This post continues an appraisal of the complex, diversified coal, oil and gas company Linc Energy, from the perspective of a small retail investor. It is not a professional analysis. Readers looking to invest should seek professional advice, appropriate to their needs.
Linc’s CEO is Peter Bond. He is one of a rare breed: An ambitious young entrepreneur, self-taught but with practical experience in the mining industry, who was so successful that he was able to retire at 39 years of age with $50 million in the kitty. He came out of retirement at 41, not out of financial necessity, but for the challenge of being relevant and not idle. His personal wealth over a decade at Linc’s helm, has continued to grow, with ownership of 39% of Linc Energy shares.
Appropriate I think is this quote from the Australian Financial Review written twelve months ago by Angela Macdonald-Smith.
Bond’s critics concede he has put in the hard yards to develop Linc.
“He’s been able to do things because he’s gone out and drilled holes, then talked about them very successfully,” says one.
The Australian Financial Review, 01 February 2013, Angela Macdonald-Smith (Angela is chief of staff, energy and utilities, based in the Sydney newsroom).
This quote highlights two aspects in which he has excelled, that are necessary for corporate success; hard work, and effective promotion.
Not everyone sees this in a positive light, however, and this is why it is so difficult to assess Linc Energy’s investment potential.
Peter Bond was able in 2004, for an outlay of $1 million, to buy Linc Energy when it was struggling financially. It was re-capitalised by floating on the Australian Stock Exchange in 2006, and was also listed on the OTCQX exchange in the USA in December 2007. Under his guidance the company has continued to focus on developing its Underground Coal Gasification technology.
But he has also been instrumental in shifting company strategy toward revenue generating conventional oil and gas exploration and production, particularly in the United States, reducing reliance on raising additional venture capital. Amongst his acquisitions has been:
- October 2008, Linc acquired South Australian oil and gas explorer SAPEX Limited
- July 2010, Linc acquired 122,000 acres of oil and gas leases in the Cook Inlet Basin of Alaska.
- February 2011 Linc acquired three producing oil fields (27,856 acres) from US Rancher Energy.
- October 2011 Linc acquired 14 oil fields, with 156 leases, over 13400 acres in the Gulf Coast Region of Texas and Louisiana from ERG Resources LLC for US$236 million.
As at 18 October 2013, total US oil production had increased to over 6900 BOEPD as a result of a successful drilling program at Cedar Point on Galveston Bay, Texas, about 28 miles southeast of Houston. It was discovered in 1938 by the Standard Oil Company of Texas, and is sited in the heart of three oil-producing trends, and it has produced over 28 billion cubic feet of gas to date.
Linc intends to re-commence drilling at Galveston Bay mid 2014 with a production target of 8000 to 9000 BOEPD by year end.
Subsequent posts will look at these assets and Linc Energy’s plays for them