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).
New tenders lifting sentiment towards the Santos share price
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.
The Santos share price lifts amid joint venture news
Separately, Santos also announced that its other JV with Central Petroleum Limited (ASX: CTP) has been given approvals to carry out certain activities. These include rig contracting and environmental and land access approvals.
This JV is aiming to drill three sub-salt exploration wells in 2023 looking for hydrocarbons, helium and naturally occurring hydrogen south of Alice Springs.
The Santos share price has gained over 16% in the past year. This is thanks in large part to the war in Ukraine which is driving up oil prices.