LNC - Linc Energy

[teabagger]

Had a sell set at 2.50 yesterday and was then hoping to come back in at a lower price and gain some more. Missed out on that one.....but it could have gone the other way too! I guess thats why I keep the day job and primarily hold long term.

Maybe this will present an opportunity to pick up some more. I noticed the dow went down last night which probably will lead to a softer Monday.

Don't take my advice, I'm only 9 posts old...lots to learn!

Have a good weekend.

 

[basilio]

There are a number of presentations around from LNC which pull together the story they are selling to investors and partners around the world. The corporate video for example recently quoted is one example.

Came across another presentation made to a Hong Kong audience which included a reference to fuel cell powered power plant in the first quarter of 2011. (I have very high hopes for this part of LNC's plans because I think it might actually address the biggest questions of producing carbon free electricity )

The refefence is on slide 22.

http://www.slideshare.net/plsderrick/linc-energy-2010-asx-conference-presentation-hong-kong

 

[Mickel]

LNC announcement today is encouraging but not definitive-

18 November 2010
ALASKAN GAS EXPLORATION PROGRAM SHOWS COMMERCIAL GAS POTENTIAL
. Drilling of LEA #1 exploration well in the Cook Inlet Basin completed
. The well was successfully drilled to its target depth of 6,323 feet
. LEA #1 was completed on time and within budget
. A number of gas bearing horizons have been encountered
. A testing program is now underway to evaluate the potential for commercial gas production
. Preparation for an expansion of Linc Energy’s Alaskan natural gas drilling program is underway
Linc Energy (ASX:LNC) (OTCQX:LNCGY) is pleased to report that it has completed the drilling of the LEA #1 exploration well in the Point Mackenzie Block of the Cook Inlet Basin in Alaska, USA.
The well was drilled to a total depth of 6,323 feet into the basement volcanic rocks. LEA #1 encountered a number of gas bearing horizons and 7” casing has been run and cemented. This will allow Linc Energy’s technical teams to plan a testing program to evaluate the potential for commercial gas production from the prospect. A number of significant coal seams were encountered as expected. Coal is recognised as the source rock for all the gas discovered and produced from the prolific Tyonek, Beluga and Sterling formations in the Cook Inlet Basin.
Linc Energy CEO Mr. Peter Bond said “In light of the fact that Linc Energy took over these Leases in June, it is an exceptional result that by October, our team planned and permitted a drill site, built the pad, contracted the rig and spudded the LEA #1 well. The safe completion of the well to depth, within budget and time is also a fantastic outcome. It will now take our team about a month to conduct the relevant tests upon LEA #1 to define a commercial outcome. I am very excited about the opportunity that Alaska offers, particularly for the potential for early cashflow to Linc Energy.”

In addition to testing at LEA #1, Linc Energy will now prepare for phase two of its Alaskan natural gas drilling program in its Trading Bay Block leases which are located on the northwest side of the Cook Inlet approximately 70 miles from the site of LEA #1.

http://www.lincenergy.com/data/asxpdf/ASX-LNC-293.pdf

S/P is currently up 11c to $2.41 after reaching a high earlier today of $2.46

 

[Mickel]

More good news from LNC website is a report on AFC Energy's Fuel Cell
Technology

CPI finds AFC Energy’s fuel cell technology close to commercialisation
By Toby Price

Posted 16 November 2010 @ 03:04 pm BST

An independent technical report from the Centre for Process Innovation (CPI)
has this week confirmed major technical advances made by AFC Energy plc,
the world’s leading developer of low cost alkaline fuel cells. Dr Jon Helliwell,
Project Manager of Fuel Cell Applications at CPI has undertaken an
independent technical review of AFC Energy, gaining an exclusive insight into
their Beta fuel cell system, the future of green energy generation.

