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Wire: Bloomberg News (BN) Date: Mar 7 2013 16:53:52
Linc Says Australian Shale Assets Draw 70 Potential Partners (2)


(Updates to add analyst’s comments in fifth paragraph.)

By James Paton
March 7 (Bloomberg) -- Linc Energy Ltd. said it’s been
contacted by about 70 companies from North America to India to
fund the development of shale oil prospects in central
Australia.
“You’ve got the majors, but at the same token a lot of
second-tier groups with big checkbooks,” Peter Bond, chief
executive officer of the Brisbane-based company, said in an
interview. “We’ve had about 70 inquiries.”
Linc has hired Barclays Plc to find a partner to develop
shale oil prospects in the Arckaringa Basin that it says may be
similar to acreage in the Bakken and Eagle Ford shale regions in
the U.S. Any partner would follow global energy companies
including Chevron Corp., ConocoPhillips, Statoil ASA and BG
Group Plc in making shale bets in Australia to tap the world’s
sixth-biggest potential resources of the fuel.
Linc’s shares rose 1.6 percent to A$2.55 in Sydney, while
the benchmark S&P/ASX 200 Index fell 0.2 percent. The stock
earlier rose as much as 5.2 percent to A$2.64.
“There’s a good likelihood of a partnership forming,”
Paul Jensz, a Melbourne-based analyst at PhillipCapital Ltd.,
said today in a phone interview. “You’d think there would be a
few majors involved. It’s risk management. They don’t want to be
left out of a large new energy play,” he added.

‘High-Risk’

Linc is seeking a partner to contribute as much as A$300
million ($307 million) to fund the shale oil exploration, Bond
said yesterday in Sydney. Of the companies that have contacted
Linc, there are a “lot of North American groups, but quite a
few from Asia and India and Europe as well,” he said.
The potential resources in the South Australia state basin
are estimated at 103 billion barrels of oil equivalent -- or 3.5
billion barrels “adjusted for probability” of success -- by
Dallas, Texas-based consultants DeGolyer and MacNaughton, Linc
said in January.
The company expects to reach an agreement about mid-year to
sell as much as half of the project, Bond said in a Jan. 23
interview. Drilling at the Arckaringa Basin project may start by
the end of the year, he said at the time.
“The challenge for Linc is it’s a new basin and it needs a
lot of development to prove the hydrocarbons they’ve found are
amenable” to drilling techniques such as hydraulic fracturing,
or fracking, Jensz said, adding it may take longer for Linc to
reach a deal. “It’s high-risk, high-reward.”

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--Editors: Keith Gosman, Andrew Hobbs

To contact the reporter on this story:
James Paton in Sydney at +61-2-9777-8698 or
[email protected]

To contact the editor responsible for this story:
Andrew Hobbs at +61-2-9777-8642 or
[email protected]