nice jump - is ann coming?, page-26

szaba
I totally agree with you that there have been good trading opportunities with Linc.

I for one lost $60K on LNC a year ago as I got sucked into the hype like everyone else.
Luckily I managed to get this all back and some more when the stock ran from below a $1.00 to $3.00 on all the shale and Alaska hype.


The problem is that people have reached the point now where PB's credibility is not that great. He has a history of talking stuff up and then not delivering.



Long term Linc could do very well.
The problem is the way the company continues to burn cash will they be able to survive.


The $265M US debt has to be repaid 2017 and if the oil production doesn't increase they might find they have a problem issuing more debt to repay the old debt.

If they can become cash flow positive I would have a different view but because they are trying to develop so many things IMHO they are seriously over stretching their finances.


The Adani Royalty won't be that significant for another 10 years as the production ramp up will take time. Its also possible that Adani may not ramp up production to 60 mt per year by 2024. Everyone is assuming this but its based on what PB has presented and with coal prices so low they may well go with a much lower production and just keep the asset as a backup.


The Exxaro Royalty is also many years away and we don't even know how much it is.


Unless they sell something or farm out something for cash the only significant revenue coming in over the next five years is the oil revenue.
BBY said recently after they visited Linc that they did not believe Linc would achieve the previously published production targets.


If they try and further develop Teresa, do another drilling campaign later this year in Alaska and fail to reduce the Admin costs I just don't see where the cash will come from unless Oil production substantially increases.


Lets not forget that they currently have $465M US in debt plus another $120M AUS debt (some of which is undrawn), so I don't see that's its going to be that easy raising even more debt to fund further exploration and development.


To me now it's all about cash flow.
For sure there will still be trading opportunities but its highly risky.