LNC - Linc Energy

[notting]

The estimates released by Linc on Wednesday were classified by the consultants as unrisked prospective resources - the lowest category of certainty - because of their ‘‘lack of commerciality or sufficient drilling’’.
As the consultants wrote: ‘‘There is no certainty that any portion of the prospective resources estimated herein will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources.’’

So what has been discovered exactly? Oh yeah rock formations that sometimes contain oil!
Wooo Hooo go to town baby!

‘‘It’s a multi-billion barrel opportunity, and that’s a good news story. OK it’s not $20 trillion. But 3, 4, 5 billion barrel resources are virtually unheard of these days, so even stressing this number down to the minimum number the experts stress it down to, it’s still a big story.’’

That's a little closer, but really, the wording should not be 'opportunity' emplying even a 3 billion barrel resource, it's not a big opportunity until there is certainty that you can get some of what is yet to be discovered out!
Then if that happens there is an opportunity for someone to build something that can suck and sell after pumping 300 million $$$ into finding something on top of the 150 million spent already.
So where are we again? Oh yeah, 5 years away form seeing a yet to be discovered glassful of oil which may be redundant old world technology by then anyway looking at what's going on with gas and electric cars and climate issues etc!

 

[Garpal Gumnut]

So what has been discovered exactly? Oh yeah rock formations that sometimes contain oil!
Wooo Hooo go to town baby!



That's a little closer, but really, the wording should not be 'opportunity' emplying even a 3 billion barrel resource, it's not a big opportunity until there is certainty that you can get some of what is yet to be discovered out!
Then if that happens there is an opportunity for someone to build something that can suck and sell after pumping 300 million $$$ into finding something on top of the 150 million spent already.
So where are we again? Oh yeah, 5 years away form seeing a yet to be discovered glassful of oil which may be redundant old world technology by then anyway looking at what's going on with gas and electric cars and climate issues etc!

So what is the considered opinion for a muppet like me, do I approach her as an Angelina Jolie or as an ole tart about to take my jewels.

Not that, with great respect to Angelina, she would not take my jewels.

gg

ps Jeez these Gillard/Roxon Offence laws will make it difficult to post replies.

gg

 

[Mickel]

That's a little closer, but really, the wording should not be 'opportunity' emplying even a 3 billion barrel resource, it's not a big opportunity until there is certainty that you can get some of what is yet to be discovered out!

Notting, I agree that there is no certainty that LNC (and JV partner) will get any oil out AND at a economic price.

If there WAS certainty for ONLY 3 Billion barrels and with a profit of $20pb ($10 for each JV partner), that equates to earnings of $30 BILLION for LNC. Put your own valuation on LNC's S/P then, but it would be much more than $2.41 .

The 2 Oil Shale fields that are compared to LNC's (Bakken and Eagle Ford in USA) snuck up on everyone and have outperformed everyone's expectations.

More recently BHP forked out $12 Billion for Petrohawks Oil Shale field in Texas and now have some experience with Oil Shale.

Oh Yes ! BHP has the massive Olympic Dam project not far from LNC's PELs .

As before DYOR.

As I have stated on here many times over the last 4+ years, I am a long term holder.

 

[Mickel]

So what is the considered opinion for a muppet like me, do I approach her as an Angelina Jolie or as an ole tart about to take my jewels.

Not that, with great respect to Angelina, she would not take my jewels.

gg

ps Jeez these Gillard/Roxon Offence laws will make it difficult to post replies.

gg

GG

Good to see the wild weather up there didn't wash you down Ross Creek.

Not that happy that you sent it down here. Brissy is copping a pasting at present with some minor flooding of creeks, low lying areas etc. Not as bad as the Bundaberg area though. Hope those rum vats are still ok. LOL !!

 

[Smurf1976]

And finally the LNC find is Oil Shale not Shale Oil. There is a big difference. DYOR.

Indeed. The big difference being that Oil Shale is (1) incredibly common and (2) essentially worthless.

