The Santos share price lifts amid joint venture news

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Brendon Lau

Brendon’s passion for shares started by accident in 2003 and he has worked in various roles around capital markets ever since as a trader, stock analyst and markets reporter with the Australian Financial Review. Most of his wealth has come from share investing than any other asset class, and that has given him the financial freedom not to work full-time, if he chooses to. Brendon is a medium to long-term investor who aims to hold positions for a year or longer and is focused on fundamental analysis, although he will occasionally use technical indicators to time his entries and exits. Brendon has an MBA from Melbourne Business School and is RG 146 certified. He lives in Melbourne with his wife, three kids and two dogs.

Published May 17, 2022 1:08 pm AEST

| More on: STO

The Santos Ltd (ASX: STO) share price is outperforming today after it announced its joint venture (JV) has been appointed Preferred Tenderer of two gas exploration areas in Central Queensland.

The new areas are contiguous with existing project areas held by Santos and its JV partner, State Gas Ltd (ASX: GAS).

Both of the new areas are highly prospective for coal seam gas in the Bandanna Formation, according to State Gas. The prospects also could contain conventional gas and are not constrained by domestic gas reservation.

Not only will the new areas connect the JV partners' existing projects, but they will also provide economies of scale and other synergies to the companies.

The exploration areas cover 1,035 square kilometres and will lift State Gas' acreage by 60% to 2,630 kilometres square.

Santos owns 65% of the new permits and is the operator – given its experience in running big projects.

State Gas executive chairman Richard Cottee commented:

"Santos is a major player in the industry, with a long track record of safe and sustainable operations. Of particular relevance here is its extensive holding in the area, and its unrivalled experience with the Bandanna coals, the primary target of both these new blocks and our existing Rolleston-West project.

Santos share price also boosted by oil price gains

The Santos share price jumped 2% to $8.26 during lunchtime trade when the S&P/ASX 200 Index (ASX: XJO) added a modest 0.3%.

The bigger winner is the State Gas share price, which fired up 12% to 28 cents at the time of writing.

But today is a good day for ASX energy shares as a whole. The 2.5% uplift in the Brent crude price to US$113.95 is energising the sector.

Why is the oil price rising?

The overnight rise in the oil price comes on the back of news that the harsh lockdown in Shanghai could be ending.

The Woodside Petroleum Limited (ASX: WPL) share price is also up 2% to $31.12 and the Beach Energy Ltd (ASX: BPT) share price increased 4.4% to $1.71.