Origin’s Grant King should consider resigning

Investors should be wary of highly indebted companies operating in cyclical industries. Gearing up when conditions are favourable during cyclical upturns can prove costly when the cycle inevitably turns down and repaying the debt becomes much more difficult.Shareholders in Origin Energy (ASX: ORG) have learnt this lesson over the past year as the oil industry cycle turned downwards, taking LNG prices – which are linked to the price of oil – down with it.By my calculations, Origin’s shareholders have lost at least $7bn while and Santos (ASX: STO) shareholders have lost $6bn. And that’s after increases caused by news that Santos had...

Investors should be wary of highly indebted companies operating in cyclical industries. Gearing up when conditions are favourable during cyclical upturns can prove costly when the cycle inevitably turns down and repaying the debt becomes much more difficult.

Shareholders in Origin Energy (ASX: ORG) have learnt this lesson over the past year as the oil industry cycle turned downwards, taking LNG prices – which are linked to the price of oil – down with it.

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