The Renergen (ASX:RLT) share price is soaring 24% higher today. Here's why

The Renergen (ASX: RLT) share price is surging sharply higher today, up 24.5% following an update on its gas project.

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The Renergen Limited (ASX: RLT) share price is on a tear today, up 24.58% at $1.50 in early afternoon trading.

The All Ordinaries Index (ASX: XAO), meanwhile, is heading the other way, down 0.8% at time of writing.

Why is the Renergen share price shooting higher?

The emerging helium and natural gas company's share price is soaring today following an update on its phase 2 Virginia Gas Project.

Located in Free State, South Africa, the Virginia Gas Project contains one of the richest helium concentrations recorded around the world, with readings of up to 12%.

The company reported it has contracted with 3 companies for the engineering studies of the project.

Saipem SpA was granted the front-end engineering design (FEED) contract to develop the liquid natural gas and liquid helium processing facilities. EPCM Holdings – currently constructing Renergen's Phase 1 gas gathering pipeline – was awarded the FEED contract to develop Renergen's Phase 2 gas gathering pipeline. And Sproule has been contracted to evaluate and certify the reserves.

Renergen reported that these 3 contracts will finalise the feasibility studies for the Virginia Gas Project's phase 2 development. It expects this to be complete in the second quarter 2021, after which the board will take its financial investment decision.

Commenting on the contract awards, CEO Stefano Marani said:

This is a significant step forward in the planning of Phase 2, as it not only defines the total capital expenditure required but will clearly help define the project's financial parameters.

Working with organisations like Saipem, EPCM and Sproule brings a wealth of knowledge, experience and technical capability to the overall project, which we believe will be of great benefit to our stakeholders and the long-term value of the Virginia Gas Project.

EPCM managing director Tom Cowan added:

EPCM looks forward to our continued partnership with Renergen to further develop the Virginia Gas Project. Having been involved since the very early stages of the development, we are proud of the progress thus far and are optimistic for what is to come from Phase 2.

Renergen share price snapshot

Following on today's gains, the Renergen share price is up 37% so far in 2021. That compares to a 1.5% gain from the All Ords.

Though still down from its February 2020 peaks, the Renergen share price is up more than 34% over the past 12 months.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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