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LNC - Linc Energy

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Linc Energy in Shale Talks With Oil Services Company in U.S.

www.businessweek.com/news/2013-09-25/linc-energy-in-shale-talks-with-oil-services-company-in-u-dot-s-dot-1
 
Big push for Gas in Australia, works in well with LNC's Shale field and their announcement that they are looking for partners to develope.

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http://www.afr.com/tags;jsessionid=5F449279B9229BB4DDD1949B1A65F4DC?tag=C_LINC ENERGY LTD-LNC

Linc Energy worth watching despite ups and downs
PUBLISHED: 26 Sep 2013 15:17:20

As a highly prospective oil and gas play, shares in Linc Energy surged 500 per cent between late 2012 and March, but came off sharply in the ensuing three months. Promising exploration results have seen it rebound, and it is one to put on the watchlist.

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http://au.news.yahoo.com/thewest/bu...9143441/australia-on-the-verge-of-a-gas-boom/

Australia on the verge of a gas boom
Kim Christian, AAP
September 27, 2013, 6:50 pm
Australian domestic gas supplies and exports are expected to grow rapidly by the end of the decade.

Australia is in the midst of a gas boom.

Domestic gas supplies and exports are expected to grow rapidly by the end of the decade, enticing more major international oil and gas players to set up shop.

While iron ore, coal and gold have traditionally been the nation's big earners, analysts say Asia's insatiable demand for energy will lead to strong growth in gas production, as more than $200 billion in projects come online.

The industry is talking about an imminent boom in liquefied natural gas (LNG) exports, with four-fold growth projected by 2020 as China and Japan soak up Australia's supply.

But some analysts question whether the heady projections are realistic, given the risks that demand will not materialise.

Still, the federal government forecasts Australia will become the second biggest LNG exporter in just over two years.

Seven major projects are being built across the country, with three in WA, three in Queensland and one in the Northern Territory.

WA Premier Colin Barnett is certainly excited by the prospect of a gas boom in his state, predicting China's rapid growth will continue and as Japan acknowledges it will need more gas post-Fukushima.

As well as trumpeting WA's prized offshore conventional gas fields, Mr Barnett would love to the current shale gas boom in the US replicated in his home state.

"As some of the shale gas in the Canning Basin is developed I think you'll see the same phenomenon," Mr Barnett has said.

However, a recent HSBC report found a lack of roads and pipelines could hinder the industry's development.

It hasn't deterred junior explorer Buru Energy, and majors Mitsubishi and ConocoPhillips, from having a good look.

Meanwhile, new offshore projects are starting to produce gas, alongside the North West Shelf and Woodside's Pluto project in WA.

Last week BHP Billiton flew in executives from Houston to open its $1.5 billion Macedon gas plant, which will supply 20 per cent of WA's gas.

The modest-sized plant is set to be dwarfed by its gigantic Onslow neighbours including Gorgon, valued at $53 billion, and the $29 billion Wheatstone.

BHP's head of conventional gas Steve Pastor said the company liked WA because of its decades-long experience in oil and gas, and its proximity to the export market.

"The advantage Western Australia has is it's got fantastic resources," Mr Pastor said.

Less than six months after Woodside canned its onshore gas plant near Broome, floating gas processing is now all the rage.

Proposed floating LNG vessels in the Browse Basin and Scarborough Basin are in the early development stages, while multinational Shell presses ahead with building its world first Prelude floating LNG vessel in Korea.

Such is the popularity of the model that Shell plans to build more floating LNG plants.

Energy giant Exxon Exxon and its equal partner BHP Billiton will soon decide whether to pursue a floating option for Scarborough this year.

"Floating LNG is considered the best option," ExxonMobil says.
 
So far as the gas "boom" (not a word I particularly like where gas is concerned - i'd rather the stuff didn't go "boom" anywhere near me.... ) is concerned, there practical implication for LNC is that of price.

Historically, gas prices in eastern Australia (ie everywhere except WA) have been below international pricing simply because it was a captive market. Either sell the gas locally, or don't sell it at all. That kept prices low.

