LNC - Linc Energy

[basilio]

A new announcement has been released for LNC
Summary: LNC Acquires Oil Producing Asset in Wyoming, USA
Announcement number: 229507
Release time: 2/25/2011 12:58:00 PM
Price sensitive: Yes

This deal was noted a couple of weeks ago and it's certainly great to see the details.

It will be interesting see what the financial projections are for this deal. My initial (back of the envelope) estimates are around $200m a year. If oil is bringing $100 a barrel and EOR costs are $40 a barrel (I believe Bond suggested around $30 previously) then a 10,000 barrel a day project should deliver $600k a day or $210m over a 350 day year.

The LNC report suggests a 10,000-20,000 barrel a day production target with final extractable reserves of 100m barrels.

This is seriously good. And the field cost $20m !

 

[Atomic]

This deal was noted a couple of weeks ago and it's certainly great to see the details.

It will be interesting see what the financial projections are for this deal. My initial (back of the envelope) estimates are around $200m a year. If oil is bringing $100 a barrel and EOR costs are $40 a barrel (I believe Bond suggested around $30 previously) then a 10,000 barrel a day project should deliver $600k a day or $210m over a 350 day year.

The LNC report suggests a 10,000-20,000 barrel a day production target with final extractable reserves of 100m barrels.

This is seriously good. And the field cost $20m !

Agreed their with valuations Basilio, but seriously an understatement with the good bit !!!! , I rated it at fenomanoly Mega , but hey i hold linc buy now

 

[Mickel]

Some of the chemicals that farmers put on farms are deadly, it is about how they are used and in what concentration. It is not like fracking is new or not well understood, the oil industry have been doing it for many decades. I would have thought that if it is that bad they'd have been shut down long ago! Maybe it is evil, but no coherent argument was put forward. A long that line they presented no qualitative evidence that the ground water was in fact being impacted.

There where claims of a 10 meter drop in ground water levels but no more discussion about that, was it a local effect, was it across the basin, does it mean that the water has gone or is now just more inaccessible... etc etc... no real discussion of the issue in any detail.

Anyway... I'd have been happier to see some willingness to solve the issues, whatever they turn out to be in reality, rather than club the industry to death. We are staring down the barrel of another huge energy crunch and will will need to use everything we have in the short term if we are to have any hope of transitioning to an more sustainable future. Sad fact is that renewable energy ain't there yet!

I agree that the water table levels section of the report wasn't explained clearly. However, if you are aware of the CSG process, you know that they need to extract the water from the coal (and therefore from the water table) to allow the gas to escape. This water will almost certainly contain some of the fraccing chemicals. QCG have stated that they will spend up to $1Billion to purify the water so it can be used for agriculture. But there have been no trials to prove that it can be done for this cost if at all. There will be massive amounts of water extracted when 40,000 wells are spudded.
Regarding the chemicals, there is an extended interview with the Chemical Management expert Dr Lloyd-Smith on the 4 Corners website that is scary-

http://www.abc.net.au/4corners/special_eds/20110221/gas/default.htm

In my view, it is ironic that the UCG industry, where the process doesn't interfere with the water table, is only permitted on a trial basis with very strict environmental monitoring, while the CSG industry, that does interfere with the water table, has been given the commercial go ahead (albeit with many environmental conditions) but apparently little monitoring.

As others have said, the State Govt (who are responsible for the monitoring) obtain Mega $ from CSG but nothing directly from UCG.

 

[Jonathan111]

I wonder how the coal sale is going... It would be good if there was an announcement during the Diesel Dash...(did you book your place?). But im still happy to wait longer..


http://www.moneylife.in/article/icvl-may-buy-coal-assets-in-australia/14271.html
ICVL, at the time of its constitution, had set itself a target to buy at least one coal asset by the end of March, but has made no progress yet.



http://www.businessspectator.com.au...overseas-coal-buys-DQA28?opendocument&src=rss
The consortium was hopeful of acquiring two to three coal assets in Australia and Indonesia this year, and could look for mines in Mozambique as well, Mathur said.

Last month the consortium decided not to counter Rio Tinto's $3.9 billion bid for Riversdale.

The four listed state firms in the group held combined cash reserves of around 440 billion rupees ($A9.6 billion) as of the end of September, but all four also have ambitious expansion or acquisition plans of their own.

 

[teabagger]

This deal was noted a couple of weeks ago and it's certainly great to see the details.

It will be interesting see what the financial projections are for this deal. My initial (back of the envelope) estimates are around $200m a year. If oil is bringing $100 a barrel and EOR costs are $40 a barrel (I believe Bond suggested around $30 previously) then a 10,000 barrel a day project should deliver $600k a day or $210m over a 350 day year.

