Ann: LNC Oil and Gas Division Results for Third Q, page-20

re: Ann: LNC Oil and Gas Division Results for... MrMcgee

I have to disagree with just about every point you make.

(1) "You seem to be making the assumption that at NO POINT IN TIME did the production for the last quarter reach either parity with or exceed the exit rate from Dec. That's not been said, so while you can assume it, you don't know it".

All I was doing here is replying to what Szaba had said regarding the number being a bit loose. I never said I thought that.




(2) "Linc never said 4667 NET Bopd was or would be an immediate average. It was a peak production figure and was reported alongside an average production figure for clarity. Perhaps some people missed that".

Yes you are correct but I also NEVER said it was an average I clearly said it was production as at 31st Dec 2013.

Lets not forget that Linc had previously stated several times that they expected gross bopd to be between 6000-7000 by 31st Decemeber 2012.
So based on the fact actual production hit this range on 31st Dec 2012 I think it VERY fair to use this as the starting point to compare current production.


(3)"And Al, you're complaining about the company using some creative accounting while doing the same".

If moving $21.4M of US Admin costs out of the US subsidiary and into the head office to make the margins look better is not creative accounting then I don't know what is.

Also the whole point of reporting is consistency so that you can compare Apples with Apples and not Cherries with Melons.
So why is it that they gave us the bopd for 31st dec 2012 but decided NOT to give us the same number for 31st March 2013?




(4)"Flip it. If the number you're looking for [peak production] was, for this quarter, was 3000Bopd but the next quarter was 6000bopd would you credit the company for having doubled their production in three months and overcoming the hurdles of depletion? I doubt it. It's more likely you would revert back to the Dec figure and ride management for only increasing production by 1500bopd! "


If Linc does manage to double production from here and be in a position where the oil profit covers ALL the Admin costs I would most likely buy back in, so you are TOTALLY WRONG that I would pick another number and continue to say something negative and I take offence to your comment there as I always try and tell it based on facts and NOT fiction.


If you look at my previous posts I was very negative on the company due to bad management and lack of cost control.
When PB got the advisers in and said he would cut back Admin costs and the oil would make a positive cash flow and even cover most of the Admin costs, I did trust him and become positive again and invested quite heavily as things were looking good again.

However since then Admin costs have continued to increase, Alaska was a disaster, the Oil is still cashflow negative (even after taking out the Alaska cost) and hence does not cover ANY of the Admin costs, they had to do another Capital raising and the Exxara deal has still not happened.

Anyone who thinks that they have done a great job over the last few months can think that if they want, but the fact that the SP has dropped from $3.00 to around $1.56 suggests that the market is on my side as to how well they are currently doing.

"Full Stop"