But with the LNG plants being built this situation changes. Now we'll have export parity pricing, roughly similar to what already happens with oil and related products (petrol, diesel, kero, LPG, fuel oil etc). That means sharply higher prices - good news for gas producers, bad news for manufacturers, households, non-gas businesses and the owners of gas-fired power stations.
 
Alaska tax cut boosts value of oil company's Umiat field by $1 billion

September 28, 2013

The Alaska oil tax cut will increase the value of the Umiat oil field to Linc Energy by about $1 billion, the company said Friday, though it did not predict any increase in production over what was expected under the old ACES tax system.

Over the next year, in the run-up to the statewide vote on repealing the tax cut, there will be no end of alleged cause-and-effect announcements from the decision to increase oil company profits in hopes of generating more oil production.

After the bill won approval, Gov. Sean Parnell began calling it the "More Alaska Production Act," but it would be more accurate to call it the "More Alaska Profits Act."

As the arguments over repeal take shape, it will be important for reporters in Alaska to try to unravel as many details as possible and avoid the oversimplified claims that have dominated this debate for years.

To that end, the announcement from Linc Energy, an Australian company that bought the Umiat field two years ago, is instructive.

The company has not changed its estimate of the "probable" reserves of 155 million barrels at Umiat or its goal of reaching a peak production of 50,000 barrels per day because of the tax cut.

But what has changed is the value of Umiat to Linc Energy.

The company said Friday the net present value of the probable reserves has been increased to $2.5 billion, up from $1.5 billion a year ago.

Net present value is a financial tool used to determine how much an investment is worth after taking expectations of inflation and future costs into account. The idea is that a dollar today is worth more than a dollar tomorrow.

Linc hired the Ryder Scott Co., a Denver firm, to produce an independent estimate of its probable reserves in 2012. Ryder Scott released an updated report Wednesday with a higher value, but no change in production.

"There was no change in cumulative production and no new technical evaluation work done between April, 2012 and September, 2013," the Ryder Scott Co. said.

The Linc investment at Umiat took place in the summer of 2011.

Gov. Sean Parnell praised the move at the time, saying, “Production of up to 50,000 barrels of oil a day will benefit all Alaskans and the communities in the region by helping sustain the long-term operation” of the trans-Alaska pipeline.

And Peter Bond, the chief executive officer of Linc Energy, said the company was “greatly assisted by a number of generous state of Alaska incentives” under what was then the ACES tax regime.

“These incentives provide a natural opportunity to create a "win-win" situation for the State of Alaska, local communities and companies like Linc Energy, who are keen to invest in new resource projects in the region,” Bond said in a June 16, 2011 press release.

A year ago the company released the Ryder Scott Co. estimate that the "probable” reserves at Umiat total 154 million barrels with a net present value of $1.5 billion.

Bond, the chief executive who said the ACES system was a “win-win,” used the exact same term in a press release Friday about Senate Bill 21 and the $1 billion increase.

“We see this legislation as a win-win for the citizens of Alaska and for Linc Energy,” Bond said in his statement.

As before, the peak production goal is 50,000 barrels per day.

A $1 billion increase is a win for Linc Energy. With the production goal unchanged, it's premature to call this a win for the state.

http://www.alaskadispatch.com/artic...osts-value-oil-companys-umiat-field-1-billion
 

It doesn't make any sense to say the least. What can they achieve in SGX that can't be achieved on the ASX? None of the reasons being offered seem to make much sense, and all can certainly achieved by dual listing rather than packing up shop and leave. A move to SGX will probably be met with reduced liquidity (at least in the short term)... now someone more knowledgable can discuss whether there are different disclosure requirements between the exchanges - from memory I read that SGX is less stringent, but I could be wrong on that.

Sounds like an elaborated attempt to raise money and get a fresh start, and it's unclear to me if there are real tangible benefits to existing holders.
 

As I understand it the SGX is much more laissez-faire when it comes to disclosure. Didn't John Hempton write a pretty stinging blog about SGX when they were trying to merge with the ASX?

Given LNC advertise their shares on Sky Business, SGX would seem a more natural fit for them.

ETA: Here's the post


http://brontecapital.blogspot.com.au/2011/04/singapore-australia-stock-exchange.html
 

Yes in deed that's the article I read which gave me the impression. Although I'd be the first to admit that I did not independently verify his claims.

