LNC - Linc Energy

[Mickel]

Up today on the appointment of a company secretary, now if only LNC would hire another 10 more of them we'd be closer to intrinsic value.

On a serious note though, I agree with you DogEatDog, if we get some positive cashflow from the N. American operations it'd be much more likely to rerate in the short term. We have sufficient capital (450 million or so) to fund any well drilling or development we'd need, 100% internally so no need for debt or dilution of shares at this point. I'm just holding out for that drilling report in the near term.

Regarding available cash that LNC currently has, the latest qrtly report states $492M on hand at 30/9/10.This is before the dividend of approx $50M was paid on 8/10/10. There is also approx $60M tax to be paid on the $500M sale (deductions of approx $300M estimated).

While the remaining $382M is sufficient to fund any well drilling , development of gas wells and normal exploration, it may not be sufficient to also fund even a 5000 bpd GTL plant.

PB has stated many times that he doesn't wish to further dilute current shareholdings but he has stated that they could consider a partner to fund the GTL plant to lessen the risk. They could also now borrow without the convertible share option IMO.

Also we have the pending sale of Teresa for $600M+ hopefully, so there are plenty of funding options.

The increasing S/P is also pushing LNC towards the ASX 100 index. Once there, fund managers will be buying more of the stock which will push the S/P even higher.

Long term LNC holder.

 

[basilio]

It will be very interesting to such if LNC can continue it's run today.

On my screen there are sell orders for 415,000 shares at 2.19/2.20. Looks like the limits of the last spike. We'll see what happens.

From the look of the buy side there is some serious interest coming up this morning.

Last few days have been very encouraging.

 

[basilio]

There is some serious buying this morning. Now at 2.23 after breaking through the big group of sellers at $2.20 (or they could have regrouped...)

On balance I hope there isn't any announcement in the wings and that this is just the start of the re rating of LNC that is long overdue.

 

[ParleVouFrancois]

Whoa Basil I agree 100% with you except for the last bit about the no news, if we have a Teresa sale already... That'd make LNC's MC well below the current cash backing of itself, and trigger a MASSIVE rerating ala, last time it shot from 1 dollar to where it is today on the Adani deal. Maybe 2.50 - 3 dollars if LNC gets say 500 million for Teresa, gives the cash backing at around 850-900 million.

 

[basilio]

LNC is certainly not mucking around. Up another 12c at the moment to 2.38. And still no particular announcement in sight.

And buyers now well out weighing sellers. Very sunny day indeeeeed.

____________________________

I think 2.38 was a very short term sprint.

 

[bennib0i]

LNC is certainly not mucking around. Up another 12c at the moment to 2.38. And still no particular announcement in sight.

And buyers now well out weighing sellers. Very sunny day indeeeeed.

____________________________

I think 2.38 was a very short term sprint.

Yes true!
But as per the usual LNC camp, there is usually a tiny leak before a big annoucement is made public. Perhaps an important announcement is coming very soon and the insiders are getting ready to cash (remembers the last coal sale).

 

[teabagger]

LNC is certainly not mucking around. Up another 12c at the moment to 2.38. And still no particular announcement in sight.

And buyers now well out weighing sellers. Very sunny day indeeeeed.

____________________________

I think 2.38 was a very short term sprint.

It looks like 2.38 is becomming familiar. Would like to see some news come out that might explain the recent rises

 

[Mickel]

Linc looks like it is in a normal consolidation to me. Downside looks minimal, say $1.70 area and over $1.95 looks like blue sky until $2.50 odd. Some resistance around $2.20 but we should do the high end of the 2.20-50 area IMO FWIW.

I've praised Mr Z's 15 Sept interpreptation of the charts before and it still looks spot on IMO.

As others have said, there may not be any concrete news "in the pipeline" but simply a recognition by the market that the stock is undervalued.

Mr Z, I'd be interested if you have any more to add on LNC.

 

[Mickel]

MORE ON EOR (ENHANCED OIL RECOVERY)

In the latest Limelight series of talks to shareholders in Adelaide on 28 Oct
( http://www.lincenergy.com.au/boardroom_radio.php ).

