AJ Lucas Group Ltd, a mining contractor listed on the Australian Stock Exchange, provides services to coal and coal seam gas companies. Besides drilling for the mining industry, AJ Lucas is also known to offer engineering and construction services to other industries.
For the last month, AJ Lucas has witnessed its share prices fluctuate, going to a high of 46 cents and then falling to 38 cents. This share price fluctuation started when the mining contractor announced that Cuadrilla Resources had received the necessary permission from the UK Government to drill and frack four gas wells located at the Preston New Road site in Lancashire.
The Government had imposed a moratorium on fracking; however, it was lifted in 2012. After Third Energy, Cuadrilla Resources is only the second mining company to receive a permit for fracking.
Secretary of State for Communities and Local Government Sajid Javid announced that he would also be granting permission to drill and frack at Roseacre Wood. AJ Lucas owns 46.85 per cent of the licence that covers Roseacre Wood. The mining contractor also has a 45 per cent shareholding in Cuadrilla Resources.
Fracking has been a contentious topic in the UK. Several local governments and communities have been up in arms against fracking as there are fears that it would degrade the natural heritage and contaminate groundwater.
However, with the UK presently importing 50 per cent of its gas and estimates showing that the country would have to import 80 per cent of its gas by 2020 to meet its needs, it has become imperative that the UK develops and encourages its shale gas industry. This will ensure its energy security, particularly since the North Sea’s gas fields have reduced their production substantially due to high operational costs and plunging oil and gas prices.
It is anticipated that the recent permission given to Cuadrilla Resources will be challenged by environmental groups and local communities.