Why the AJ Lucas Group Share Price Rose Today

What happened to the AJ Lucas Group share price?

Shares of AJ Lucas Group Ltd [ASX:AJL] gapped up strongly at market open and briefly broke into a 52-week new high today in early trading.

Why did AJ Lucas shares do this?

Shares broke into new highs on the news of the UK government giving planning consent to test the flow of gas at Cuadrilla’s Preston New Road exploration site in Lancashire, UK.

The UK government has also advised it is likely to grant consent for a similar application at the Roseacre Wood exploration site pending further consultation.

AJ Lucas has a 46% stake in both exploration sites.

In granting consent, the UK government  made use of new powers to overturn the Lancashire County Council, which initially rejected  the  fracking applications.

What now for AJ Lucas Ltd?

Confirmation of gas flow will make this the largest onshore gas field in the UK.

It’s big news for the company. The company share price has been beaten down over the last few years; investors might now start to look at the stock differently.

The economics of the fracking are still uncertain, and will continue to be until a significant amount of exploratory drilling has taken place.

It’s still unclear whether the fracked gas will be competitive with the cost of imported gas (imported in tankers most commonly from Qatar).

Clearly there are risks involved. You could watch the chart of the company share price and see how it reacts to the positive news. Should the share price find higher support, it may be one for the watchlist going forward.

Terence Duffy,
Cycles, Trends and Forecasts

Terence Duffy is an analyst and chartist, specialising in researching economic trends and cycles.  His primary focus is housing and land affordability. But you can also depend on him to offer his unique analysis of stock market charts. As Terence will show you, the charts often forecast, well in advance, the good or bad news to come.

Money Morning Australia