Justyn Peters was praising EOR particularily in USA. The BRR recording covers much of the same things as previous presentations. However, the Q and A session at the end was lengthy and informative.

Further info on EOR is on a Shell website-
http://www.shell.com/home/content/innovation/meeting_demand/eor/

and a link on that page- http://www-static.shell.com/static/...ding_on_innovation/article_willem_schulte.pdf

is an article quoting one of Shell's Chief Scientists, Willem Schulte on EOR.

Part of what he said -

"Oil production increase 2030

Willem supports estimates that by 2030 EOR will be responsible for around 20 per cent of total oil production up from only three per cent today. This would mean that in a little over twenty years time, EOR could account for up to 20 million barrels of oil production per day, equivalent to nearly a quarter of what is currently produced in total today.

Reaching production volumes of this level will require getting an average of half the oil out of each reservoir, not a third, as is the case currently. "

The fact that UCG can capture CO2 (one of the gases suitable for EOR) with little extra cost and could sell it to nearby oil wells would be a win/win/win.

1. Dispose of a greenhouse gas in an environmentally friendly way.
2. Obtain an income stream in the process.
3. Assist in extracting more oil from existing oil fields which could provide more energy security for both USA and Australia (including LNC's Sth Aust potential oil fields).

No wonder LNC are excited about the process.

 

[dogeatdog]

It looks like 2.38 is becomming familiar. Would like to see some news come out that might explain the recent rises

Or maybe the recent spudding news of Lea 1, and the possibility of finding a trillion cubic units of gas, may the speculators placing their bets:dunno:

Certainly these daily sp increases of 4.8%+ are pleasing to current holders, of which I continue to be one.

 

[tehnoob]

So far today LNC has hit an intraday high of 2.53, up 0.14 on yesterdays' close. Increasing volume each day for the last week. Can't be too far off either a speeding ticket or a juicy announcement from Mr Bond.

 

[basilio]

So far today LNC has hit an intraday high of 2.53, up 0.14 on yesterdays' close. Increasing volume each day for the last week. Can't be too far off either a speeding ticket or a juicy announcement from Mr Bond.

Still think this is just the long overdue re rating of LNC. There will be ongoing excellent news from Alaskan gas drillings, coal sales, development of UCG projects in SA and so on but these in a sense have been well predicted. I believe the institutions are starting to move and as the SP moves up it encourages further investment because the other fund managers don't want to be left behind.
_________________________________________________________
I don't think managed funds really have much courage or imagination. It seems to me that they play it safe until it either becomes bleedingly obvious there is a big development in place or a couple of the pack make a start and it becomes a game of follow the leader. I suppose that's why ASF can be such a useful place to get market analysis and intelligence.

 

[dogeatdog]

Still think this is just the long overdue re rating of LNC. There will be ongoing excellent news from Alaskan gas drillings, coal sales, development of UCG projects in SA and so on but these in a sense have been well predicted. I believe the institutions are starting to move and as the SP moves up it encourages further investment because the other fund managers don't want to be left behind.

I'd like to share your optimism, basilo.
I do aspire to match your positive thinking though.
However, there appears to be a lack of "new" significant information out there, causing the consistant daily rise in the Linc sp.
Where is MR Z with his charts when we need him
LNC holder

 

[teabagger]

A good run, and this is swimming against the tide. If there was a half decent announcement strap your self in. Although as already stated, good news is probably priced in and people are realising the potential.

What I'd like to know is the potential divi once a few of these projects bring a revenue stream. I realise it will be an ongoing and developing investment. But as a so-far longterm holder the thought of a nice little earn per share keeps you going through the ups and downs

It seems GTL is not the overwhelming front and centre driver, and the focus seems to be on developing multiple income streams from other energy investments.

And again.... come on down Mr Z!

 

[Mickel]

What I'd like to know is the potential divi once a few of these projects bring a revenue stream. I realise it will be an ongoing and developing investment. But as a so-far longterm holder the thought of a nice little earn per share keeps you going through the ups and downs

It seems GTL is not the overwhelming front and centre driver, and the focus seems to be on developing multiple income streams from other energy investments.

