LNC - Linc Energy

basilio · 19 May 2012

Did a bit more homework on LNC's proposed GTL technology.

There are many indications that LNC will be commissioning an Oxford Catalysts GTL reactor for its China program and hopefully at Chinchilla to feed off the UCG gasifer 5 unit.

There is some good discussion on the Oxford Catalysts Interactive Investor forum which pulls together the connections.

It would be a huge relief if this actually begins and the market can see a tangible monetizing of LNC's underground coal assets. From both parties point of view a keenly priced initial plant to prove the process would make excellent commercial sense.

http://www.iii.co.uk/investment/detail?code=cotn:OCG.L&display=discussion&it=le

dogeatdog · 19 May 2012

basilio said:
It is a very conflicted situation Stumpy.

In the big picture there is the possibility that we will going into financial meltdown if/when Europe falls apart. Collapsing banks, collapsing economies , collapsing countries will destroy people and businesses without discrimination. On the energy front such a collapse would drop energy prices sharply which in the short-medium term throw LNC's model into a heap. I think there are many iron clad companies at the moment looking very cheap because of this fear.

With regard to LNC we can't say they have met their targets. Teresa should have been sold by now to ensure financial stability and capacity for financing the UCG - GTL projects. I'm not that convinced the Wyoming oil fields are coming up to speed as predicted with the CO2 injection. I think that has slowed down. The Alaskan fields were supposed to show commercial gas early in the piece - but didn't . The long term looks good - but that is years away.

I'm still wondering how cost effective and technology effective the UCG -GTL process is. As far as I can see LNC has not publicly laid out the proposed technology stream which will be implemented in China. Is there a clear, cost effective GTL plant ready to run ? Is it LNC's technology or are they getting off the shelf from another provider ? No problem if they do but I'd like to know.

I have also been keeping an eye on the UK fuel cell technology (AFC fuel cell - LNC has 12 %) which could be a perfect fit for LNC's UCG process. It looks like the fuel cell is operating exceptionally well but I havn't seen any indication that LNC intend to commercialize it in the near term. That's disappointing.

When you add up the underlying resources and opportunities LNC has, it is a multi billion dollar company. But that may not be enough to win if the whole game gets blown up or it can't play it's hand right. That is the dilemma.

Accurate information, and view Basilio.
I'm a former LNC share holder, having accumulated shares between June 2010 and 2011. I sold on the way down from A$3.28, luckily making a nice profit.
Like many other investors, I've lost confidence in Peter Bond.
IMHO, his ventures into O&G have been thus far, a disaster.
Having said that, I will buy in again if the SP falls to +/-50c.
I'm fearful of shorting the stock, at it's current price, as history has proved the SP can shoot up.

recruit2 · 21 May 2012

dogeatdog said:
Like many other investors, I've lost confidence in Peter Bond.
IMHO, his ventures into O&G have been thus far, a disaster.

The fact that guy has balls and repeatedly gets back on the horse may actually see him eventually succeed. Repeated failure often leads to success as entrepreneurs tend to work out every which way NOT TO do things until they find the way that works. Failure is a good thing, but Aus is such a risk averse culture.

I bought a pile of LNC today at 0.685 because its a bargain at this price with quite a bit of upshot potential.

StumpyPhantom · 21 May 2012

recruit2 said:
The fact that guy has balls and repeatedly gets back on the horse may actually see him eventually succeed. Repeated failure often leads to success as entrepreneurs tend to work out every which way NOT TO do things until they find the way that works. Failure is a good thing, but Aus is such a risk averse culture.

I bought a pile of LNC today at 0.685 because its a bargain at this price with quite a bit of upshot potential.

I think that's an astute buy. Unless GFC2 takes over the stock market, I think the bottom of this stock is around here - minimum 60 cents - and over the next 2-4 weeks.

dogeatdog · 23 May 2012

recruit2 said:
The fact that guy has balls and repeatedly gets back on the horse may actually see him eventually succeed. Repeated failure often leads to success as entrepreneurs tend to work out every which way NOT TO do things until they find the way that works. Failure is a good thing, but Aus is such a risk averse culture.

I bought a pile of LNC today at 0.685 because its a bargain at this price with quite a bit of upshot potential.

Balls he may have, vision! time will tell.
SP down at 63c as I write.
(Currently not a share holder)

basilio · 23 May 2012

Really is time for an update on LNCs activities. The lack of support at these SP suggest either an uniformed market or large scale loss of confidence in the whole share market.

Peter Bond always made a big play for smaller shareholders. Can't be many of those that are happy at the moment.

Mr McGee · 23 May 2012

I fear that even good news on the GCL deal won't carry enough weight to bounce this back to prices we were at four weeks ago. If the GCL deal gets over the line (and I think it will), people will start to make comment on how $60mil is only enough to sustain the current negative cash flow position for a finite time. My view is that the answer to a sustained rise in the SP is closely tied to an increase in US oil production. I don't think punters will even care if the targets are NOT met, as long as production is moving in the right direction. Strangely, the SP seems tied not to the primary focus of this business but that of what will eventually (if you believe PB) be a distant second. The next quarterly report out on July 30ish will be interesting.
So I agree that the market seems to be both uninformed and scared silly, but more importantly...faithless.