In this report, the third in a twenty-four month period, Helliwell was
overwhelmed by the dramatic progress made by the company in terms of both
technical innovation, design concepts and targets achieved and was left in no
doubt that AFC Energy will deliver on their commercialisation goals.

http://www.lincenergy.com/data/media_news_articles/LNC-Media_Coverage-568.pdf

 

[dogeatdog]

Even more potential good news from the Linc web site.
Would be marvelous to get positive results from the well to drive up the sp, now that a second coal tenement sale appears less imminent this year.

18 November 2010
ALASKAN GAS EXPLORATION PROGRAM SHOWS COMMERCIAL GAS POTENTIAL
● Drilling of LEA #1 exploration well in the Cook Inlet Basin completed
● The well was successfully drilled to its target depth of 6,323 feet
● LEA #1 was completed on time and within budget
● A number of gas bearing horizons have been encountered
● A testing program is now underway to evaluate the potential for commercial gas production
● Preparation for an expansion of Linc Energy’s Alaskan natural gas drilling program is underway
Linc Energy (ASX:LNC) (OTCQX:LNCGY) is pleased to report that it has completed the drilling of the LEA #1 exploration well in the Point Mackenzie Block of the Cook Inlet Basin in Alaska, USA.
The well was drilled to a total depth of 6,323 feet into the basement volcanic rocks. LEA #1 encountered a number of gas bearing horizons and 7” casing has been run and cemented. This will allow Linc Energy’s technical teams to plan a testing program to evaluate the potential for commercial gas production from the prospect. A number of significant coal seams were encountered as expected. Coal is recognised as the source rock for all the gas discovered and produced from the prolific Tyonek, Beluga and Sterling formations in the Cook Inlet Basin.
Linc Energy CEO Mr. Peter Bond said “In light of the fact that Linc Energy took over these Leases in June, it is an exceptional result that by October, our team planned and permitted a drill site, built the pad, contracted the rig and spudded the LEA #1 well. The safe completion of the well to depth, within budget and time is also a fantastic outcome. It will now take our team about a month to conduct the relevant tests upon LEA #1 to define a commercial outcome. I am very excited about the opportunity that Alaska offers, particularly for the potential for early cashflow to Linc Energy.”
ASX ANNOUNCEMENT
CONTINUED…
Page 2 of 2
In addition to testing at LEA #1, Linc Energy will now prepare for phase two of its Alaskan natural gas drilling program in its Trading Bay Block leases which are located on the northwest side of the Cook Inlet approximately 70 miles from the site of LEA #1

 

[Mickel]

More news on LNC's Teresa coal tenement and update on sale process-

"TERESA COAL ASSET UPDATE
● Further drilling on coal resource
● Commencement of Environmental Impact Statement (EIS)
● Participation in Stage 2 of Wiggins Island Coal Export Terminal (WICET)
● Sales process progressing'


http://www.asx.com.au/asxpdf/20101122/pdf/31v14cbq97d7kr.pdf

While it's good to receive any update, this isn't likely to boost the S/P IMHO.
However it should increase the sale price of Teresa whenever it occurs.

 

[basilio]

More news on LNC's Teresa coal tenement and update on sale process-

"TERESA COAL ASSET UPDATE
● Further drilling on coal resource
● Commencement of Environmental Impact Statement (EIS)
● Participation in Stage 2 of Wiggins Island Coal Export Terminal (WICET)
● Sales process progressing'


http://www.asx.com.au/asxpdf/20101122/pdf/31v14cbq97d7kr.pdf

While it's good to receive any update, this isn't likely to boost the S/P IMHO.
However it should increase the sale price of Teresa whenever it occurs.

I think it's very astute. LNC is making it clear it isn't just throwing Teresa onto the market as a take it or leave it product. Each activity either improves the known value of the asset, makes it easier to develop or smooths the path for development. A bit like selling a block of land with an approved DA.

In that context all the buyers will be aware that the attractiveness of the tenement is increasing along with any increase in intrinsic vale as coal prices appreciate. Should make them a bit keener to sign up at a full price before another prospective buyer jumps in or further activity increases the value yet again.

