Linc Energy Coal Assets Provide Downside Protection?

Below is a Linc Energy press release from 5-Sep-2008 (a dramatic period of time in the financial markets) where Linc Energy agreed to sell its Teresa coal exploration permits for AU$ 1.5 billion.  The sale subsequently fell through and another buyer has not appeared, but this is an interesting data point that suggests that the coal assets may be worth at least its current enterprise value and that all the other assets are free.

http://www.lincenergy.com/data/asxpdf/asx-94.pdf


17-Feb-2015 Update:  Looks like the conventional coal assets have just been given away

Wright Residents Wary Of Proposed Coal Gasification Project

http://wyomingpublicmedia.org/post/wright-residents-wary-proposed-coal-gasification-project

$LNCGY Linc Energy 2Q2014 Financial statements released

$102.3 MM liquidity
AUD$85.8 MM in cash
AUD$16.5 undrawn from KeyBank facility

Ordinary share count = 575,423,498
unexercised employee options = 361,331
unvested performance rights = 10,819,395
convertible notes = 117,700,935 (conversion price will be reset in April 2014 according to a predetermined formula)
Credit Suisse (Hong Kong) has option to buy 50MM convertible notes until 10 May 2014

disappointing drop in Gulf Coast production
2Q2014 ave = 5157 boepd
2Q2014 EBITAX = $23.8 MM
1H2014 EBITAX = $41.2 MM
Not a favorable development for repaying/refinancing the USD$265MM Senior Secured Notes due 31-Oct-2017.  These notes are secured by Gulf Coast and Wyoming oil and gas assets only.

From the release:

9. Where a forecast, or a prospect statement, has been previously disclosed to shareholders, any variance between it and the actual results.
 Average production for the quarter ended 31 December was 5,157 BOEPD, comprised of 92% oil which was lower than our forecast production exit rate. As a result of extensive evaluation of well performance in our Cedar Point field, we have opted to control flow rates in order to extend the life of the wells. Reservoir pressure has maintained across the wells drilled at Cedar Point but, for unforeseen reasons, we have been unable to maintain production at the rates anticipated across the fields. Various attempts at remediation were unsuccessful in significantly improving production. Consequently, we are now producing at controlled flow rates at Cedar Point to minimize water production and maximize ultimate oil recovery.

During the months of November and December we curtailed drilling activity across our Gulf Coast asset base in order to focus on enhancing our prospect portfolio through the interpretation of our newly reprocessed 3D seismic data.
 Additionally, we were unable to continue our Cedar Point/Atkinson Island drilling program due to previously discussed water depth constraints during winter months. We expect to be able to maintain current production in the Cedar Point field whilst planning a second Galveston Bay drilling campaign in Cedar Point and Atkinson Island. Linc Energy plans to return to Galveston Bay in April 2014 to target up to ten additional prospects in the two fields combined. It is anticipated that the reservoirs at Atkinson Island will perform well and not experience the issues experienced at Cedar Point. Consequently, the initial production rates will be maintained for a longer period than we experienced at Cedar Point.




   We have moved on location with a drilling rig at our Hoskins Mound field to drill one well. At the conclusion of this well we plan to commence a drilling program at our Barbers Hill field for the remainder of 2014. We continue to add to our robust prospect inventory of approximately 60 wells.

We are also likely to drill the first of our sub-salt prospects at Port Neches in the coming months.  

Linc Energy Might Be A Positive Black Swan

Moderate risk/extremely high potential reward

My Seeking Alpha article is linked below:

http://seekingalpha.com/article/1915611-linc-energy-might-be-a-positive-black-swan

Notes on Linc Energy

I spent the weekend drilling down on Linc Energy.  Key findings as follows:

~575 million shares on Singapore exchange @ S$1.20 = ~USD$575 MM mkt cap
long term debt = ~$465 MM
Cash = ~$116 MM + ~50 MM net proceeds from SGX IPO
EV = ~875 MM
2013 EBITDAX = USD$78 million

Assets
Gulf Coast Region 1P PV10 = $610 MM

Umiat 2P PV10 = $2.4B

Blair Athol Mine & Teresa Project Proved + Probables = A$440MM
Coal in Pentland & Dalby too.

Wyoming CO2 EOR project 2P PV10 = 0; 3P PV10 = $1.14B; all three fields currently under waterflood which speaks well for CO2 EOR chances

Invested A$210 MM (USD$196 MM) in UCG over last 9 years.  Ready for commercialization.
UCG operation in Uzbekistan.  Possibilities in Russia, Poland, Ukraine, South Africa, Wyoming, Alaska.

Contracted royalty stream from Carmichael coal tenement of $2 per ton (indexed to CPI) expected to commence 1Q2017

Arckaringa Basin unconventional has potential to be even  better than the Bakken or Eagle Ford (much thicker).  100% WI in 16 million acres.  Several enormous conventional leads.  Three largest conventional leads each have best estimates of prospective resources of 18B to 22B barrels!

Linc Energy to Relist on SGX

http://www.fool.sg/2013/12/13/linc-energy-to-relist-on-sgx/

article includes link to prospectus


and another article:
http://business.asiaone.com/news/linc-energy-launches-ipo-ahead-asx-de-listing/page/0/1


and a video interview with CEO Peter Bond on Bloomberg:
http://www.bloomberg.com/video/linc-energy-s-singapore-ipo-heavily-subscribed-ceo-deS0tY0PQuGKZa8dNNkZRw.html

Direct links for the SGX prospectus are:

Volume 1 of 2
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/936bad13609791c948256b3e001ed49f/1D49B946C0ED305248257C3E004014B2/$File/3(a)%20Prospectus%20Volume%201%20Part%201%20of%202.pdf

Volume 2, part 1 of 8 pages I-1 thru I-353
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/36858ca0bf0879fb48256b4500285a82/1D49B946C0ED305248257C3E004014B2/$File/3(a)%20Prospectus%20Volume%202%20Part%201%20of%208.pdf

Volume 2, part 2 of 8
???

Volume 2, part 3 of 8 - pages I-525 thru I-650
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/36858ca0bf0879fb48256b4500285a82/1D49B946C0ED305248257C3E004014B2/$File/3(a)%20Prospectus%20Volume%202%20Part%203%20of%208.pdf

Volume 2, parts 4, 5, 6, & 7
???

Volume 2, part 8 of 8 - pages I-986 to end
http://masnet.mas.gov.sg/opera/sdrprosp.nsf/36858ca0bf0879fb48256b4500285a82/1D49B946C0ED305248257C3E004014B2/$File/3(a)%20Prospectus%20Volume%202%20Part%208%20of%208.pdf

All 1542 pages are located here:
http://www.lincenergy.com/data/sgx/Preliminary-Prospectus-as-lodged.pdf

Linc Energy Vidoes

http://www.bloomberg.com/video/alaska-climate-a-hurdle-for-linc-energy-drillers-~KgyaTC9RX6FJDvb0dh1pQ.html

http://www.adelaidenow.com.au/news/south-australia/trillion-shale-oil-find-surrounding-coober-pedy-can-fuel-australia/story-e6frea83-1226560401043

http://moneymorning.com/ob-article/arckaringa-saudi.php?code=131883