Former Drillsearch Energy chief Brad Lingo has wasted no time in moving on from his old company, agreeing to take on the managing director’s role at oil and gas minnow Elk Petroleum.
Mr Lingo, who only stepped down from Drillsearch this month, has joined the board of Elk with a plan to build the group into a regional expert in enhanced oil recovery techniques.
And the strategy may well see Elk pick up ground in South Australia’s Cooper Basin, where Mr Lingo directed his focus over six years at the helm of Drillsearch.
Sydney-based Drillsearch enjoyed an eightfold increase in share price and market capitalisation under Mr Lingo, and was once valued at more than $1 billion before the collapse in oil prices.
Mr Lingo told The Australian that Elk had refined its expertise in enhanced oil recovery over years of operations in the US state of Wyoming and was now ready to introduce those skills to Australia and the region.
“Elk in many respects is in a unique proposition in that in this part of the world there just haven’t been companies that have focused on dedicated core competency of enhanced oil recovery,” Mr Lingo said.
Conventional oil extraction, he said, typically only recovers around 20-25 per cent of the discovered oil within a reservoir. Enhanced oil recovery, which typically involves repressurising reservoirs with gas such as carbon dioxide, can allow that volume to be recovered again.
The technique is widely used in North America and the Middle East but has been largely ignored in Australia and Southeast Asia.
“A lot of people have left a lot of oil behind where in other markets that’s when the engineers get involved and put some new life back into the assets,” Mr Lingo said.
“It’s ultimately a lot lower risk and even in a low oil price environment it’s highly profitable.”
With numerous oil and gas producers feeling the squeeze from lower oil prices, Mr Lingo said it was an ideal time to be scouting for cheap “mature” oilfields in Australia and Asia that could benefit from enhanced oil recovery.
One of Drillsearch’s joint venture partners in the Cooper Basin, Santos, had tinkered with enhanced oil recovery with some success but had not given adequate focus to the potential of the technique.
“It’s not a technique that works for all fields, and that’s where the knowledge and experience of knowing what projects are worth working on is important. It’s that knowledge that Elk has worked up,” Mr Lingo said.
The sudden departure of Mr Lingo from Drillsearch earlier this month — he left the role with immediate effect — prompted speculation that there had been a falling-out between him and the board over the direction of the company.
Drillsearch has widely been considered a prime acquisition target, with Kerry Stokes’s Seven Group having taken a 19.9 per cent stake in the company.
But Mr Lingo insisted there was no bad blood towards his old company, and that it was time to put his efforts into a company at an earlier stage of development.
“There’s a high degree of pride in what was accomplished at Drillsearch, it’s a fundamentally strong business sitting there in the Cooper,” he said.
“My true passion is about taking companies that are either at an early stage or that have struggled to realise their full potential and help them refine the focus, build their teams and deliver.”
Elk, which last traded at 2.6c, currently has a market capitalisation of just over $5 million and only had $142,000 in cash to its name at the end of March.
ELK Price at posting:
5.0¢ Sentiment: Buy Disclosure: Held