The LNC report suggests a 10,000-20,000 barrel a day production target with final extractable reserves of 100m barrels.

This is seriously good. And the field cost $20m !

These guys seem to be doing similar things nearby..and paying for co2

http://clients.weblink.com.au/clients/elkpet/article.asp?asx=ELK&view=6525853

 

[basilio]

That was some serious buying this afternoon for LNC. Pushed it up 10c. Perhaps the next coal sale announcement is getting close.

I remember when the first coal sale stared to firm up in July last year. There was much speculation about how this potentially company making sale would impact on the SP.

And then we got the $3billion sale - and nothing happened. In fact LNC drifted down again for a few more months - despite having $500 m in the bank and $2b plus in potential royalties

Nine months later will the market be just as casual about a $500-600m cash injection that adds an instant $1 per share value to the company ?

 

[dogeatdog]

So our esteemed leader, Peter Bond heads off on a pioneering venture.

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

This could be a very positive marketing move.
I would hope Linc will enlighten us on the logistics of the trip, ie Is Peter to be followed by a re-fueling vehicle etc.
It would also be good to highlight the amount of coal that was consumed to produce the necessary Diesel for the trip, for analytical purposes.

Anyway, good luck Peter, and avoid those Kangaroos :car:

 

[Mickel]

I was at the function at the Marriott Hotel in Brisbane last night.

The following are my recollections of what PB said both in his presentation and in reply to questions-

-If West Texas crude is $100 then Linc diesel would sell for $115

-RBS Morgans analyst report has just been finalised and apparently will be available on the website soon. It is very positive with "Options Galore" and a current valuation of $3.25.

-VW Golf runs very well on linc diesel which meets exacting standards for european diesel motors

-Once a GTL module plant is on site it should be ready to produce within 6 mths-

-The initial site will depend on which tenement (here or overseas) has all the permitting approved first.PB won't be held hostage to slow permitting by authorities

-PB is aiming to have the first steel of the module laid by end of 2011

-He put his views to new Qld Mines Minister Stirling Hinchcliffe (who was at Chinchilla for the start of the diesel dash) that CSG industry has full commercial go ahead, despite depleting the water table, while UCG industry which doesn't interfere with the water table, has only trial approvals.

-PB confirmed that the trial for UCG was to end this year with the Govt to decide on its future early in 2012 but has now been extended for a further year.

-An ABC Landline TV crew are following the Diesel Dash and are producing a doco on the trip.

-Nothing was mentioned about the Teresa Coal Sale (I think most of the audience realise PB won't say anything until it it signed off). The AFR article on 9 Feb mentioned that LINC was 4-5 weeks away from closing the sale.

That would fit in nicely with the final Diesel Dash function in Perth on Sunday night 13 March.

 

[basilio]

Nice work Mickel. Excellent to hear a summary of the LNC presentation.

Just for interest was there any discussion on the AFC Fuel cell technology ? Was it on the radar as far as part of no carbon power plants in South Australia for example?

And was there any elaboration on the EOR program being proposed/developed in USA ?

Cheers

 

[dogeatdog]

Yes! Thanks for sharing the info Mickel.

One question: Any idea how the comparison between the West Texas crude, and Linc's Diesel was worked out? Diesel being a refined product, and sold by the litre etc, while the former by the barrel?

 

[Mickel]

Nice work Mickel. Excellent to hear a summary of the LNC presentation.

Just for interest was there any discussion on the AFC Fuel cell technology ? Was it on the radar as far as part of no carbon power plants in South Australia for example?

And was there any elaboration on the EOR program being proposed/developed in USA ?

Cheers

Hi Bas

There was no mention of the AFC Fuel Cell and I can't recall any mention of UCG in Sth Aust last night.

Regarding EOR, PB mentioned that that they should be able to produce 10,000 to 20,000 BPD from the Rancher assets & for $20M they will have an asset worth in excess of $1B (I think he said $1B not $2B). He stated that there would be more depleted oil field acquisitions to come and that initially they would purchase CO2 to inject into the Rancher wells for an early increase in production before they have their own CO2 from UCG. He mentioned a production cost of $40 pb using their own CO2. They hope to be producing their own CO2 before the end of 2011.

He also mentioned that they get about 15 enquiries a month for joint ventures and licensing of their technologies. They are very selective and only consider those where they have a majority interest and are the operator. PB said in some situations they were unaware if they were talking to a Govt minister or a supervisor of parks (or something similiarly menial). This will be remedied to a great extent when they have their regional offices (Europe and Asia) fully functional.