My

dogeatdog · 23 May 2012

StumpyPhantom said:
I think that's an astute buy. Unless GFC2 takes over the stock market, I think the bottom of this stock is around here - minimum 60 cents - and over the next 2-4 weeks.

13% down day, to 59.5c
European crisis certainly playing havoc with market sentiment.
With such high capex to get the formerly proposed Modular GTL units up and running, will we ever see Linc producing meaningful quantities of Hydro carbons, allowing the SP to recover to historic levels

feetdawg · 23 May 2012

dogeatdog said:
13% down day, to 59.5c
European crisis certainly playing havoc with market sentiment.
With such high capex to get the formerly proposed Modular GTL units up and running, will we ever see Linc producing meaningful quantities of Hydro carbons, allowing the SP to recover to historic levels

Assuming commercial scale UCG and GTL is feasible (5,000 bpd plants duplicated), which LNC feels certain it is, and GCL will cover CAPEX with minimal balance sheet impact to Linc, you would think LNC is a no brainer long term buy....

dogeatdog · 23 May 2012

feetdawg said:
Assuming commercial scale UCG and GTL is feasible (5,000 bpd plants duplicated), which LNC feels certain it is, and GCL will cover CAPEX with minimal balance sheet impact to Linc, you would think LNC is a no brainer long term buy....

PB stated that syn gas is likely to be in production by the end of this year. Seems highly unlikely.
I'm also confused why GCL will be paying 4.50 a share for Linc. Unless it's for IP
Any thoughts?

feetdawg · 24 May 2012

dogeatdog said:
PB stated that syn gas is likely to be in production by the end of this year. Seems highly unlikely.
I'm also confused why GCL will be paying 4.50 a share for Linc. Unless it's for IP
Any thoughts?

Because there's a complete and utter COST difference between buying 5% of a company in the share market and simply owning 5% of the float and buying 5% of a company's shares while getting access to potentially game changing technology for stranded coal/UCG-GTL and and getting a 67% of the bottom line benefits.

Expertise and technology and 67% share dont come free. Granted GCL must fund the CAPEX, but if commercial scale UCG-GTL is a reality which can go on for decades in one location, then paying off the capex through 67% stake and producing a barrel of fuel for say $30 will not take a lot of time relative to the longevity of the project.

Theyre paying 120M for 67% and the technology, not just shares.

The timing of the reheated Greek crisis is bad and yes should weigh on the deal somewhat but looking at the assets of Linc, GCL knows they cant expect Linc to give the technology away after coming all this far for simply buying 5% of their stock in the market.

I have been told that Linc really cracked the UCG GTL nut Gasifier 5/6 and the micro GTL plants available.

Given stranded caol turned into fuel for say $30 a barrel for a period of decades and you are back to 2006 and the initial game changing scenario Linc is attempting.

basilio · 24 May 2012

feetdawg said:
Because there's a complete and utter COST difference between buying 5% of a company in the share market and simply owning 5% of the float and buying 5% of a company's shares while getting access to potentially game changing technology for stranded coal/UCG-GTL and and getting a 67% of the bottom line benefits.

Expertise and technology and 67% share dont come free. Granted GCL must fund the CAPEX, but if commercial scale UCG-GTL is a reality which can go on for decades in one location, then paying off the capex through 67% stake and producing a barrel of fuel for say $30 will not take a lot of time relative to the longevity of the project.

Theyre paying 120M for 67% and the technology, not just shares.

The timing of the reheated Greek crisis is bad and yes should weigh on the deal somewhat but looking at the assets of Linc, GCL knows they cant expect Linc to give the technology away after coming all this far for simply buying 5% of their stock in the market.

I have been told that Linc really cracked the UCG GTL nut Gasifier 5/6 and the micro GTL plants available.

Given stranded caol turned into fuel for say $30 a barrel for a period of decades and you are back to 2006 and the initial game changing scenario Linc is attempting.

Well put feetdawg. I think it is an astute deal by Peter Bond and a good one for both parties.

I'm very interested in your source for the critical comment on getting the Gasifer 5/6 dead right and satisfaction with the micro GTL units. These are the main pieces of this deal and I would have thought there would be a clearer statement that the technical issues had been resolved and that the commercial reality of this process was now within reach. Certainly the crash in LNC shares since the announcement of the GCL deal suggest no institutional support for the company.

basilio · 24 May 2012

LNC has responded to a "slowing" ticket from ASX.

All seems positive. They are still banking on being cash flow positive via the North American oil assets and are not specifically counting on short term financial sales of assets (although these are expected)

Of course if oil drops sharply as a result of a GFC those projections would be revised IMO.

They also noted the sharp rise in shorting during May.

http://newsstore.fairfax.com.au/app...rkets.theage.com.au/apps/qt/quote.ac?code=lnc

feetdawg · 24 May 2012

basilio said:
Well put feetdawg. I think it is an astute deal by Peter Bond and a good one for both parties.