The way LNC likes to value oil in the ground by the $billions with little consideration of economics of extraction... yes I can see the rationale of the move now.

Correction: I think they said $trillion.
 
The market has dropped like a stone since the announcement. Currently $1.25.

Thanks for the heads up on the SGX. Sounds like real cowboys. Unfortunately that may be what Peter Bond is looking for.

LNC can certainly spin a story about its potential assets and I think a creative story teller could create some action around the the newly listed company. In that sense current shareholders could see a boost in SP.

But the risk of being on the wrong side of share scam seems too much to be part of.
 
That's me out. Being listed on the ASX attracted me to LNC. I have no faith in SGX and conclude that LNC wants less disclosure, not more, which hurts small investors. It's a sad day for LNC. I suspect the ASX is better off without them.

Current long term holder. Dumping shortly...
 
I'm pissed because I wont be able to short it after another stunt if it's subject to less disclosure in Singapore.

The board should be sacked and Bond should be banned from running a company in Australia.
His shares and other interests should be cancelled and share holders should mount a class action.
If share holders vote against the move the share price will be devastated, this latest stunt has destroyed them!

Bond reckons "It will unlock shareholder value." whilst he gives no indication of the value that would be put on it!!!

Quote "There is a percentage of gut feel and entrepreneurial philosophy in this."

I'm reading this as, - I thought it would make the share price go up!!!

Get the spears out!
 
MARKET RELEASE
2 October 2013
Linc Energy Limited

TRADING HALT

The securities of Linc Energy Limited (the “Company”) will be placed in Trading Halt Session State at the request of the Company, pending the release of an announcement by the Company in relation to an acquisition. Unless ASX decides otherwise, the securities will remain in Trading Halt Session State until the earlier of the commencement of normal trading on Friday, 4 October 2013 or when the announcement is released to the market.
Security Code: LNC
Cormac Murphy
Adviser, Listings Compliance

http://www.asx.com.au/asx/statistics/displayAnnouncement.do?display=pdf&idsId=01449855
 
http://online.wsj.com/article/BT-CO-20131002-701629.html

SYDNEY--Rio Tinto PLC (RIO.AU) is poised to sell its Blair Athol coal mine in eastern Australia to Linc Energy Ltd. (LNC.AU), in a move to scale back exposure to a commodity that has suffered a steep fall in prices, a person familiar with the matter said Wednesday.

Discussions between the parties are at an advanced stage and a deal for the mothballed mine in Queensland state could be announced as soon as Thursday, the person said. Financial terms aren't known.

International resources companies like Rio and BHP Billiton Ltd. (BHP.AU) are selling smaller or less-profitable assets to boost shareholder returns following the end of a decadelong mining boom in Australia. Rio Tinto in July agreed to sell its majority stake in an Australian copper-and-gold mine to China Molybdenum Co. for US$820 million and wants to sell several other assets, including an iron-ore mine in Canada and stakes in coal mines in Australia and Mozambique, to trim debt that swelled to almost US$19 billion last year.

Rio Tinto closed the Blair Athol operation in November after it decided not to extend its mining life. The company estimated there was at least 10 million metric tons of coal left at the mine, which operated for nearly three decades. Annual production peaked at 11.3 million tons in 2009, falling to 2.6 million tons in 2012 as Rio scaled down operations.

"Any value obtained in our view would be good for Rio because we consider it a closed asset," said Glyn Lawcock, a Sydney-based mining analyst at UBS. "Someone else might have a slightly different vision on what they want to do with the mine and what direction coal prices are headed."

Later Wednesday, Linc requested that trading in its shares be halted ahead of an agreement to acquire a coal asset in Queensland. It didn't identify the mine.

Securing a sale is a boost for Rio Tinto, which faced the cost of converting the mine back to grassland. Another person familiar with the sales process said the Blair Athol mine could be restarted quickly, possibly within two months.

Coal assets are proving particularly difficult to sell as China's economy cools and coal supply in the Asia-Pacific region rises as cargoes are redirected from North America where power plants are using more natural gas. At round US$78 per metric tonne, prices for thermal coal used in power generation exported from Australia are less than half their July 2008 peak.