They already mine oil shale in SA. It's dumped as waste, its' removal being necessary in order to access the coal underneath at Leigh Creek. This has been going on since at least the 1950's so it's nothing new.

Oil Shale is incredibly common. Queensland has heaps of the stuff and even Tasmania has several dozen known deposits as do many other places. Finding more of it is akin to finding sand - useful only if you find it someplace that doesn't have any and which actually has a use for it. There are a few places, notably Estonia, which use oil shale as fuel for power stations but that's about it.

The main concern I have about Linc is that there's just too much hype relative to actual results in my opinion.

 

[Mickel]

Indeed. The big difference being that Oil Shale is (1) incredibly common and (2) essentially worthless.

They already mine oil shale in SA. It's dumped as waste, its' removal being necessary in order to access the coal underneath at Leigh Creek. This has been going on since at least the 1950's so it's nothing new.

Oil Shale is incredibly common. Queensland has heaps of the stuff and even Tasmania has several dozen known deposits as do many other places. Finding more of it is akin to finding sand - useful only if you find it someplace that doesn't have any and which actually has a use for it. There are a few places, notably Estonia, which use oil shale as fuel for power stations but that's about it.

The main concern I have about Linc is that there's just too much hype relative to actual results in my opinion.

I think you have the two mixed up Smurf. LNC's Shale Oil tenements are also known as "tight oil ". It is liquid and that's why it is being compared to Bakken and Eagle Ford in the USA.

This from LNC's presentation in Nov 2012-

"Shale Oil Asset – Arckaringa Basin
•Linc Energy has proved the existence of a working petroleum system with approximately 41o API oil discovered in the Maglia-1 well;
•Linc Energy has identified formations within the Arckaringa Basin as having excellent resource play potential with TOC levels, permeability, porosity and thickness comparing favourably to prolific unconventional liquid plays in the USA (Bakken, Eagle Ford, Mississippi Lime); and
•Linc Energy is currently finalising our technical evaluations."

http://www.lincenergy.com/data/asxpdf/ASX-LNC-435.pdf

If you or any shareholder doubts this, phone LNC for their confirmation.

 

[Mickel]

I might add some points to show that I'm not just a gung-ho ramper.

Yes, I agree that there has been too much over enthusiasm with the Shale Oil, mainly because of the "$20 Trillion" headlines.

Apart from the large expenditure required just to confirm the reserve, production of the oil will also be more expensive than conventional oil production.

However the signs are good that it will be commercial.

 

[Smurf1976]

I think you have the two mixed up Smurf. LNC's Shale Oil tenements are also known as "tight oil ". It is liquid and that's why it is being compared to Bakken and Eagle Ford in the USA.

I won't claim to be an expert on what the company has supposedly found, my main point being that I don't trust any company with such a high level of hype associated with it. When a company that has limited cashflow spends money to advertise a product they don't even have available for sale then that makes me immediately suspicious.

Second issue I have with them is apparent indecision as to what business they are actually in. First the aim was to turn coal into liquid fuels. Then they wanted to generate electricity. Then attention turned to conventional oil production. Now it's shale oil. The only common theme there is energy. What next? Uranium mines and hydro-electric dams?

It's like opening a fashion retail store then turning it into a fish shop and ending up selling tyres. The only common theme is retailing and there's not much cross-over in terms of useful product knowledge there. Likewise there's not a lot in common between turning coal into gas versus extracting shale oil form the ground. It's a very different industry and I feel that the Company is trying to take on far too much, far too quickly.

As for the oil shale, I was responding specifically to a previous post which stated that they had found "oil shale". Whether or not that is correct I don't know, but I do know that oil shale is a very different thing to either conventional crude oil or shale oil. If they've found shale oil then that's potentially a good thing. But if it's only oil shale then that's not worth getting excited about. Refer the original post I was responding to.

 

[Garpal Gumnut]

So... Is it a goer?