The information just kept flowing last night interspersed with jokes/wisecracks. I will consider taking a recorder to the next presentation so I don't miss anything.

 

[Mickel]

Yes! Thanks for sharing the info Mickel.

One question: Any idea how the comparison between the West Texas crude, and Linc's Diesel was worked out? Diesel being a refined product, and sold by the litre etc, while the former by the barrel?

Hi Doggy

PB mentioned that the diesel that comes out of the LNC demo plant at Chinchilla can be put straight into a car even though some wax can be extracted. While it would be a simple addition to add this function to the LNC plant, they have elected to have it refined off site at present. The resultant barrel of diesel (159 L by my calculations) would command a 15% premium to West Texas crude according to PB.

 

[Jonathan111]

Very informative post. Thanks Mickel!

 

[dogeatdog]

Hi Doggy

PB mentioned that the diesel that comes out of the LNC demo plant at Chinchilla can be put straight into a car even though some wax can be extracted. While it would be a simple addition to add this function to the LNC plant, they have elected to have it refined off site at present. The resultant barrel of diesel (159 L by my calculations) would command a 15% premium to West Texas crude according to PB.

Thank you Mickel.

A very positive day for the share price today.
Looking forward to the next analyst report.

Pleasant weekend people

 

[skivvy]

Been doing some research and reflection on current open positions (with a cold beer in hand) and was wondering to myself what is holding Linc back. I dont really know why, as all the news has been pretty damn positive especially the sale of the Galilee tenament last year. The $500 million in the bank, plus the ongoing royalties from Adani ensure future cash flow will not be a problem.

The acquisition of 122,000 acres of Alaskan oil and gas leases last year and the recent acquisition of a further 181,414 acres of Underground Coal Gasification (UCG) coal exploration licences in Alaska is also positive with the spudding of its first gas exploration well (LEA #1) located in the Cook Inlet Basin in Alaska last year coming on pretty quickly. The presence of high quality gas charged zones has been reported and in one of the announcements PB said that Linc Energy is aiming to have the Flow Test Rig on site in late March 2011.

With the recent acquisition of the 27,856 acres of producing oil fields in the Powder River Basin in Wyoming from Rancher Energy Corp (for $20 million, Rancher paid $70 million) with a current oil production of approximately 190 barrels per day across three fields and the potential to increase oil production from EOR (CO2 Flooding) to 10,000 barrels/day to 20,000 barrels/day range with total recoverable oil from these fields being approximately 100 million barrels, this transaction is pretty significant also.

The twofold increase in syngas flows from the Chinchilla production plant last year shows Linc are leading the field in the UCG area and the potential sale of the Theresa tenament down the road are even more reasons for this share price to be racing ahead.

Even as I write this, I am thinking I need to buy some more shares on any dips in the future as there is just far too many reasons why this company is going places.
I look forward to reading any further details about Linc and hope that other holders can shed some light as to why Linc is not racing along, or if I have missed something in my research or misquoted PB.

Mickel, as a long term holder and supporter of Linc can you add anymore dialogue or correct my interpretation of the companies current state?

I guess in time the sp will appreciate and there are a few hurdles to cross with the closing of the Theresa sale, the realisation of the increase in flow rates from Wyoming fields using CO2 flooding and the testing and commercialisation of Lea 1 in Alaska. But from where I sit alot of these facts have not been taken into account in the sp yet.
Good luck to all holders

 

[basilio]

Been doing some research and reflection on current open positions (with a cold beer in hand) and was wondering to myself what is holding Linc back. I dont really know why, as all the news has been pretty damn positive especially the sale of the Galilee tenament last year. The $500 million in the bank, plus the ongoing royalties from Adani ensure future cash flow will not be a problem.

The acquisition of 122,000 acres of Alaskan oil and gas leases last year and the recent acquisition of a further 181,414 acres of Underground Coal Gasification (UCG) coal exploration licences in Alaska is also positive with the spudding of its first gas exploration well (LEA #1) located in the Cook Inlet Basin in Alaska last year coming on pretty quickly. The presence of high quality gas charged zones has been reported and in one of the announcements PB said that Linc Energy is aiming to have the Flow Test Rig on site in late March 2011.

With the recent acquisition of the 27,856 acres of producing oil fields in the Powder River Basin in Wyoming from Rancher Energy Corp (for $20 million, Rancher paid $70 million) with a current oil production of approximately 190 barrels per day across three fields and the potential to increase oil production from EOR (CO2 Flooding) to 10,000 barrels/day to 20,000 barrels/day range with total recoverable oil from these fields being approximately 100 million barrels, this transaction is pretty significant also.

