The energy behind today’s ASX gains

The energy behind today's ASX gains

Full steam – or should that be gas – ahead for our energy sector

Scott Phillips (TMFGilla)

Scott Phillips is The Motley Fool’s Chief Investment Officer in Australia. He is Advisor of The Fool’s flagship investment service, Motley Fool Share Advisor and the Portfolio Manager of Motley Fool Everlasting Income and Premier Portfolio, as well as running our most premium service, Motley Fool Platinum. He is passionate about investing, having managed his own portfolio for over 15 years. A dyed-in-the-wool Fool (in the best way), he has been a member of The Motley Fool since 1999. Scott holds a Bachelor of Commerce (Management) and a Graduate Diploma of Accounting. Before joining The Fool, Scott worked in various Sales and Finance roles in industry, which has allowed him to see the good, bad and the ugly of corporate management close-up. Giving him a great understanding of the way businesses run – and what separates the business wheat from the chaff – Scott wholeheartedly agrees with Warren Buffett when he said he was a ‘better investor because I am a businessman and a better businessman because I am an investor’. Scott left a successful career to follow his passion – helping our members achieve the best possible investment returns, and helping Australians learn to better manage their money. It’s no surprise he ended up at The Motley Fool.

Published July 4, 2012 4:05 pm AEST

In a good day so far on the ASX, it's the energy related companies that are really seeing significant gains.

At the time of writing, the S&P/ASX 200 index (Index: ^AXJO) (ASX: XJO) was up 1.0% at 4,169.2 points after a strong lead from Wall Street and some positive economic data.

As my colleague Mike King has reported, better than expected retail sales and record full-year auto sales have helped put a spring in the market's step.

Job cuts and new projects

Among the gainers in the energy space have been Linc Energy (ASX: LNC) and Origin Energy (ASX: ORG), which both updated the market this morning.

Linc has taken steps to slash its cash burn by retrenching 60 workers, mostly from its clean energy and corporate divisions. The changes are reported to be behind a halving of Linc's cash burn from over $38m per quarter to $19m per quarter (excluding its Oil and Gas business).

'Cash burn' is industry jargon for the cash loss each quarter. At the moment these parts of the company leave the business with $38m less cash than it starts each quarter with, so the halving is a significant improvement.

The company is funding that cash burn from its profitable US oil business, but shareholders must be wondering when they'll see some of that money for themselves.

APLNG A-OK

Meanwhile Origin Energy has announced that the second production facility will be commissioned at its Australia Pacific LNG joint-venture plant. Origin will have a smaller proportional holding as a result of the final investment from the joint venture partners.

The market liked both announcements, with Linc shares gaining 2.6% just before the close of the day's trade and Origin adding 3.6%.

It was a good day for all energy stocks in the ASX 200, with every company in the S&P/ASX 200 Energy (Index: ^AXEJ) (ASX: XEJ) showing gains in the last stages of today's trade.

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Scott Phillips is an investment analyst with The Motley Fool. You can follow Scott on Twitter @TMFGilla. Take Stock is The Motley Fool Australia's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691).

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