AJ Lucas (ASX:AJL) has revealed a substantial turnaround from 12 months ago in its half yearly results.
The company made a $10.3 million loss in H1 FY20 but this morning reported a $9.9 million profit.
The turnaround was credited to a lift in earnings from its core drilling operations in Australia – which came in at $15.4 million – 19.2 per cent more than a year ago.
AJ Lucas CEO Brett Tredinnick credited the result to higher yielding drilling projects and efficiency measures taken.
“The group is now better positioned to maximise growth opportunities and better withstand any possible shocks,” he said.
“The board and management remain confident in the continued performance of the company’s drilling operations and are buoyed by a recent increase in levels of tender activity.”
AJ Lucas shares rose as much as 320 per cent this morning as shareholders welcomed the turnaround.
AJ Lucas (ASX:AJL) share price chart
But what about its British gas well?
The share price rise and profit turnaround came even though fracking has not resumed at its UK gas well.
AJ Lucas holds a 48 per cent stake in British gas exploration firm Cuadrilla which has a well in the Lancashire region.
In late 2019 fracking was suspended after drilling caused an earthquake and the company’s shares plummeted 36 per cent.
AJ Lucas has never given up on resuming the project and this morning revealed it holds onto hopes that some day it could resume.
Today it said the moratorium was still in place and AJL was trying to allay the government’s concerns about “sub-surface induced seismicity” – essentially more human-induced earthquakes (albeit minor) caused by fracking.
Nevertheless, the scaling back of operations allowed its earnings loss to be cut from $3.7 million to $0.4 million and it said it is “also exploring other conventional and renewable opportunities”.