Australian Shale Oil Asset Sale

Linc Energy (ASX: LNC) Seeks Partner


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By Swagato Chakravorty
Thursday, January 24th, 2013

Interest in Australian shale continues to grow. Linc Energy (ASX: LNC) of Australia has now called upon Barclays for advice as it noses into the partial sale of a large exploratory tract in South Australia’s Arckaringa Basin. Linc bought the tract some four years ago for about $100 million.

Link is clearly seeking to attract several international oil and energy majors who have been snapping up deals lately in Australia, just as Central Petroleum Ltd. (ASX: CTP) attracted Total SA (NYSE: TOT) and Santos Ltd. (ASX: STO).

The region, roughly 25,000 square miles, is entirely controlled by Linc, who hopes to attract a partner to help develop the shale prospects there.

It is estimated that there could be up to 100 billion barrels in shale reserves in that location, and Linc claims that several oil companies have already approached the company over that tract.

Last year, Australian conventional oil production dropped to just 485,000 barrels per day, a decrease of 14.5 percent. But the clear presence of extensive shale reserves spiked interest in developing Australian shale as a way out.

The Wall Street Journal quotes PhillipCapital analyst Paul Jensz on the sale:

“It’s a matter of high risk, high reward,” Mr. Jensz says. “Linc is trying to compare its assets to the unconventional plays in the U.S., which is sensible. But we’d like to see more verification on the recoverability of their gas or oil. External verification through a joint venture partner is important as it brings along cold hard cash.”

Linc’s shares were up more than 23 percent to A$2.67 at close in Australia on Thursday.


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