Shares in oil & gas companies considering using fracking rose on Monday after the government announced plans to compensate residents affected by the controversial extraction technique.
IGAS Energy (LON:IGAS) jumped 4.3p, or 32%, to 18.85p and Egdon Resources Plc (LON:EDR) lifted 23%, to 13.35p on news that ministers would give local people part of the tax proceeds from fracking.
The move represents a change from original plans for a £1bn "shale wealth fund" under which up to 10% of the tax proceeds from fracking had been due to go to councils or community groups.
It is reportedly thought that individual households could receive between £5,000 and £20,000 from a total compensation pot of about £10mln.
The industry is thought likely to welcome the proposals tabled by new premier Theresa May as a way to reduce opposition to fracking in affected communities.
VSA Capital Research analyst Ed Vaughan said in a note: "By handing proceeds directly to local residents, these proposed changes could increase support for fracking."
But environmental campaigners branded the move as a bribe which could slash the cash available for other local priorities like infrastructure projects.
Greenpeace UK chief scientist Doug Parr said: "The government has tried to sweeten the fracking pill with cash payments before, and it didn't work.
"People's concerns about climate change and their local environment cannot be silenced with a wad of cash.
"If Theresa May wants to show the UK is open for business, she should reverse the policies that have harmed our vibrant clean energy sector and back technologies that can supply cheap, homegrown energy for decades to come."
VSA's Vaughan said there were several "catalyst" events in the rest of 2016 which may give UK shale players a boost including IGas Energy's application to drill at Springs Road in north Nottinghamshire.
The local council’s planning committee is due to consider the application in October.
Vaughan added: "We view Egdon Resources as an attractive way for investors to gain exposure to this industry and have a 'buy' recommendation and 38p target price."
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