There is every possibility that the $5-10 million worth of investment here will translate into an extra $100m at sale time ( imho ) That's worth another 20c a share - not peanuts:

 

[Mickel]

I think it's very astute. LNC is making it clear it isn't just throwing Teresa onto the market as a take it or leave it product. Each activity either improves the known value of the asset, makes it easier to develop or smooths the path for development. A bit like selling a block of land with an approved DA.

In that context all the buyers will be aware that the attractiveness of the tenement is increasing along with any increase in intrinsic vale as coal prices appreciate. Should make them a bit keener to sign up at a full price before another prospective buyer jumps in or further activity increases the value yet again.

There is every possibility that the $5-10 million worth of investment here will translate into an extra $100m at sale time ( imho ) That's worth another 20c a share - not peanuts:

I agree with your comments, Basilio. I probably didn't phrase my last comment very well. I meant that I didn't think that the announcement would have any effect on the S/P in the SHORT term. In fact the S/P did rise on that day (an up market day) but has not held since.

Looks like we'll have to wait for the analyst report on the LEA1 Gas Well drilling.

 

[Mickel]

A BRR interview with Peter Bond speaking about the drilling of LEA1 gas well in Alaska and how the analysis of the results is done.

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

I would welcome comments by anyone with gas well experience.

 

[basilio]

Presentation for the AGM is out. Interesting as ever but I felt it left as many questions as it answered. I can only see the power point presentation so perhaps a script will expand on the major points.

1) I didn't notice any mention of the South Australian project. I assume it was there somewhere but it escaped me . Anyone else see it ?

2) Also missed any comment on the AFC fuel cell technology. Perhaps playing possum on this opportunity ?

3) In the promotion of the EOR(Enhanced Oil Recovery) projects in America I didn't notice any discussion on the returns from actually producing the syngas in the first place. It looks as if the whole process is purely about producing lots of CO2 to pump into current oil fields. Where is the power generation and/or GTL plant ?

4) Interesting to see another coal sale being flagged in teh Great Northern coal lease.

5) Teresa sale now pitched for Q2011. They seem to be taking a relaxed attitude to coal sales now that the first one is in the bank.

6) Also note their determination to prove up reserves around the world. One can see that after the first UCG plants prove the value of the previously worthless coal these assets will take on a whole new value.

Does look good.I could really see how the Wyoming operation will be a (black) gold mine if it can gain profit from both the UCG operation AND the sale of the resulting CO2 . Big bucks.

 

[Mickel]

Presentation for the AGM is out. Interesting as ever but I felt it left as many questions as it answered. I can only see the power point presentation so perhaps a script will expand on the major points.

1) I didn't notice any mention of the South Australian project. I assume it was there somewhere but it escaped me . Anyone else see it ?

2) Also missed any comment on the AFC fuel cell technology. Perhaps playing possum on this opportunity ?

3) In the promotion of the EOR(Enhanced Oil Recovery) projects in America I didn't notice any discussion on the returns from actually producing the syngas in the first place. It looks as if the whole process is purely about producing lots of CO2 to pump into current oil fields. Where is the power generation and/or GTL plant ?

4) Interesting to see another coal sale being flagged in teh Great Northern coal lease.

5) Teresa sale now pitched for Q2011. They seem to be taking a relaxed attitude to coal sales now that the first one is in the bank.

6) Also note their determination to prove up reserves around the world. One can see that after the first UCG plants prove the value of the previously worthless coal these assets will take on a whole new value.

Does look good.I could really see how the Wyoming operation will be a (black) gold mine if it can gain profit from both the UCG operation AND the sale of the resulting CO2 . Big bucks.

Bas, I was at the AGM and I'll comment on your various points from what Bondy said in both his presentation and in answer to questions-

1. They need to do more drilling in the Walloway basin because of overburden problems where they have found suitable coal. This will take time so the immediate future in Sth Aust will be oil extraction in Arckaringa because it will be quicker.

