Linc Energy

What is happening to this counter? Price dropping like nobody business.

(10-10-2014, 09:28 AM)Boon Wrote: PB has stepped into the role of Executive Chairman.

Before - it was the CEO said
Now - it is the Executive Chairman said

Being the largest single shareholder of the company - it appears to me that he is still the one calling the shots.................regardless...

(vested)
________________________________________________________________________________________________________________

http://infopub.sgx.com/FileOpen/2014.10....eID=317699

10 October 2014

ADANI EXERCISES CALL OPTION WITH $90 MILLION FIRST PAYMENT DUE BY 14 OCTOBER
• Adani has exercised its call option under the $155 million Put and Call Option Deed to facilitate the transfer of Linc Energy’s interest in the Royalty Deed to Adani
• The first payment of AU$90 million is expected on or before 14 October 2014

Linc Energy Ltd (SGX:TI6) (OTCQX:LNCGY) is pleased to announce, further to its announcement of 28 August 2014, receipt of the call option pursuant to the Put and Call Option Deed with subsidiaries of the Adani Group (“Adani”) for the transfer of Linc Energy’s interest in the Carmichael Royalty Deed to Adani. The option exercise consideration under the Put and Call Option Deed is AU$155 million with the first tranche payment of AU$90 million expected on or before 14 October 2014. The second tranche payment of AU$65,000,000 is expected within twelve months from today. As Adani has exercised the call option, it is not necessary for Linc Energy to exercise the put option it had at its discretion.
Peter Bond, Executive Chairman of Linc Energy, said, “This is the first of many transactions the Company is working towards closing and we look forward to making further announcements as we continue the process of simplifying and focusing our Company on the development of our core assets and business.”

ASX savvy resources investors gave up liao, now SGX investors to be conned... stay away from trouble.

Global commodities deflation due to low global economic growth...

Not Vested
GG

SGX query on trading activities

http://infopub.sgx.com/Apps?A=COW_CorpAn...45a8bf7ded

We all wish we could know the real reasons for drop in share prices – ha-ha!

But possible explanations (on speculative basis) are many :

1) Carmichael Royalty being sold too “cheaply”:
2) Carmichael Royalty was sold without shareholder approval (Under SGX rules, for transaction with value > 20% market cap – shareholder approval required.)
3) PB stepped down from CEO role and stepped into Executive Chairman role:
4) Linc reported huge loss for FY20140630: though a lot of non-cash “write-offs” or “impairment”, nevertheless, a legitimate concern.
5) Global commodities deflation due to low global economic growth...as explained by GG.
6) Possible target of “short selling” – but volume is not huge

To me, none of the above, except 4, is of a concern

No doubt, commodities prices are weak but it doesn’t mean commodities are worthless and Linc is worthless – it’s all relative.

Fundamentally, I don’t see Linc is in any “troubles” at all.

Assets rich – cash poor – selling assets is the right way going forward, IMO

Linc has sold Carmichael Royalty for AUD 155 milion.

Linc is in the process of selling its coal assets – how much could Linc sell it for? What is the right price? Coal price could be weak but for how much longer? We are seeing uneconomic mines being shut down – rebalancing signs have emerged, I reckoned.

Linc has received unsolicited offer for its conventional O&G assets in the USA.

What is the value of Linc’s conventional O&G assets, amid current weak oil price?

The Gulf Coast properties have proved 1P PV-10 value of USD 416.6 million

Alaska (Umiat) assets have 2P PV-10 value of approximately USD 2,465 million.

Linc’s conventional O&G business alone is worth more than its current market cap. (even if a huge discount is applied to its 2P reserves)

What is the value of Linc’s shale assets?

What is the value of Linc’s UCG assets?

As always, to some, these are “troubles” - to others, these could be “opportunities”.

(vested )

The main worry is this. The value we attribute to Linc Energy assets do not appear to be in tandem with what Linc Energy is valuing their own assets. Carmichael Royalty is the first exemplification of this. And investors fear that more cheap sales may be in the works if the company is desperate for cash.

While Boon does have a point that Linc's assets are still worth 'a lot', this amount is really not tangible enough. Investors dont think that there is a solid price to it, yet.

And I personally do not like the fact that Bond collects >2.25 million in salary and 28% of it come from a sign-on bonus for his new contract as executive chairman instead of CEO. Company not making money and he is still taking a huge amount of money.

How are Linc’s assets being carried on its Balance Sheet (BS) ?

