The Beach Energy Ltd (ASX: BPT) share price has surged more than 2.50% in early trade as the company's stock continues to draft after a key strategic announcement involving Santos Ltd (ASX: STO) and Key Petroleum Ltd (ASX: KEY).
What was in Monday's announcement?
Key Petroleum announced a non-binding Memorandum of Understanding (MOU) had been executed between Key, Santos and Beach Energy (and subsidiaries) to cover proposed terms for connection and transport into the Cooper Basin gas gathering network and gas processing at the Santos-operated Moomba Gas Processing Facility.
Santos and Beach Energy are joint venture (JV) partners which own gas processing facilities at Moomba in South Australia, where Santos acts as the Operator of the plant. The latest announcement (on confidential terms) will form the basis of a future binding agreement for supply to the east coast Australian gas market.
Beach continues to benefit from high gas prices in the Australian market, which have been sustained above $9-10 per gigajoule (GJ) and likely to remain high amid an ongoing gas shortage around the country.
So is Beach a Buy?
The Beach share price has been on the tear in 2019, as it has rocketed more than 60% higher to sit amongst the top stocks in the S&P/ASX200 Index (ASX: XJO). With the index returning 11.5% so far this year, investors in Beach have risen a strong earnings report in February and key strategic announcements to a near-record high.
At the time of writing, Beach's stock was trading at $2.08 per share, just shy of the $2.11 mark set on October 2018 after it sold its 40% interest in Victorian Otway assets.
I think the technical environment remains supportive for Australian gas and Beach is one of the better picks within the sector in my view. The gas industry remains at the mercy of government energy policy (or lack thereof) and will surely see some volatility in the months before and after the May Federal Election.
For those who aren't willing to jump into the energy sector just yet, I'd be checking out these top growth shares that have been tipped as market beaters.