Hi Teabagger
A previous BBY analyst report(which is no longer on LNC's website) in late 2008 showed an EBITA profit of $600M+ on a 20,000 bpd GTL plant. As the whole business plan has developed and changed over the last 2 yrs, profit from the GTL is not the immediate goal now but rather power generation.

However the net profit from GTL is still the diamond in the portfolio IMHO, even though there is a growing list of potential income streams. LNC's USA broker- Merriman Curhan Ford - has an analyst report on the LNC website which is about 12 months old.
I would hope that they issue an updated analyst report in the near future. It would be very interesting to get the USA perspective as there is more emphasis on the operations in USA.

 

[Mickel]

On the LNC website there is a report published in a local Alaskan paper from a high school geology student on their Oct 22 visit to the LNC gas drill site (LEA1) during operations.

In part he states-
"The hole was 130 feet deep when the students arrived, and a distance of 40 feet was drilled while the students were on site. This greatly impressed many, especially an eighth-grader whose family runs a water well drilling business. When asked to guess how long the exploratory process would
probably take, most students widely overshot the actual figures. The bit touched the ground six months after the drill sight was selected. Twenty-one days of drilling is expected to allow the drill rig to reach its goal of 7,000 feet, where workers expect to hit volcanic rock. Saying the process
goes quickly does not mean processes are skipped or overlooked. The company has it together and is serious about what it does."

And further on he says-
"The drill station is purely exploratory. Whether or not gas is found will not be known until the findings of the exploration well have been reported after the drilling process is completely finished.
If nothing is found, the area will almost immediately and completely be reclaimed to nature. However, there is a large possibility the local market may be fed if a discovery is made."

21 days from Oct 22 is 13 Nov. If they have struck commercial gas flow I would expect they would know very quickly. So the next 2 weeks could prove to be very interesting.

http://www.lincenergy.com.au/data/media_news_articles/LNC-Media_Coverage-567.pdf

 

[Mickel]

A New Corporate Video on LNC's business model has been released on their website.

It emphasises operations in USA and highlights the EOR (Enhanced Oil Recovery) aspects in the business plan. It's about 9 minutes in length.

http://www.lincenergy.com.au/boardroom_radio.php

 

[basilio]

We don't want to get too ahead of ourselves with LNC do we ? Great looking "re rate" during the week and then a sharp fall on Friday just to mess with our minds again.

 

[basilio]

A New Corporate Video on LNC's business model has been released on their website.

It emphasises operations in USA and highlights the EOR (Enhanced Oil Recovery) aspects in the business plan. It's about 9 minutes in length.

http://www.lincenergy.com.au/boardroom_radio.php

That is a very good story on LNC. Probably needs (and has) some back up figures for the bean counters but when you recognise the elegant way that UCG also revives old oil fields through the injection of CO2 as well as providing an immediate quality resource all the light bulbs light up.

It will be even more interesting when the hydrogen fuel cell capability is written into the picture.

 

[ColB]

Originally Posted by Basilio

We don't want to get too ahead of ourselves with LNC do we ? Great looking "re rate" during the week and then a sharp fall on Friday just to mess with our minds again

It had to happen Bas. As markets soften after the recent runup a few profit takers have come in. With the Dow dropping 70 points overnight and concerns in China the profit takers have probably timed it right as Monday will probably see a further drop UNLESS LNC come out with the LEA Drill results [Due 13/11 ??] or some other magic

See article below...

The Explorers 2010: Linc Energy - 14 November 2010

Linc Energy isn’t dilly-dallying in Alaska. The Australian company bought 123,000 acres from fellow independent GeoPetro Resources in March 2010 and immediately planned a drilling program.

Linc is/has drilled the LEA No. 1 well near Point MacKenzie in October to look for conventional natural gas resources, but longer term the company is focused on generating synthesis gas from deep coal deposits using Underground Coal Gasification.

The drilling site is near an existing Enstar Natural Gas distribution line.

Source: http://www.petroleumnews.com/pntruncate/116497741.shtml

Article edited - For full version see above link