Well done Jonathan in sourcing the latest Investor Linc.
It is on their website with this link-
http://www.lincenergy.com/data/investor_linc/investor-linc-issue-17.pdf
Certainly, there are exciting times ahead in the next 12 months. I think the American investors will be very excited when they read this latest information.
So I consider the full text of Peter's message should be posted here-
"Welcome once again to InvestorLinc. I can’t believe Christmas is already here!
I guess time really does fly when you’re having fun!
This year has seen a number of highlights for Linc Energy, including the sale
of our Galilee coal asset, the refocus of our company to an even more
dynamic and progressive business strategy, and the upward recovery of our
share price. It is at about this time of year you start to reflect on just what
has been achieved over the past 12 months. Here’s the list I came up with:
1. The purchase of oil and gas leases in Alaska.
2. Opening Linc Energy’s offices in Alaska, Denver and Wyoming.
3. Spudding our first Alaskan gas well (LEA #1) in just four months after taking control of the lease.
4. The sale of our Galilee coal asset to Adani Mining Pty Ltd.
5. Payment of the 10 cent special dividend following that sale.
6. Continued expansion of our Linc Energy team.
7. Safe and continuing operation of UCG Gasifier 4.
8. The purchase and use of our coil tubing equipment at the Chinchilla Demonstration Facility. Linc Energy is
the only company in Australia using coil tubing for UCG.
9. Successful UCG oxygen injection trials, which are also set to continue next year with the purchase of our own
oxygen facility.
10. Hydrogen fuel cell trials and the acquisition of a 10 per cent stake in AFC Energy.
11. The joint venture with Germany’s GFZ to research the sequestration of CO2 into UCG cavities. Remember it’s
been proposed that up to 400 times more CO2 can be injected into used UCG cavities compared with the
currently proposed traditional deep aquifers. Subsequently, UCG cavities could become a carbon ‘sink’ for the
world’s carbon.
12. The acquisition of another 32 coal leases/tenements in Alaska and
Australia. This means we now own over 340 coal, oil and gas tenements around the world. The resource
position we control is larger than the entire state of Oklahoma.
13. And finally, we are set to begin work for UCG Gasifier 5 at the Chinchilla Demonstration Facility,
while progressing permitting work for our first overseas UCG operation in Wyoming, with another soon
afterwards in other key strategic locations around the world.
When you review what we’ve achieved over the past few months, it’s staggering. Much of this achievement was set up by
the hard work we did in the latter part of 2009 and the early part of this year. There is no doubt Linc Energy lost a great
deal of traction due to the financial crisis that affected the globe from late 2008 to late 2009. Now 12 months on, there is
no doubt that Linc Energy is now back. We are driving hard and are seeing traction across all our business units,
and we are starting to gain some very strong momentum.
The next two to three years at Linc Energy are going to be very exciting. We have completed the development phase of the
business and we are now transitioning to being a sizable commercial operation and an international energy player.
Importantly, Linc Energy has added a new key commercial driver to its business model – enhanced oil recovery (EOR).
EOR uses the CO2 by-product from the UCG process by pumping it into depleted oil fields to extract greater volumes of
oil. This is a significant step forward in Linc Energy’s commercial model.
There are hundreds of depleted oil fields in and around where Linc Energy is based in Wyoming and Alaska. Most of these
oil fields have large known oil reserves that will remain stranded unless the oil field can be flooded with CO2. For that,
an abundant amount of CO2 is needed, and Linc Energy has the capacity to produce the cheapest man-made CO2
in the world, right next door to these oil fields. For every tonne of CO2 pumped into an oil field, two to five barrels of oil can
be recovered at an average cost of $30 to $35 per barrel. With an oil commodity price of $80, that’s a $40 to $50 margin
per barrel. Also, the good news is that virtually all the CO2 can be sequestered and trapped in that oil reservoir.
Consider the hundreds of millions of barrels of oil readily available in these depleted oil fields and you start to gain an
appreciation for the potential commercial opportunity at hand. We have already started work on the UCG to EOR process
and have established our own EOR team in our Wyoming office in Casper.
My aim is to commence EOR by late 2011 with the goal to produce 3,000 barrels of oil per day. Soon afterwards, our aim is
that this oil production will increase to 10,000 barrels per day, with the ultimate goal being the production of over 36,000
barrels per day within 36 months of the extraction of the first barrel of oil.
What that means in terms of dollars and cents is that Linc Energy is aiming to produce $100 million in revenue
quickly, in fact by the fourth quarter of 2011. We intend to move quickly to over $250 million in revenue in 2012.
Once Linc Energy breaks over 36,000 barrels of oil per day, Linc Energy will be in a position to earn over a billion dollars a
year, with an estimated EBITDA1 (profit) of over $400 million. In addition, we will have a series of EOR projects that will
continue for years to come, with a new EOR project added to our execution list at least every quarter, year upon year. This
brings me to Linc Energy’s new motto, which is simply ‘Towards One Billion’.
This motto means that Linc Energy is focused on creating one billion dollars per annum of revenue and booking a
billion barrels of oil reserves. For me, this is the first big step for Linc Energy to establish itself as a commercial energy
player of some size and significance. This is all driven by UCG and will not be lost on the world’s financial markets.
In one move, by developing and linking UCG with EOR, Linc Energy will commercialise and substantiate the
UCG process, whilst significantly growing the value of our coal assets and oil reserves. This is why Linc Energy has been
acquiring oil and gas assets over the past few months. It is the final piece of Linc Energy’s business model.
Linc Energy will continue to focus on GTL and I’d like to have a firm opportunity and modular design fully costed and
quoted available for our Board to make a definitive decision by the third quarter in 2011.
Linc Energy’s improvements in the cost of construction of a modular GTL facility will change the industry. Combining UCG
with GTL will add a generation of opportunity to Linc Energy and I am still committed to unlocking that potential.
Linc Energy has three unique value steps in its growth model:
1. Resource sales: Selling assets (similar to the coal tenements sold to Adani) provides Linc Energy with a shortterm,
self-funding growth model. The next obvious asset for sale is ‘Teresa’, on which I expect strong progress in
the first quarter of next year. I can now also inform you of a third sizable coal asset in Queensland, adding to the
string of resource opportunities we own. This asset will also go up for sale by the end of 2011.
2. UCG to EOR: The oil recovered using CO2 from UCG for the oil recovery process is a very strong first step in
the commercial model that will be part of Linc Energy’s growth platform for many years ahead. This is by far
the fastest, most profitable way to commercialise UCG for Linc Energy.
3. GTL: The GTL component of the business model will have a generational role to play in the energy sector.
Linc Energy will continue to develop this via its multi-stage 5,000 barrel per day modular GTL platform.
The Linc Energy business plan is literally a 25 year high growth model, and one that will morph and expand as the
company grows in the future. To our shareholders, I simply say welcome to the next era of Linc Energy.
I look forward to updating you all as we start upon this journey of commercialisation; the journey ‘Towards
One Billion’.
From me, and all of the team at Linc Energy, may you have a fantastic Christmas break and enjoy a safe and prosperous New Year.
With best wishes to all,
Peter Bond
CEO and Managing Director"
Hopefully this will trigger a huge demand for LNC shares and send the S/P much higher.
Longterm LNC holder.