Total Reportable Segment Assets (30-June-2014) = AUD 942.971 million = BV = Book Value
Consisting:
1) Oil & Gas (Conventional) = AUD 593.680 million (Proven reserves only)
2) Coal (Conventional) = AUD 43.986 million
3) Clean Energy (UCG) = AUD 96.714 million
4) Shale Oil (Sapex) = AUD 136.907 million
5) Corporate/Unallocated = AUD 71.684 million

Based on BV,
Total Equity (net of liabilities) = AUD 267.189 million or NAV = SGD 0.50 per share = BV

Market Value (MV) of Linc’s assets are above its BV : Possible Additions ABOVE BV:
1) Oil & Gas (Conventional) = 2P (PV 10) of Alaska (Umiat) = USD 2,465 million, if reserve could be proven up from 2P to 1P
2) Coal (Conventional) = Potential Sale Price – AUD 43.986 million
3) Clean Energy = ? The Directors’ believe that the recoverable amount of goodwill exceeds the carrying value.
4) Shale Oil (Sapex) = possible billion, depending on de-risking process or validation ?
5) Corporate Assets = AUD 155 million (Carmichael Royalty) – AUD 71.684 million

Carmichael Royalty (under corporate assets) had been sold for AUD 155 million or AUD 83.316 million above BV or SGD 0.157 per share above BV.

Assuming Linc’s conventional coal assets could be sold for another AUD 155 million or AUD 111.014 million above BV or SGD 0.208 per share above BV

NAV(1+3+4) + RNAV (2+5) = SGD ( 0.50 + 0.157 + 0.208 ) = SGD 0.865 per share (pretty close to current share price)

RNAV (1+3+4) potentially could be worth a lot more - pure speculation - part & parcel of E&P sector.

If 20% of 2P (PV10) of Alaska (Umiat) asset could be proven up to 1P reserve, it translates to 0.20 x USD 2,465 million or about SGD 1.00 per share　

What is RNAV(4) & RNAV (3) ? Who knows ?

(vested)

I salute you even though I am clueless over analysis on E&P and commodities companies.

Admittedly, you always choose tough paths which I have little heart and appetite for it.

Good Luck
GG

(10-10-2014, 10:52 PM)Boon Wrote: How are Linc’s assets being carried on its Balance Sheet (BS) ?

Total Reportable Segment Assets (30-June-2014) = AUD 942.971 million = BV = Book Value
Consisting:
1) Oil & Gas (Conventional) = AUD 593.680 million (Proven reserves only)
2) Coal (Conventional) = AUD 43.986 million
3) Clean Energy (UCG) = AUD 96.714 million
4) Shale Oil (Sapex) = AUD 136.907 million
5) Corporate/Unallocated = AUD 71.684 million

Based on BV,
Total Equity (net of liabilities) = AUD 267.189 million or NAV = SGD 0.50 per share = BV

Market Value (MV) of Linc’s assets are above its BV : Possible Additions ABOVE BV:
1) Oil & Gas (Conventional) = 2P (PV 10) of Alaska (Umiat) = USD 2,465 million, if reserve could be proven up from 2P to 1P
2) Coal (Conventional) = Potential Sale Price – AUD 43.986 million
3) Clean Energy = ? The Directors’ believe that the recoverable amount of goodwill exceeds the carrying value.
4) Shale Oil (Sapex) = possible billion, depending on de-risking process or validation ?
5) Corporate Assets = AUD 155 million (Carmichael Royalty) – AUD 71.684 million

Carmichael Royalty (under corporate assets) had been sold for AUD 155 million or AUD 83.316 million above BV or SGD 0.157 per share above BV.

Assuming Linc’s conventional coal assets could be sold for another AUD 155 million or AUD 111.014 million above BV or SGD 0.208 per share above BV

NAV(1+3+4) + RNAV (2+5) = SGD ( 0.50 + 0.157 + 0.208 ) = SGD 0.865 per share (pretty close to current share price)

RNAV (1+3+4) potentially could be worth a lot more - pure speculation - part & parcel of E&P sector.

If 20% of 2P (PV10) of Alaska (Umiat) asset could be proven up to 1P reserve, it translates to 0.20 x USD 2,465 million or about SGD 1.00 per share　

What is RNAV(4) & RNAV (3) ? Who knows ?

(vested)

(10-10-2014, 10:52 PM)Boon Wrote: How are Linc’s assets being carried on its Balance Sheet (BS) ?

