The All Ordinaries Index (ASX: XAO) is down 0.9% in morning trade on Tuesday, but this junior ASX energy stock is heading the other direction.
And fast!
The rocketing stock in question is Energy World Corporation Ltd (ASX: EWC).
Energy World shares closed yesterday trading for 3.6 cents. At the time of writing, shares are changing hands for 8.4 cents apiece.
That sees shares in the ASX energy stock up a whopping 133.3% today.
Here's what's got investors overheating their buy buttons.
Image source: Getty Images
ASX energy stock surges on $489 million divestment news
Energy World shares are rocketing after the company announced an agreement to sell its Siemens gas and steam Turbines, located in the United States, to Hallador Energy Co (NASDAQ: HNRG).
The sale is expected to bring in gross proceeds of US$350 million (AU$489 million).
The ASX energy stock expects net proceeds of around US$331 million, after transaction costs. That's assuming there are no material adjustments to the current baseline estimate of restoration costs.
Before completion of the sale, the gas turbines need to be inspected and refurbished by a recognised original equipment maintenance (OEM) provider.
The company said it has received an initial estimate from a recognised provider for the refurbishment costs based on a borescope inspection that was completed last year. The provider estimated that the required costs will be approximately US$22 million. It expects the works to take around 13 weeks to complete.
But management added that the final costs "remain subject to adjustment" following detailed inspection of the gas turbines.
The company also said that Hallador will deposit up to US$35 million into escrow to facilitate the packing and loading of the turbines.
Energy World noted it will book a non-cash impairment to the carrying value of the Power Plant assets of approximately US$285 million.
The company expects the sale to be recognised as part of its FY 2026 financial results.
What did Energy World management say?
Commenting on the sale that's sending the ASX energy stock flying today, Energy World CEO Alan Jowell said:
The sale is an important transaction for EWC and demonstrates the company's execution against a key element of its strategic review, namely the monetisation of selected assets to unlock value for shareholders.
Jowell added:
At the same time, global demand for gas turbines has strengthened considerably, driven by rapid growth in electricity demand from AI, data centres and cloud infrastructure.
Our turbines are unique in that they have never been fully installed, commissioned or fired and can be delivered within a relatively short timeframe, relative to widely reported lead times of five years or more for comparable new equipment from OEMs.
