The Leigh Creek Energy Ltd (ASX: LCK) share price surged 16% higher this morning after its latest market update upgraded its energy resource estimates.
The $162 million energy company's share price has rocketed more than 250% in the last 12 months on strong earnings and a continued growth trajectory.
What did Leigh Creek announce this morning?
In its latest update, the company said its Leigh Creek Energy Project (LCEP) is now Australia's largest uncontracted 2P gas reserve serving the Australian east coast market.
In the Oil and Gas sector, reserves are categorised as 1P (proven), 2P (proven + probable) or 3P (proven + probable + possible).
A US-based engineering consulting firm, MHA Petroleum Consultants, certified Leigh Creek's 1,153 PJ 2P reserve which is a direct result of the company's Pre-Commercial Demonstration Plant (PCD) which produced all targeted commercial gases with commercial flow rates from a single gasifier.
The certification means Leigh Creek now sits ahead of big names including BHP Group Ltd (ASX: BHP), Beach Energy Ltd (ASX: BPT) and Senex Energy Ltd (ASX: SXY) in terms of 2P east coast gas reserves.
Why has Leigh Creek's share price exploded in the last year?
Leigh Creek investors have had a fantastic year as the share price has surged from $0.10 per share this time last year to $0.36 per share at the time of writing.
The last 12 months have seen Leigh Creek post strong earnings results and had its equity placements oversubscribed as the growth potential for the gas company has been priced into the market.
Today's certification of its 2P gas reserves means that the share price is likely to head even higher given that significant reserve is now worth quite a bit of cash.
Some estimates have put the value of the resource at $2 billion, based on a recent transaction between Origin Energy Ltd (ASX: ORG) and Australia Pacific LNG which translated to a purchase price of $1.79 per gigajoule of energy available.
With east coast gas prices remaining elevated from the short supply story, today's move of the resource into the 2P "probable" sphere should see the Leigh Creek continue its upward trajectory in the next 6-12 months I'd suspect.
For those who aren't sold on Leigh Creek's value just yet, I'd check out this buy-rated stock which is well-positioned for substantial growth as it takes booming $22 billion industry by storm in 2019.
