PERTH (miningweekly.com) – ASX-listed oil and gas major Origin Energy has launched the retail component of its A$2.5-billion renounceable entitlement offer, after raising an initial A$1.35-billion through its institutional entitlement component.

At the end of September, Origin launched a A$4.7-billion capital initiative aimed at strengthening the company’s balance sheet.

In addition to the A$2.5-billion capital raise, the company would also implement additional A$2.2-billion targeted cash preservation initiatives, including reducing capital expenditure (capex) and working requirements during 2016 and 2017 by some A$1-billion, and targeting up to A$800-million worth of noncore asset sales by 2017.

The reduction in working capital requirements would include a 40% reduction in capex by stopping uncommitted exploration and production projects and by limiting expenditure to joint venture and permit commitments.

The company would also exit geothermal and international exploration activities, which could result in a write-down of between A$100-million and A$150-million and could result in an additional A$53-million exploration expense in Vietnam during 2016.

The initiatives were aimed at reducing Origin’s net debt to below A$9-billion by the end of 2017.

“We believe this package of initiatives is prudent in light of current market conditions and strikes a reasonable balance in the best interest of all shareholders,” Origin chairperson Gordon Cairns said at the time.

Some 27.4-million new shares were made available in the institutional shortfall bookbuild, which was conducted on October 2, at an offer price of A$4 each.

It was expected that the retail component of the entitlement offer would raise a further A$1.2-billion. Eligible shareholders would be allowed to subscribe for four new shares for every seven shares held, at an offer price of A$4 each.

Following the completion of the entitlement offer, Origin was expected to issue some 636-million new shares, resulting in a total of 1.74-billion Origin shares being in issue.

The entitlement offer would open on October 13 and close on October 26.