The twofold increase in syngas flows from the Chinchilla production plant last year shows Linc are leading the field in the UCG area and the potential sale of the Theresa tenament down the road are even more reasons for this share price to be racing ahead.

Even as I write this, I am thinking I need to buy some more shares on any dips in the future as there is just far too many reasons why this company is going places.
I look forward to reading any further details about Linc and hope that other holders can shed some light as to why Linc is not racing along, or if I have missed something in my research or misquoted PB.

Mickel, as a long term holder and supporter of Linc can you add anymore dialogue or correct my interpretation of the companies current state?

I guess in time the sp will appreciate and there are a few hurdles to cross with the closing of the Theresa sale, the realisation of the increase in flow rates from Wyoming fields using CO2 flooding and the testing and commercialisation of Lea 1 in Alaska. But from where I sit alot of these facts have not been taken into account in the sp yet.
Good luck to all holders

It doesn't make sense does it ? For example just compare LNC's current share price with all additional resources and opportunities available to the $3-4-5.00 prices of 2008.

My take on the picture is

1) The "proper" analysts (by and large) just won't take newer companies seriously . If you are not a current ASX 100 company you are unlikely to get on the recommendation list

2) Overall the market is now dominated by short term traders who will push shares up and oown in aflash. Very hard to build a solid base.

 

[Atomic]

Possibly the sp is lacking as there is not much production yet, and as it picks up so to the sp. This issue was mentioned elsewhere and without decent past present earnings are not on the table its harder to put a fundamental value on linc and to also predict future earnings

 

[Jonathan111]

Found these links on another forum..

Candidates must be degree-qualified in Geology, with a minimum of 5 years' coal experience in Southern Africa. This position is a pivotal technical role providing input on UCG, conventional coal, power and related energy project opportunities.
http://jobs.miningweekly.com/job/senior-coal-geologist

http://www.jobs.co.za/job-seekers/jobs/90814/commercial-manager-southern-africa


Sasol JV??

 

[basilio]

Really interesting find Jonathan on the 2 South African positions. That is the first time we have heard about LNC's interest in that part of the world.
________________________________________________________________

With regarded to employment LNC currently has 36 positions advertised on it's website in Brisbane and the US. Certainly looks like they are in full commercialisation mode. And isn't it great that they have so much cash in the bank to pay wages and development costs..
__________________________________________________________________

I just saw the first story in The Australian on Peter Bonds dash across Australia on UCG sourced diesel. Not that confident about how the message is getting across.

IT'S 40 degrees on a windless day in a shimmering dry field of brigalow scrub in western Queensland, but for Peter Bond, this is a field of dreams where he can produce petrol that will power him to the other side of the continent for 20c a litre.

Bond, the head of coal miner Linc Energy, will set out this morning from Brisbane to Sydney, then Canberra, Adelaide and Perth, in a Volkswagen Golf powered by diesel petrol (???) produced by the controversial method of underground coal gasification.

http://www.theaustralian.com.au/bus...ces-cheap-diesel/story-e6frg8zx-1226016134384

I just don't think that LNC will be selling diesel for 20c a litre and I'm trying to work out how a reporter can manage to totally confuse "diesel" and "petrol". Needs some chemistry lessons I think!

 

[dogeatdog]

Really interesting find Jonathan on the 2 South African positions. That is the first time we have heard about LNC's interest in that part of the world.
________________________________________________________________

With regarded to employment LNC currently has 36 positions advertised on it's website in Brisbane and the US. Certainly looks like they are in full commercialisation mode. And isn't it great that they have so much cash in the bank to pay wages and development costs..
__________________________________________________________________

I just saw the first story in The Australian on Peter Bonds dash across Australia on UCG sourced diesel. Not that confident about how the message is getting across.



http://www.theaustralian.com.au/bus...ces-cheap-diesel/story-e6frg8zx-1226016134384

I just don't think that LNC will be selling diesel for 20c a litre and I'm trying to work out how a reporter can manage to totally confuse "diesel" and "petrol". Needs some chemistry lessons I think!

What a fool this Andrew Fraser, the journalist who wrote this article, appears to be.
Linc does not claim to be a mining company for a start.
Also the fact he mentions Diesel then petrol in the same sentence, shows his lack of technical knowledge.

Regarding the frustration of various Linc share holders:
It's just a case of Linc starting to generate revenue, rather than the continued promise of it.
The coal tenement sales encourage speculative trading. Once we have a revenue stream, this company will take off, and benefit long term share holders. IMHO

LNC holder