Today's price rise comes as the company announces it has acquired 100% of a South African gas project.

Let's take a closer look at today's update.

What's up with the Kinetiko share price?

In a statement to the ASX, Kinetiko says it has acquired "the remaining 51% of Afro Energy (Pty) Ltd, making [Kinetiko] the 100% owner of all South African exploration rights and production approvals." The previous joint-owner was Badimo Gas.

Afro Energy was founded 6 years ago as a joint venture between Kinetiko and Badimo. Kinetiko claims the ownership model was affecting the efficiency of the business and "causing delays in exploration and development programs." The company believes these inefficiencies will be eliminated by the takeover. Investors seemingly agree, judging by the huge jump in the Kinetiko share price today.

Kinetiko will issue Badimo 595 million shares in its company in exchange for its share in Afro Energy. The statement also says the sale is at a discount due to debt owed to Kinetiko. Badimo will own 46% of share capital in Kinetiko once the transaction is completed, according to the company.

The deal is conditional on the following:

• Afro Energy holding 100% of the exploration rights at the Amersfoort Project.
• Kinetiko receiving ministerial consent for the purchase, under South African law.
• Meeting additional regulatory approvals and receiving adequate tax advice.

Management commentary

Kinetiko executive chair Adam Sierakowski said:

This union between the historic joint venture partners represents the achievement of a major milestone for the de-risking of the development of what is potentially the largest on shore gas project in South Africa. Years of significant cooperation between the Badimo and Kinetiko teams have enabled this acquisition to be realised and will result in delivering substantial shareholder value.

Badimo Gas executive chair Don Ncube added:

We have worked for over a decade to explore and develop a significant onshore non-fracking gas project in the Mpumalanga, Orange Free State and Kwazulu-Natal regions of South Africa. The creation of a project which delivers abundant clean energy will greatly assist South Africans whose economy faces an energy crisis.

This merged entity will now be able to raise capital for accelerated exploration, production and downstream development in international markets. Such foreign direct investment was previously not available to Badimo and this merger facilitates and reinforces the foreign direct investment initiative of our President. It will provide new employment opportunities and development of technical skills in the regions where such gas production is established. It will also contribute to the reduction of harmful polluting carbon dioxide emissions.

Kinetiko share price snapshot

Over the past 12 months, the Kinetiko share price has increased by an amazing 233%. It reached a 5-year record of 16.5 cents in December last year.

Kinetiko has a market capitalisation of around $65 million.

The post Why the Kinetiko (ASX:KKO) share price is surging 18% appeared first on The Motley Fool Australia.

Kinetiko shares are up a whopping 550% over the past 12 months after continued success in the company's gas exploration projects.

Promising aeromagnetic surveys and significant gas resources

During the period, Kinetiko completed $1.2 million in interim funding to accelerate gas production from its Amersfoort Project in South Africa, where it believes it may be sitting on one of the world's largest coal basins. 

Perth-based Kinetiko is undertaking the Amersfoort Project as a joint venture (49% stake) with South African partner Badimo Gas. The project's significant gas resources tripled by 227% in 2020, sending the gas producer's share price soaring.

Kinetiko aims to generate its first gas revenues from the project this year, after aeromagnetic surveys revealed several large gas deposits in the region, including the largest ever surveyed, which stretched up to 22 kilometres in size.

The surveys undertaken so far represent just 15% of Amersfoort's total exploration potential.

The Amersfoort basin hasn't required fracking, and the company has secured environmental approvals from the Minister of Mineral Resources and Energy in South Africa of up to 500 million standard cubic feet (MMscf) of gas per annum for a two-year period. 

South African energy market full of demand

The company advised it is currently in discussions with gas off-takers in Johannesburg to buy the gas un-compressed on site for South African demand. Kinetiko and Badimo have a long-standing presence in the region and are confident of optimising the surface separation of water and gas.

Kinetiko says it's had "positive" conversations around transforming the Amersfoort Project into a standalone onshore gas producer to meet the needs of the "constrained" South African energy market, which continues to suffer from undersupply.

The gas producer has a current market capitalisation of $64 million and has a year-to-date return of -16.67%, with the Kinetiko share price still well down on its 2013 highs of more than 30 cents per share.

The post Here's why the Kinetiko (ASX:KKO) share price is up 18% today appeared first on The Motley Fool Australia.