2.I understand Bondy will be going to London within a day or so despite only arriving from New York Thursday morning. Could be some news from there soon. In answer to a question about possibility of using (Aussie)cemetric fuel cells,he replied that they are a much higher cost item but they may check out their suitability.

3. EOR is definately the prime focus at the moment IMO. Bondy mentioned that in some cases where they have oil production permits in Wyoming near UCG coal, they might pump all the gas (incl syngas) into the oil well for quick cheap oil production. It would be very quick because of little or no permitting required and no seperating of the CO2 and syngas. Depending on the Alaska gas analyst results, this oil recovery could be their first commercial operation.

4 & 5. Bondy mentioned in passing that they were currently negotiating with one party for sale of Teresa. IMO, he wisely said no more, but I had the impression that the sale of Teresa could happen at any time up to March 2011.

6. Agree totally. They want to purchase them cheaply and this is an intregal part of their business strategy. "Growth target of 100 Billion tonnes over next 18 mths".

The heading in the presentation "TOWARDS ONE BILLION" refers to their target of achieving $1 Billion of revenue ASAP.

Bondy basically said that the Alaska gas well was not a "gusher" but still could be a commercial operation. They need "to do the maths on the results".

IMO the recent addition of Oliver Yates (ex Macquarie Head of Operations America) to the board (Oct 2010)and now as Acting Chairman has influenced their focus on EOR.

A question on Vietnam operations drew a response that LNC are not spending any money or time there at the moment as the Govt is not on the same page regarding western commercial practices.

A good informative meeting but I think that there is a lot more going on that we haven't heard of yet. One overriding theme that was evident is that LNC wants commercial operations starting ASAP.

 

[basilio]

Excellent infill Mickel. Helps make sense of the sllde show.

Certainly fascinated about the idea to simply gasify the coal and pump the whole lot into the oil wells to force out more oil. Could be very quick and profitable.

And as for achieving a $1billion a year in revenue..... If for arguments sake costs were 50% that suggests a profit of $500 m a year- $350m after tax. That would be around 70c a share (500 million shares). To reflect that sort of result the SP would have to be $12-15 plus. Can't say they have set their sights too low.

___________________________________________________________________________

You know I really think that in line with LNC determination to prove a 100 billions tons of underground coal, CTP with it's billions of tons of underground coal., location in Australia plus potential oil kitchens and a seemingly dispirited investor base is screaming out for a takeover - friendly or otherwise.

 

[dogeatdog]

Personally, and as a Linc share holder, I'm a little concerned at the seemingly fickle approach to business.
Of course it's important to be able to change or adapt a business model, but I do think the company should focus on the original core business, and get at least one CTL module up and running.
I fear Linc will lose it's apparent lead in this technology otherwise.
Of course for the short term, and from a share holders point of view, any activity to increase the sp is good.
All IMHO.
Pleasnt weekend people

 

[basilio]

Personally, and as a Linc share holder, I'm a little concerned at the seemingly fickle approach to business.
Of course it's important to be able to change or adapt a business model, but I do think the company should focus on the original core business, and get at least one CTL module up and running.
I fear Linc will lose it's apparent lead in this technology otherwise.

I can see your point dogeatdog but I believe the UCG/GTL field is brand new territory(insofar as the current revival) and being nimble enough to recognize a range of possibilities for implementing it will make excellent business sense.

In that context the latest analysis by Allenby Capital on the AFC fuel cell is pretty breath taking. Remember that LNC holds 10% of AFC, has a forward order on notice and has the rights to distribute the fuel cell technology in UCG applications around the world.