I'm very interested in your source for the critical comment on getting the Gasifer 5/6 dead right and satisfaction with the micro GTL units. These are the main pieces of this deal and I would have thought there would be a clearer statement that the technical issues had been resolved and that the commercial reality of this process was now within reach. Certainly the crash in LNC shares since the announcement of the GCL deal suggest no institutional support for the company.

Just know UCG in 2006 is not anywhere near what UCG is now and it took Linc years to get there with Gasifier 5/6 and 2006 UCG wasnt up to par for commercial scale UCG GTL. What the market cant see is that things are actually starting to fall into place and the bigger plan of UCG GTL is closer now than it ever has been.

skc · 24 May 2012

basilio said:
LNC has responded to a "slowing" ticket from ASX.

All seems positive. They are still banking on being cash flow positive via the North American oil assets and are not specifically counting on short term financial sales of assets (although these are expected)

Of course if oil drops sharply as a result of a GFC those projections would be revised IMO.

They also noted the sharp rise in shorting during May.

http://newsstore.fairfax.com.au/app...rkets.theage.com.au/apps/qt/quote.ac?code=lnc

Linc has total of 504.5m shares on issue.

According to ASIC short report, there were 4.26m short position (3.39% of total shares) on 1 May. Come 18 May the number was 24.3m short position (4.81% of total shares. So a total of 20m shares were short sold. Total volume traded between those days were ~50m shares. So around 40% of transactions were short...

These numbers no doubt increased significantly in the last week, where another 37m shares were traded while the price dropped another 18%.

I've got nothing against the morality of shorting per se but it's difficult to see how shorting LNC at this level has sensible reward/risk... but I guess it's easy to join the shorting frency than to go against it.

namrog · 24 May 2012

feetdawg said:
What the market cant see is that things are actually starting to fall into place and the bigger plan of UCG GTL is closer now than it ever has been.

It's been talked about for a long time, so where is the evidence that the technology even works let alone that they are capabale of producing commercial quantities of diesel / liquid fuel ...?

I suspect that if it were so, then the shareprice would be well north of where it is...?

The slump in share price is not just recent, this slide started around July 2011, Why.? Investors have lost confidence big time, too many irons in the fire, going in all directions but not concentrating on any in particular, especially it seems GTL...

That's not to say it won't be worth a punt when the time comes, ( Greek Euro exit ) and that time I expect could be around the low 50 cent region , that's only my oppinion though..

namrog · 24 May 2012

skc said:
Linc has total of 504.5m shares on issue.

According to ASIC short report, there were 4.26m short position (3.39% of total shares) on 1 May. Come 18 May the number was 24.3m short position (4.81% of total shares. So a total of 20m shares were short sold. Total volume traded between those days were ~50m shares. So around 40% of transactions were short...

These numbers no doubt increased significantly in the last week, where another 37m shares were traded while the price dropped another 18%.

I've got nothing against the morality of shorting per se but it's difficult to see how shorting LNC at this level has sensible reward/risk... but I guess it's easy to join the shorting frency than to go against it.

I'd guess that once major support at 98 cents broke , coupled to the Euro election results / crisis, then baring a major announcement from the company, there was a good chance that the share price was destined to hit around the 50 cent area, as it moves in roughly 50 cent increments, which in the past has roughly proven to be S/R areas .
That's just my theory though....

basilio · 24 May 2012

IMO one of the main reasons behind loss of confidence in LNC has been the failure to move Teresa.

It was supposed to worth $600m plus and would have bankrolled all the development that is now currently underfunded. We have seen a continuing stream of "almost there" announcements and now I suspect the whole coal market is off the boil.

I don't think LNC is dead by any stretch but this was a very significant deal in relation to the company.

On the upside I think the GCL deal could be a saver and maker of LNC. I sincerely hope that feetdawg is correct in his confidence on the Gasifier and GTL mini plant. My research also supports that view. Lets see what happens

Mr McGee · 25 May 2012

I'd be interested to know how many margin calls were made for this stock over the last month. By my math, an LVR of 35% would trigger a mass selloff when the stock dropped below 20% of an investors respective buy average. If people bought in off the back of the GCL deal at around $1.20 (16/04) on margin, then news of a continuing cash burn in the last quarterly report released (30/5) that caused some shorting and some long-term holders to run for cash, then add Greece, and you get a SP down to $1 in less than a week. I would suspect that the phone might have started to ring! Try rebalancing under that kind of selling pressure. Not easy.

basilio · 28 May 2012

Big upswing today. Up 17% to 70.5c. Buyers outnumbering sellers 2.5 - 1

Perhaps the short sellers are having to cover themselves - or maybe LNC's real value is being recognised.

LNC - Linc Energy

basilio

dogeatdog

recruit2

StumpyPhantom

dogeatdog

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Mr McGee

dogeatdog

feetdawg

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feetdawg

basilio

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feetdawg

skc

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