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By Ross Kelly-- CEO says Chinese entity to take a relatively small stake-- New interest in Teresa coal asset after several bids rejected last year-- Linc may packaging Teresa with other coal assets for sale-- CEO sees Linc Energy becoming profitable by the end of 2012SYDNEY -(MarketWatch)- Australia's Linc Energy Ltd. said it hopes to secure investment in the company by a Chinese entity within weeks, and has experienced fresh interest in an auction of Australian coal assets worth over A$1 billion.Linc hopes to build its next commercial underground coal gasification, or UCG, project in China with assistance from the unnamed Chinese investor, Chief Executive Peter Bond told Dow Jones Newswires in an interview.UCG is being investigated by several international energy companies as a technology that has the potential to tap enormous and otherwise inaccessible coal reserves, and to slow the speed of climate change. The process involves burning the coal where it lies, deep below the Earth's surface, then extracting the gases produced for applications including powering turbines or the production of chemicals.Bond declined to say how much of Brisbane-based Linc will be sold, but said the investment likely won't be has high as 10-20%."It'll be a relatively small stake," Bond said. "But I think in the scheme of things it will be significant to the commercialization of underground coal gasification and gas-to-liquids. And it'll be a significant revaluation of some of the assets within the group, including the UCG technology."Bond said the China deal was expected to be completed this quarter. "I still think we're very close to doing that," he said.Linc, which has a market value of A$643 million, wants to produce liquid transport fuels such as gasoline and jet fuel from coal by employing UCG and gas-to-liquids, or GTL, technology.It already has an operational UCG facility in Uzbekistan, which feeds a power plant, and has built a GTL demonstration plant in Australia's Queensland state.To bring in funding the company sold its Emerald coal property to India's Adani Enterprises Ltd. for A$500 million plus royalties in 2010. It's also acquired producing oil assets in the U.S. to generate cashflow to support its growth.In a statement to the Australian Securities Exchange last week, Linc said it declined a number of offers for its Teresa coal property because they were either too low, or it didn't like the implied post-transaction ownership structure. Discussions are continuing with several potential new buyers, it said at the time.Bond said that although the company received "a couple of firm offers" for Teresa, it had to consider them in the context of all its coal assets, including the Pentland property and Great Northern Leases."There's probably over A$1 billion of hard value in our coal assets and you've got to be pretty smart about how you unlock the value. I want to do an aggressive sale process on the bulk of the coal asset base because I think between now and the end of the year is a good time to do it," he said.A wave of merger and acquisitions activity has swept over Australia's coal sector, generated by strong demand for metallurgical coal used in steelmaking and thermal coal used in electricity generation from rapidly industrializing countries such as China and India. But not all companies selling assets have been successful, with Bandanna Energy Ltd. (BND.AU) and Whitehaven Coal Ltd. (WHC.AU) both terminating formal sales processes after failing to attract adequate bids.Linc's oil fields in Texas and Louisiana are currently producing about 3,000 barrels per day and Bond said the company is on track to hit 7,000 barrels per day by the end of 2012. This increased output rate would equate to around A$250 million of revenue and A$120 million-A$130 million of operating cashflow, he said.Linc on Friday booked A$48.7 million net loss for the six months to Dec. 31. Bond said cashflow from the U.S. assets should make the company profitable by the end of 2012 and that, over the longer term, it may consider spin-offs and offshore listings of separate business unitshttp://www.marketwatch.com/story/linc-energy-close-to-investment-from-china-entity-2012-03-18
By Ross Kelly
-- CEO says Chinese entity to take a relatively small stake
-- New interest in Teresa coal asset after several bids rejected last year
-- Linc may packaging Teresa with other coal assets for sale
-- CEO sees Linc Energy becoming profitable by the end of 2012
SYDNEY -(MarketWatch)- Australia's Linc Energy Ltd. said it hopes to secure investment in the company by a Chinese entity within weeks, and has experienced fresh interest in an auction of Australian coal assets worth over A$1 billion.
Linc hopes to build its next commercial underground coal gasification, or UCG, project in China with assistance from the unnamed Chinese investor, Chief Executive Peter Bond told Dow Jones Newswires in an interview.
UCG is being investigated by several international energy companies as a technology that has the potential to tap enormous and otherwise inaccessible coal reserves, and to slow the speed of climate change. The process involves burning the coal where it lies, deep below the Earth's surface, then extracting the gases produced for applications including powering turbines or the production of chemicals.
Bond declined to say how much of Brisbane-based Linc will be sold, but said the investment likely won't be has high as 10-20%.
"It'll be a relatively small stake," Bond said. "But I think in the scheme of things it will be significant to the commercialization of underground coal gasification and gas-to-liquids. And it'll be a significant revaluation of some of the assets within the group, including the UCG technology."
Bond said the China deal was expected to be completed this quarter. "I still think we're very close to doing that," he said.
Linc, which has a market value of A$643 million, wants to produce liquid transport fuels such as gasoline and jet fuel from coal by employing UCG and gas-to-liquids, or GTL, technology.
It already has an operational UCG facility in Uzbekistan, which feeds a power plant, and has built a GTL demonstration plant in Australia's Queensland state.
To bring in funding the company sold its Emerald coal property to India's Adani Enterprises Ltd. for A$500 million plus royalties in 2010. It's also acquired producing oil assets in the U.S. to generate cashflow to support its growth.
In a statement to the Australian Securities Exchange last week, Linc said it declined a number of offers for its Teresa coal property because they were either too low, or it didn't like the implied post-transaction ownership structure. Discussions are continuing with several potential new buyers, it said at the time.
Bond said that although the company received "a couple of firm offers" for Teresa, it had to consider them in the context of all its coal assets, including the Pentland property and Great Northern Leases.
"There's probably over A$1 billion of hard value in our coal assets and you've got to be pretty smart about how you unlock the value. I want to do an aggressive sale process on the bulk of the coal asset base because I think between now and the end of the year is a good time to do it," he said.
A wave of merger and acquisitions activity has swept over Australia's coal sector, generated by strong demand for metallurgical coal used in steelmaking and thermal coal used in electricity generation from rapidly industrializing countries such as China and India. But not all companies selling assets have been successful, with Bandanna Energy Ltd. (BND.AU) and Whitehaven Coal Ltd. (WHC.AU) both terminating formal sales processes after failing to attract adequate bids.
Linc's oil fields in Texas and Louisiana are currently producing about 3,000 barrels per day and Bond said the company is on track to hit 7,000 barrels per day by the end of 2012. This increased output rate would equate to around A$250 million of revenue and A$120 million-A$130 million of operating cashflow, he said.
Linc on Friday booked A$48.7 million net loss for the six months to Dec. 31. Bond said cashflow from the U.S. assets should make the company profitable by the end of 2012 and that, over the longer term, it may consider spin-offs and offshore listings of separate business units
http://www.marketwatch.com/story/linc-energy-close-to-investment-from-china-entity-2012-03-18
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