Well Well Well..... sorry could not resist that opening pun. The...

Well Well Well.....

sorry could not resist that opening pun. The basin is confirmed as potentially prospective by PATA1 oil shows, but now, just like the coal asset sales venture, Bond has somehow managed to time the company Arck drilling activity to coincide with a dramatic low point in the price cycle for the hydrocarbon commodity. Selling coal mines when coal is worthless is a hard task. Selling oil projects when oil is worthless will be difficult IMO.

If Linc gets lucky in the 3 hole campaign and proves there is tight oil or conventional oil able to be commercialised, they will have another great asset that will be expensive to develop and (still) have no money to do it. This seems to be the Linc MO - develop fantastic ideas and burn cash on multiple side shows till you have insufficient funds to complete anything or wait till a low point in the commodity price cycle then try to flog the asset in the bottom of the market.

What interest rate would Linc get for funds to develop a new tight oil field given their financial history and current oil oversupply and poor price - and would anyone lend them the required funds? If they try to negotiate a farm in deal in 2015 would they get a good deal given market conditions?

I would say a cashed up oil companies and investment banks (vultures) can just wait and circle until they can pick the bones of Linc carcass once its cashless body is unable to defend itself. Proof of commercial oil in Arck would have been a game changer if oil price remained around $100. With oil around $50 and commodity in oversupply compared to demand it is unlikely someone will plonk down a premium offer for any oil asset with cost of production above $20 per barrel.

Winter is hitting hard in the northern hemisphere this year which may precipitate a russian oil and gas supply gamble (turn off the taps) as the ukraine issue remains unsettled and sanctions bite which help could fast track UCG in Poland, Hungary etc and save the company. Demand for heating oil should also increase in a bitter winter. A demand driven oil price reversal plus success in the Arck would indeed be a game changer.

Linc need some luck to go their way eventually if they want to continue to exist IMO. They dont have sufficient cashflow to ride out the commodity cycle for longer term from what I can tell.