Or not.

gg

 

[keely]

Eagleford USA is a good producer of shale liquids as well as gas. if it is correct that Linc's find is comparable in characteristics this is indeed good news for Linc.
A little background, all shale gas or liquids come from kerogen in the shale. There are 4 types of kerogen. Type 2 is oil prone, type 3 is gas prone. Linc describe quantities of type 2 & type 3 kerogen. Most shale plays in the Cooper basin are type 3 kerogen (gas).
Regardless of kerogen type shale needs apx 500degC to release the vast majority of its kerogen as oil or gas - hence surface retorting processes (such as the old Suncor project in Qld).
Been able to do this inside a well is the real answer - no mining costs, and much cheaper and simpler.

Linc are a technology company.
There are 2 current technologies that enable introducing 500DDegC into a shale deposit in the ground.
Both use ordinary water in its superheated state to do this (no fraccing chemicals).
One is for drilling through hard deep rocks like granite (USA) signed off by the USA department as field tested and field ready, and the other is an Aussie technology UCTL which has been ticked off by Stanford Uni (USA).
Poor old UCTL got itself tangled up with Regal Resources and has gone nowhere recently.
The point is the technology to get all the oil out from these type of shales already exists now, even if the technology is very young.
The big majors rarely put any money into technologies such as these until after they are already in production elsewhere.
Linc may be exactly the right company to pick up either of these technologies and make the breakthrough in field production of shale that has been long awaited.
If so the big numbers talked about might be realised.

I think you have the two mixed up Smurf. LNC's Shale Oil tenements are also known as "tight oil ". It is liquid and that's why it is being compared to Bakken and Eagle Ford in the USA.

This from LNC's presentation in Nov 2012-

"Shale Oil Asset – Arckaringa Basin
•Linc Energy has proved the existence of a working petroleum system with approximately 41o API oil discovered in the Maglia-1 well;
•Linc Energy has identified formations within the Arckaringa Basin as having excellent resource play potential with TOC levels, permeability, porosity and thickness comparing favourably to prolific unconventional liquid plays in the USA (Bakken, Eagle Ford, Mississippi Lime); and
•Linc Energy is currently finalising our technical evaluations."

http://www.lincenergy.com/data/asxpdf/ASX-LNC-435.pdf

If you or any shareholder doubts this, phone LNC for their confirmation.

 

[basilio]

As I said earlier (and as almost all analysts agree) the shale oil deal could be valuable - possibly very valuable.

But there is a loooooonnnng way to go to prove its viability and commercial prospects. In that sense this current zoom in SP is unwarranted and looks . in my mind, to be a bit of ramp.

However the other opportunities that LNC is developing - the China GTL deal, oil in Alaska, international UCG, hydrogen fuel cells, Teresa coal sale ect should have sufficient legs to make LNC fly.

But the critical element in my mind is the achievement of the 6000 Barrels of oil a month in the US. That appears to stabilise the finances of the company and ensure no critical cash flow problems. IMO.

 

[notting]

Second issue I have with them is apparent indecision as to what business they are actually in. First the aim was to turn coal into liquid fuels. Then they wanted to generate electricity. Then attention turned to conventional oil production. Now it's shale oil. The only common theme there is energy. What next? Uranium mines and hydro-electric dams?

You forgot to mention real estate!!!
Buy acerage rights, ramp, sell them to farm in suckers!!

That appears to stabilise the finances of the company and ensure no critical cash flow problems.

What an achievement!
I prefer healthy cash flow, little or no debt and understated, speaking for itself, proven potential. Kind of like the way SDL was being managed prior to the plane crash, by a billionaire!

It will be interesting to see which way the market votes on Tuesday afternoon for the momentum play.

 

[Mickel]

I prefer to ignore your sarcastic comments Notting. Smurf , I think you were on the LNC thread years ago so I thought you might have been more aware of LNCs trials and achievements. But it appears you arn't .

On a positive note, Bas have you seen the latest announcement by AFC Energy ?

They've extended the life of their fuel cells beyond 6 months which is very good news.

