IGas Energy stock price surges 600%: Will lifting of fracking ban spur another spurt?

IGas Energy PLC is a UK based oil and gas exploration and production company. The company is engaged in exploring, appraising, developing and producing oil and gas properties.

Recently the UK-based oil, gas exploration and production company, IGas (IGAS) has seen its stock price surge almost 600% this year, as the group benefits from rising global energy prices. In the past week alone, the IGas (IGAS) share price has risen 31% and its believed that with the UK lifting its ban on fracking, a further stock price surge could commence.

Last week the UKs new prime minister, Liz Truss lifted the government ban on fracking for shale gas in England, as part of her £150bn ($175bn) energy plan to help limit rising costs. Companies like British Gas' parent group Centrica (CNAl), have been benefiting from high energy prices, which have led to consumers and businesses paying higher bills.

Fracking was banned in 2019, as opposition from environmental groups grew and people became concerned over earth tremors. In addition, fracking was alleged to have started a mini earthquake in Blackpool in the UK three years ago.

Centrica (CNAl) share price chart

Fracking ban could boost profits of natural gas suppliers

Truss believes the move will help boost the UKs domestic gas supplies. However, Keir Starmer, leader of the opposition Labour party, said it would not help reduce bills. Nevertheless, Truss is moving forward with lifting the ban and energy companies like IGas (IGAS) may profit even further.

IGas (IGAS) has welcomed the move and in a statement released on 8 September the group said: “We have always believed the science, as well as the need for increased domestic production of gas, supports a lifting of the moratorium.”

“The data that we have collected in the Gainsborough Trough over the past five years shows that we have a world class shale gas resource which is now, given the energy crisis, a strategic national asset.”

IGas said that the development of its shale gas assets has the potential to provide secure and affordable energy for the UK in the near term, helping to decouple the UK from volatile and competitive international gas markets.

“Aside from the clear benefits in job creation and balance of payments through producing indigenous natural gas, we will support local communities with a comprehensive benefit package,” the statement said.

IGas (IGAS) said this move from the government was imperative to helping with the ongoing energy and cost-of-living crisis.

Will IGas see further stock price rises？

Back in February, it was reported on the companies that could benefit from rising natural prices.

But recently it was announced with pleasure to report that the IGas Energy plc (LON:IGAS) is up 151% in the last quarter. But don‘t envy holders – looking back over 5 years the returns have been really bad. In fact, the share price has declined rather badly, down some 65% in that time. So is the recent increase sufficient to restore confidence in the stock？ Not yet. We’d err towards caution given the long term under-performance.

Mike Hamilton, market analyst and founder of Tradetheeasyway.com, told Capital.com at the time: “It was time for natural gas prices to rise. The shale taps were switched on and fracking was popular and global warming contributed. So, it was only a matter of time before natural gas prices spiked.”

Rising natural gas prices have caused problems in the industry. With these high prices it will impact the economy throughout this year and into the next, Hamilton added.

Experts believe that certain stocks will do better than others if natural gas prices continue to rise and its not just the bigger energy suppliers that will benefit; analysts believe that less well-known energy suppliers may reap the natural gas price increase harvest.

With that said, now that the fracking ban has been lifted, is IGas destined to see further profit？

In a report produced by IGas in April, it said with the right support and a lift on the ban on fracking it could deliver five well pads each with up to 16 wells in 18 months, which would be enough to supply three million homes with cheap domestic gas.

“I like IGas Energy, who have done well as part of this economic cycle. All the utilities have done well and will continue to do so, even companies like Drax Group,” Hamilton said.

IGas (IGAS) received more good news recently, as it was announced that Odey Asset Management had purchased a 3.17% stake in the group.