Three separate bids for Rio's majority stake in the Clermont mine, which borders Blair Athol, all fell short of the company's expectations and talks with potential buyers have stalled, people familiar with the matter told The Wall Street Journal on Monday.

Brisbane-based Linc already owns undeveloped coal properties in Queensland, but wants to focus more on its unconventional fuel and U.S. conventional oil assets. The company has indicated previously that it would consider buying extra coal assets and packaging them together to make a possible spin off of its coal business more appealing to investors.

Linc has also considered acquiring the Gregory Crinum mine in Queensland, which produces metallurgical coal used in steelmaking, from BHP Billiton Ltd. (BHP.AU) and Mitsubishi Corp. (8058.TO). Late July, BHP said it had decided against selling the operation.

Linc said early Wednesday that it's planning to switch share market listings to Singapore from Australia and issue new shares in the process to help fund its growth. The company intends to seek approval from its shareholders for the move at a meeting on Nov. 6.

-Write to Ross Kelly at ross.kelly@wsj.com
 
There was some interview footage of Peter Bond on the ABC show 'the Business' explaining the move and reasons behind it...he came across as a bit of a tool.

He was whining that the 'market' ~ meaning us, didn't value Linc properly, implying that we were not sophisticated enough....i immediately though that the opposite was true and that the average market participant is a wake up to a stock that see value in self promotion over profits.

--------------------

Funny thing is i have to half agree with him, i remember when i bought into Beach after the CEO announced they were going to drill for shale gas and claimed there could be 200 TFC deep under the Cooper Basin, an almost outrageous claim at the time, that the market subsequently ignored, in fact the SP fell a little in the weeks after the announcement...allowing me to buy in cheap

2 years later and the SP has more than doubled and one of the worlds largest energy company's (Chevron) has paid 350 million for a piece of the action, every hole hit gas and all the projections so far remain valid...and the market simply didn't want to know about it, and still (arguably) massively undervalues it.
 
McLovin said:
As I understand it the SGX is much more laissez-faire when it comes to disclosure. Didn't John Hempton write a pretty stinging blog about SGX when they were trying to merge with the ASX?
Click to expand...

Whilst we are on the topic of SGX's governance issues - keep an eye out for the development of Blumont (which is trying to take over CKA and trying to recapitalise DML) and Lion Gold on the SGX. Both seem dodgy-at-best companies and each fell 60% on Friday. Blumont was suspended after the fall, but down up to 80% today on resumption.

I dare say normal companies don't tend to behave like this without news.
 
I have made a loss on LNC, on getting out on the SGX announcement.

I'm happy.

It may be the bestest, but I won't be losing sleep waitingest for it.

gg
 
Nothing surprises me where Linc Energy is concerned.

Right from the start, it's been lots of "aspiration" with numerous changes to the actual business model along the way and, so far at least, nothing much actually produced beyond a bit of oil using technology that isn't new.

They were going to turn underground coal into oil. Then they were going to turn it into electricity (without first having to mine the coal). Now it's all about trying to be a pretty much conventional oil company whilst still having aspirations relating to coal (though it's not clear what they intend to actually do with the coal - using it underground versus mining it in the conventional manner).

The overall situation is akin to David Jones going into the business of selling cars or Qantas getting into the railway business. Sure, selling cars is a form of retail and trains are a means of transport, but a rational person would conclude that neither company has directly relevant experience and would be taking a huge risk at best with such a plan.

There are exceptions, but most companies struggle to achieve success across unrelated fields. OK, so electricity and oil are both marketable forms of energy, but the business as such is entirely different and few companies are able to successfully operate in such a manner. Origin Energy is the only one that comes to mind, but they've got a lot more experience, from the board to blue collar workers, than Linc has. That plus Origin is just applying established technologies - it's only the financial and business side of it that they really have to focus on to make it work.

Linc just need to decide what business they are actually in, and get on with that business in my opinion. Trying to build an energy conglomerate from scratch is going to be difficult at best. Add in the various promotional stunts, a somewhat strange approach for a company that doesn't actually have a product to sell, and now the ASX / SGX antics and the whole thing looks dubious at best to me.
 
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