context, the S&P/ASX 200 Index (ASX: XJO) also gained 0.3% today.
Let’s take a closer look at today’s non-price sensitive news from Origin.
Origin’s $200 million impairment charge
The Origin share price moved in line with the broader market on Thursday despite the company announcing its half year results, being released on 17 February, will include a writedown of up to $200 million.
It follows Origin’s decision to sell 10% of its stake in Australia Pacific LNG to EIG Partners. The institutional energy infrastructure investor agreed to pay $2.12 billion for the stake in the asset.
The transaction is expected to be completed in the first quarter of 2022.
In today’s release, Origin said the charge will be partially offset by the release of a $100 million to $110 million benefit from the foreign currency translation reserve.
Additionally, the energy company expects to recognise a capital gains tax expense of $170 million to $180 million from the sale.
Though, it noted no significant cash tax payment is expected from offsetting tax deductions.
Origin share price snapshot
While the broader market has struggled in 2022 so far, the Origin share price has moved higher.
It has gained 15% year to date. In that time, the ASX 200 has slipped 4%.
Origin’s stock is also trading for 39% more than it was this time last year.
The post Origin (ASX:ORG) share price gains despite $200 million financial hit appeared first on The Motley Fool Australia.
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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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