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.
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