Total Reportable Segment Assets (30-June-2014) = AUD 942.971 million = BV = Book Value
Consisting:
1) Oil & Gas (Conventional) = AUD 593.680 million (Proven reserves only)
2) Coal (Conventional) = AUD 43.986 million
3) Clean Energy (UCG) = AUD 96.714 million
4) Shale Oil (Sapex) = AUD 136.907 million
5) Corporate/Unallocated = AUD 71.684 million

Based on BV,
Total Equity (net of liabilities) = AUD 267.189 million or NAV = SGD 0.50 per share = BV

Market Value (MV) of Linc’s assets are above its BV : Possible Additions ABOVE BV:
1) Oil & Gas (Conventional) = 2P (PV 10) of Alaska (Umiat) = USD 2,465 million, if reserve could be proven up from 2P to 1P
2) Coal (Conventional) = Potential Sale Price – AUD 43.986 million
3) Clean Energy = ? The Directors’ believe that the recoverable amount of goodwill exceeds the carrying value.
4) Shale Oil (Sapex) = possible billion, depending on de-risking process or validation ?
5) Corporate Assets = AUD 155 million (Carmichael Royalty) – AUD 71.684 million

Carmichael Royalty (under corporate assets) had been sold for AUD 155 million or AUD 83.316 million above BV or SGD 0.157 per share above BV.

Assuming Linc’s conventional coal assets could be sold for another AUD 155 million or AUD 111.014 million above BV or SGD 0.208 per share above BV

NAV(1+3+4) + RNAV (2+5) = SGD ( 0.50 + 0.157 + 0.208 ) = SGD 0.865 per share (pretty close to current share price)

RNAV (1+3+4) potentially could be worth a lot more - pure speculation - part & parcel of E&P sector.

If 20% of 2P (PV10) of Alaska (Umiat) asset could be proven up to 1P reserve, it translates to 0.20 x USD 2,465 million or about SGD 1.00 per share　

What is RNAV(4) & RNAV (3) ? Who knows ?

(vested)

Hi Boon, I just did some research on 1P and 2P valuations. I found out the current market valuation of 1P oil assets is around USD 3 / barrel while 2P is USD 0.5 / Barrel. Are you using this rate in your valuation?

(10-10-2014, 11:25 PM)greengiraffe Wrote: I salute you even though I am clueless over analysis on E&P and commodities companies.

Admittedly, you always choose tough paths which I have little heart and appetite for it.

Good Luck
GG

Ha-ha ! Fair comment, mate !

It’s all relative – “tough” to one could be "easy" to another – and vice versa.

One man’s meat - another’s poison.

There are many paths to be profitable in investments – one should choose the path one is most “comfortable” with.

I do have "dividend income" quota and “opportunistic" quota in my portfolio - wondering what other counters that I am vested that you also consider as “tough path”.

To me, nothing is “tougher” than a “black box” (example : GIL – haven’t got a clue what are in its equity portfolio”)

I do admit that E&P and commodities are not easy to analyze and I am still learning the rope. (but these are old or matured industries
where abundant information/materials/industry standards etc are available on the web).

E&P is a speculative business by nature – money spent on “exploration” could simply go down the drain – hence one should not invest in it if one could not bear the associated risks.

That said,
1) I do find “tough path” to be a better “training ground” than “easy path” - it is certainly more challenging.
2) I learnt more and enjoy the learning process more in analyzing relatively “tougher” counters.
3) But I don’t intentionally choose to invest in “tough path” just for the sake of it – if it happens, it happens - if opportunities knock, I will seize them anyway, regardless of its "toughness".
4) I have made positive return from round 1 in Linc (more from luck than skill) – I could be wrong but I think opportnunity knock again - positioning for round 2 – ha-ha!

(vested)

(11-10-2014, 05:46 PM)propertyinvestor Wrote:

(10-10-2014, 10:52 PM)Boon Wrote: How are Linc’s assets being carried on its Balance Sheet (BS) ?

Total Reportable Segment Assets (30-June-2014) = AUD 942.971 million = BV = Book Value
Consisting:
1) Oil & Gas (Conventional) = AUD 593.680 million (Proven reserves only)
2) Coal (Conventional) = AUD 43.986 million
3) Clean Energy (UCG) = AUD 96.714 million
4) Shale Oil (Sapex) = AUD 136.907 million
5) Corporate/Unallocated = AUD 71.684 million

Based on BV,
Total Equity (net of liabilities) = AUD 267.189 million or NAV = SGD 0.50 per share = BV

Market Value (MV) of Linc’s assets are above its BV : Possible Additions ABOVE BV:
1) Oil & Gas (Conventional) = 2P (PV 10) of Alaska (Umiat) = USD 2,465 million, if reserve could be proven up from 2P to 1P
2) Coal (Conventional) = Potential Sale Price – AUD 43.986 million
3) Clean Energy = ? The Directors’ believe that the recoverable amount of goodwill exceeds the carrying value.
4) Shale Oil (Sapex) = possible billion, depending on de-risking process or validation ?
5) Corporate Assets = AUD 155 million (Carmichael Royalty) – AUD 71.684 million

Carmichael Royalty (under corporate assets) had been sold for AUD 155 million or AUD 83.316 million above BV or SGD 0.157 per share above BV.