Read it here - http://www.afcenergy.com/regulatory...s-fuel-cell-electrode-life-beyond-six-months/

 

[notting]

I prefer to ignore your sarcastic comments Notting.

I feel you'd be better off ignoring Brisbane news Papers and TV adds.

 

[dogeatdog]

I feel you'd be better off ignoring Brisbane news Papers and TV adds.

Give it a rest notting, your boring at least two of us.

This article is reasonably comprehensive.
http://www.commodities-now.com/reports/power-and-energy/13676-shale-oil-and-the-australian-outback--a-hot-secure-frontier.html

 

[basilio]

I prefer to ignore your sarcastic comments Notting. Smurf , I think you were on the LNC thread years ago so I thought you might have been more aware of LNCs trials and achievements. But it appears you arn't .

On a positive note, Bas have you seen the latest announcement by AFC Energy ?

They've extended the life of their fuel cells beyond 6 months which is very good news.

Read it here - http://www.afcenergy.com/regulatory...s-fuel-cell-electrode-life-beyond-six-months/

It is exciting. I picked it up a couple of days ago and posted it on link below
https://www.aussiestockforums.com/forums/showthread.php?t=4010&p=751001&viewfull=1#post751001

 

[dogeatdog]

Happy Australia day folks

 

[Mickel]

Happy Australia day folks

Thanks Doggy. Very quiet Australia Day weekend with the weather and road conditions.

It appears that most of the rain has gone now ( http://www.bom.gov.au/products/IDR502.loop.shtml ).
But some creeks and low lying areas are flooded and with the river to rise further tomorrow, it will restrict draining of these areas and probably cause more flooding. This is mainly because of water entering the Brisbane River below the dams.

"I feel you'd be better off ignoring Brisbane news Papers and TV adds. "

Notting, you'd be a lot richer if you hadn't ignored my posts on this thread from Dec 2012.

Winners can laugh and losers can please themselves. LOL !! LOL !! LOL !!

 

[Mickel]

Some people may better understand Shale Oil from this simple video
explaining drilling for shale oil-

http://www.youtube.com/watch?v=OO-aNBHV4VI

 

[Smurf1976]

I prefer to ignore your sarcastic comments Notting. Smurf , I think you were on the LNC thread years ago so I thought you might have been more aware of LNCs trials and achievements. But it appears you arn't

Yes I've been on this thread previously and I invested in the stock quite some time ago on the basis that I was investing in a company which planned to turn coal into marketable liquid fuels (diesel, kero etc) via an underground gasification process.

Then the company started actively marketing to the public via both actual advertising and a number of "stunts" such as the Diesel Dash. That's a rather strange move for a company which doesn't actually have a product to sell. Then there's the attempted move into electricity generation and the actual move into conventional oil production. Now they're interested in shale oil too.

I just can't see how management could possibly be properly focused on so many different things at once. Each one of them is a difficult challenge in itself, and it's not as though Linc has the resources of someone like BHP or Wesfarmers and can divide itself into multiple units each focused on a specific business.

Maybe they can pull it off and I hope that they do. But it's not going to be easy that's for sure to be doing so many different things all at once.

As for the shale, I was responding to a previous post which stated "oil shale". Having now read the actual announcement from the company, they are clearly talking about shale oil not oil shale. That being so, my previous comments about oil shale are not applicable and I stand corrected.

So far as resources are concerned, they are referring to barrels of oil equivalent not oil as such. Based on general experience in Australia plus the data in the company's announcement, much of that (probably the majority) is likely to be gas rather than actual oil. There's nothing wrong with finding gas of course, but it's considerably less valuable than actual oil. The figures from the company suggest about 15% oil, 35% condensate (which can be considered as oil) and 50% sales gas (natural gas) for the risk adjusted scenario of 3.5 billion barrels of oil equivalent. So that's about 1.75 billion barrels of oil and condensate which is the most valuable stuff.

I continue to hold a small investment in Linc.