Dear Peter (via HV) I am a long long term holder in LNC. I sometimes wonder why I stick in, I guess it is because the company does have interesting prospects. I do not doubt your energy or enthusiasm in advancing these projects. I still feel comfortable that one or more can be very exciting. Should just one commercial UCG project commence it may be a game changer. The coal spin off should also be interesting. Of course the future Adani royalty continues to look an increasingly realistic payoff in the relative near term. Texas oil continues to flow money.
From my perspective Arckaringa and Umiat are side issues - if they play out great, just don't want them to cause a big hole in the bank.
I remain concerned at what appears to be significantly increased admin costs for a company that announced a cost reduction package.
I also think that LNC is trying to juggle too many balls at once and some of those are very expensive balls should they fall.
What particularly concerns me (and I suspect other shareholders )is the amount of enthusiasm (and what I consider hype) associated with new project announcements. Furthermore, when they fail to deliver or are delayed there is often minimal information announced. I think this adversely affects credibility. For example GCL was announced with great fanfare and slowly and quietly slipped into a one liner in the annual report (I think it had that much exposure).
Another instance is Umiat. Most longterm shareholders would accept that drilling for oil in this part of the world is a high risk endeavour and won't produce gain without pain. Whether or not we want a large amount of company capital tied up there at this stage of the development cycle may be more contentious.
You have promoted Umiat as a potential 50k BBL bonanza for the company and it may well be. Problem is that there are many hurdles to overcome to get there together with a realistic chance that some hurdles may be insurmountable. With great expectations comes the potential for great adverse consequences when something does not work out as planned - as happened today with our SP. Even if the adverse is not that adverse it will be measured against expectations - not reality.I believe that a much better approach would have been to promote Umiat as a potentially very rich source of oil that is in a very difficult location and emphasise the associated risks. Then when things don't go as planned, it is expected, and in all probability may have minimal adverse response. Many of LNC's prospects are frontier in nature and I believe that a similar conservative approach would enhance rather than detract from the company.
My perception (backed by comments from others) is that LNC is less enthusiastic releasing bad news than with good news. I would have thought news about the various obstacles encountered at Umiat would have been better digested by the market if released piecemeal as they occurred rather than as a fait accompli. Just my opinion.
I intend to raise these matters at the next AGM and encourage HC posters to comment.
LNC Price at posting:
$1.55 Sentiment: Hold Disclosure: Held
