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View Full Version : Linc Energy to acquire Central Petroleum?


Sparty
08-03-2010, 03:53 AM
If I was Peter Bond (LNC CEO) I'd be seriously thinking about having a chat to John Heugh (CTP CEO).

Linc Energy LNC (http://www.australian-shares.com/mining/LNC) is an avowed and accomplished UCG GTL (http://www.ucg-gtl.com) company that is going to have a serious amount of money at some time in the future..... With over a billion** of cash LNC would be in the position to swallow Central Petroleum CTP (http://www.australian-shares.com/mining/CTP) just out of several months interest.

LNC would then have the largest holding of UCG suitable coal of any company in Australia and possibly the region.

Moreover the ex-Sapex and CTP coal is in semi desert-desert with some of the lowest population counts in Australia. Dry, arid, infertile ground.

LNC have already decided to dump Qld... (thanks Anna) and are moving their operations to SA to utilise the several billion tons of coal they bought from Sapex for a song.

Having acquired CTP's trillions tons+ of UCG suitable coal plus CTP's other goodies, for just on $20m*, LNC could then be in the position of becoming one of the world's largest oil suppliers with an almost endless amount of energy at their disposal.

Thus LNC could provide Australia with oil independence and a huge amount of foreign exchange input for several centuries and at the same time take out the other emerging players by virtue of strength.

For those that haven't been following the UCG-GTL story LNC have demonstrated that 1 ton of coal can be converted to 1.7 BOE for around $28 - $35 per barrel.

* CTP Mkt Cap ~$60m Cash $35m

** LNC have three large high quality coal deposits for sale in Qld. Several overseas companies are looking at them at the moment and there seems to be a sale of at least one within weeks being possible.

Alexis
03-09-2011, 02:47 PM
The problem with CTP is that UCG coal in Pedirka basin they claim to be suitable for UCG is:

(1) Landlocked (quite far from major infrastructure, except rail line to Darwin -> higher logistics costs
(2) Quite deep, 300-1000 m vs. 200 m vs. e.g. South Australian coal of LNC -> higher costs of gasification
(3) Water-constrained, especially important for UCG-GTL process which consumes a lot of water in syngas conditioning and electricity generation steps

There are some advantages over LNC's Orroroo project (thicker seams of coal, no problems with groundwater contamination), but do they outweigh disadvantages? It's really an issue if CTP can ever monetize this coal into something commercial.

Alexis
03-09-2011, 03:02 PM
The problem with CTP is that UCG coal in Pedirka basin they claim to be suitable for UCG is:

(1) Landlocked (quite far from major infrastructure, except rail line to Darwin -> higher logistics costs
(2) Quite deep, 300-1000 m vs. 200 m vs. e.g. South Australian coal of LNC -> higher costs of gasification
(3) Water-constrained, especially important for UCG-GTL process which consumes a lot of water in syngas conditioning and electricity generation steps

There are some advantages over LNC's Orroroo project (thicker seams of coal, no problems with groundwater contamination), but do they outweigh disadvantages? It's really an issue if CTP can ever monetize this coal into something commercial.

Sparty
04-05-2011, 03:18 AM
Hi Alexsis,
I think I might have replied but just a couple of points...

The costs of drilling for UCG chambers is rather minimal in the grand scheme as they only have to drill a few wells unlike with the hundreds/thousands required for CSM.

But of course a deep well costs a bit more but this is off-set by the ability to use the increased pressure at depth to modify the outputs... some very interesting work is being done on this overseas.

The Perdika region has access to good roads and isn't out of reach for transport to the Darwin Adelaide railway.

But most importantly the backlash from farmers will be negligible as the basin isn't farmed.... and it is the latter that will be a pivotal point in the near future... as green-farmer opposition to CSM and coal mining grows.

To put the potential Perdika project into some sort of context.... The cost of drilling a very deep well in very deep water in both economic and environmental terms far outweighs the costs of building a UCG-GTL plant and then shipping the oil to the railway. This plus the cheap ~$28 per BOE production cost to convert 1 ton of coal to a barrel of diesel/kerosine etc should make building and running a UCG-GTL plant with ready access to over a trillion tons of thick seamed UCG suitable coal an attractive long term proposition.

I own CTP and LNC.

Alexis
04-10-2011, 12:19 AM
Hi Alexsis,
I think I might have replied but just a couple of points...

The costs of drilling for UCG chambers is rather minimal in the grand scheme as they only have to drill a few wells unlike with the hundreds/thousands required for CSM.

But of course a deep well costs a bit more but this is off-set by the ability to use the increased pressure at depth to modify the outputs... some very interesting work is being done on this overseas.

The Perdika region has access to good roads and isn't out of reach for transport to the Darwin Adelaide railway.

But most importantly the backlash from farmers will be negligible as the basin isn't farmed.... and it is the latter that will be a pivotal point in the near future... as green-farmer opposition to CSM and coal mining grows.

To put the potential Perdika project into some sort of context.... The cost of drilling a very deep well in very deep water in both economic and environmental terms far outweighs the costs of building a UCG-GTL plant and then shipping the oil to the railway. This plus the cheap ~$28 per BOE production cost to convert 1 ton of coal to a barrel of diesel/kerosine etc should make building and running a UCG-GTL plant with ready access to over a trillion tons of thick seamed UCG suitable coal an attractive long term proposition.

I own CTP and LNC.

Of course CTP offers a number of advantages vs. LNC in terms of environmental pressure.

Concerning potential acquisitions, I thought they consider only 50/50 JV-like alliances, not full sale to an investor? At least according to their October 2010 presentation.

But if they change their mind, it would be interesting to see their coal resources acquired by a UCG-focused player.

In fact, worldwide not so much places have coal resources exactly suitable for the process. First, coal shall not be prospective for CBM (otherwise oil/gas giants will grab it like they already did in QLD). Then it shall be accessible by existing infrastructure / close to consumers (LNC's Cook Inlet, Powder River Basin acquisitions perfectly fit into this logic). And finally it must be of proper thickness, depth, moisture, etc.

Among places with potential for UCG which LNC did not target yet I see Botswana, Central Australia, India/Pakistan. Let's see who will target these resources.