In a nutshell the analysis suggest the the fuel cell technology has the capacity to challenge traditional turbines to provide competitively priced , clean power around the world. LNC is very much part of that picture in that it plans to deploy 4 gigawatts of power stations using the UCG and AFC technologies over the next 10 years

Underground Coal Gasification (UCG)
The contribution to value from AFC‟s activities in UCG remains fundamentally unchanged in that it is anchored on Linc Energy‟s intended roll-out of 4.2GW of operating UCG sites throughout Australia, Europe and North America. After discussions with Linc‟s management earlier this year we projected 4.2GW of operational UCG by 2021 subject to the necessary permissions being obtained. We have pushed this roll-out back by two years. This is not based on AFC‟s capability to deliver its technology in the necessary volumes, but on what we view as a very ambitious time frame from Linc. Allenby Report

http://www.afcenergy.com/wp-content...lc-AFC-L-Allenby-Capital-29-November-2010.pdf

 

[Mickel]

Personally, and as a Linc share holder, I'm a little concerned at the seemingly fickle approach to business.
Of course it's important to be able to change or adapt a business model, but I do think the company should focus on the original core business, and get at least one CTL module up and running.
I fear Linc will lose it's apparent lead in this technology otherwise.
Of course for the short term, and from a share holders point of view, any activity to increase the sp is good.
All IMHO.
Pleasnt weekend people

Doggy, I had the impression at the AGM that LNC is still working hard towards getting a GTL facility up and running ASAP. The issues that they are dealing with are IMO, -
1. Rising cost of the GTL plants
2. Finalizing the design of the plant modules to incorporate the latest improvements to their technology.
3. Selecting the contractor to build the modules.
4. Selecting the first site to produce the Diesel.

Because of 1. they are looking to have 5000bpd plant modules built in Asia to contain the costs.
Speaking with Daryl Rattai after the AGM he mentioned that they want to finalise the design before letting out contracts to build the modules as to change design once construction had started would incur heavy extra costs.

It appears that advances at the Chinchilla demo plant are still occuring.
Daryl also mentioned that there were several world class engineering firms in Asia (incl Philippines & Singapore) that they were investigating.

Because of the overburden problems at Orroro, they need to find another site in that area for UCG and GTL. This has pushed Sth Aust back and the USA is likely to have the first GTL operation now.

In my view, LNC are still striving for a GTL plant to be up and running ASAP. However, because of various hiccups along the way, they are seeking to capitalise on other income streams in the short term. IMO LNC are fortunate to have these other "strings to their bow" to obtain cash flow.

We can see with Carbon Energy (CNX) for instance, that their various hiccups (particularily in QLD), are having an adverse effect on their S/P.

 

[basilio]

That was a strong sustained rise for LNC today in what was a falling market. 10c lift to $2.60 with no sign of falling away. One might think that a few resistance levels have been broken and that the pressure on index funds to include LNC in their portfolio is coming to bear. There was a strong spurt in the last hour that took it to a new high of $2.62

It didn't look like the sort of frantic buying that might herald a new announcement.

 

[Mr Z]

On my chart and assuming we can close the week out above $2.50 that should be a break. Next stop looks a little messy to me but I suspect that resistance starts @ 2.90 to 3.00 being around the top of a channel I have marked. Historically the price action from $3 to $5 was very messy, I think we have some historical overhead to work through there. The environment moving into next year looks supportive to me so this could produce some exciting rides over the next year, both up an down!!! JMO. DOYDD!

 

[Mr Z]

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

Sorry... I missed your post, but it looks like I just did it

$3 could prove to be a tough nut to crack given the stocks history up around these levels. It will be interesting to see if we get relieved long term holders bailing out OR if we have a share holder base of true believers. That dividend may have gone a long way to buying some loyalty. We will C!

Thanks for the kind words.

FWIW LNC is looking like a bottom draw stock to me Ben Hur may get jealous in the end if this story plays as well as I think it might. Again JMO.

 

[dogeatdog]

Thank you for your input Bas, and Mic.
I must attend next years agm. Always good to get info from the horses mouth.
Very pleased with the sp surge.
Totally agree with MR Z, regarding this one is for the "back draw".
LNC holder.

 

[basilio]

I think the train is leaving the station for LNC.. Up to $2.74from $2.60 overnight. The index chasers will simply have to pay whatever is required to stay in touch.