Assuming Linc’s conventional coal assets could be sold for another AUD 155 million or AUD 111.014 million above BV or SGD 0.208 per share above BV

NAV(1+3+4) + RNAV (2+5) = SGD ( 0.50 + 0.157 + 0.208 ) = SGD 0.865 per share (pretty close to current share price)

RNAV (1+3+4) potentially could be worth a lot more - pure speculation - part & parcel of E&P sector.

If 20% of 2P (PV10) of Alaska (Umiat) asset could be proven up to 1P reserve, it translates to 0.20 x USD 2,465 million or about SGD 1.00 per share　

What is RNAV(4) & RNAV (3) ? Who knows ?

(vested)

Hi Boon, I just did some research on 1P and 2P valuations. I found out the current market valuation of 1P oil assets is around USD 3 / barrel while 2P is USD 0.5 / Barrel. Are you using this rate in your valuation?

Hi "propertyinvestor",

I am not aware that such rate exist in the market that you are talking about - it needs to be asset specific as cost of production could vary greatly between assets.

If you are talking about EV/1P or EV/2P multiples, it needs to be company specific.

(vested)

(12-10-2014, 03:42 PM)Boon Wrote:

(11-10-2014, 05:46 PM)propertyinvestor Wrote:

(10-10-2014, 10:52 PM)Boon Wrote: How are Linc’s assets being carried on its Balance Sheet (BS) ?

Total Reportable Segment Assets (30-June-2014) = AUD 942.971 million = BV = Book Value
Consisting:
1) Oil & Gas (Conventional) = AUD 593.680 million (Proven reserves only)
2) Coal (Conventional) = AUD 43.986 million
3) Clean Energy (UCG) = AUD 96.714 million
4) Shale Oil (Sapex) = AUD 136.907 million
5) Corporate/Unallocated = AUD 71.684 million

Based on BV,
Total Equity (net of liabilities) = AUD 267.189 million or NAV = SGD 0.50 per share = BV

Market Value (MV) of Linc’s assets are above its BV : Possible Additions ABOVE BV:
1) Oil & Gas (Conventional) = 2P (PV 10) of Alaska (Umiat) = USD 2,465 million, if reserve could be proven up from 2P to 1P
2) Coal (Conventional) = Potential Sale Price – AUD 43.986 million
3) Clean Energy = ? The Directors’ believe that the recoverable amount of goodwill exceeds the carrying value.
4) Shale Oil (Sapex) = possible billion, depending on de-risking process or validation ?
5) Corporate Assets = AUD 155 million (Carmichael Royalty) – AUD 71.684 million

Carmichael Royalty (under corporate assets) had been sold for AUD 155 million or AUD 83.316 million above BV or SGD 0.157 per share above BV.

Assuming Linc’s conventional coal assets could be sold for another AUD 155 million or AUD 111.014 million above BV or SGD 0.208 per share above BV

NAV(1+3+4) + RNAV (2+5) = SGD ( 0.50 + 0.157 + 0.208 ) = SGD 0.865 per share (pretty close to current share price)

RNAV (1+3+4) potentially could be worth a lot more - pure speculation - part & parcel of E&P sector.

If 20% of 2P (PV10) of Alaska (Umiat) asset could be proven up to 1P reserve, it translates to 0.20 x USD 2,465 million or about SGD 1.00 per share　

What is RNAV(4) & RNAV (3) ? Who knows ?

(vested)

Hi Boon, I just did some research on 1P and 2P valuations. I found out the current market valuation of 1P oil assets is around USD 3 / barrel while 2P is USD 0.5 / Barrel. Are you using this rate in your valuation?

Hi "propertyinvestor",

I am not aware that such rate exist in the market that you are talking about - it needs to be asset specific as cost of production could vary greatly between assets.

If you are talking about EV/1P or EV/2P multiples, it needs to be company specific.

(vested)

I am referring to conventional oil & gas assets. Not referring to the EV but the valuation price of reserves in terms of barrel. Not taking into account the cost of production. Just the raw valuation in assessing the value of the oil and gas asset