Linc Energy dumps ASX for Singapore
The move follows a prolonged downswing in the market valuations of some companies working in the unconventional energy sector, such as coal seam gas hopefuls, in the wake of rising opposition in some parts of the community to the sector's ambitions.
For Linc, the sour sentiment has been a double whammy given the criticism of underground coal gasification, which it has been promoting, along with its large demand for funds to feed its growth ambitions.
Another underground gasification hopeful, Cougar Energy, was fined for contamination in Queensland, with Linc now looking at using the technology in South Australia.
Linc said Singapore was an emerging regional oil and gas hub, and listing there would help expand its investor base and improve access to international investors.
That may be all the more important following the disclosure of the planned move on Wednesday, which wiped 10.5 per cent off its worth as the shares fell 14.8¢ to $1.257 - a far cry from the highs above $4.50 a few years ago.
The shares were suspended in late trading so it could complete an acquisition of some coal assets.
Linc chief executive Peter Bond said he looked at shifting the company's listing to the US, but investors there were only interested in its oil and gas of its shale assets, so it would have been forced to split the company in two.
"If I went into a private equity play and carved the assets up, it's worth $6 a share, in round figures," Mr Bond said of Linc shares. "It bemuses me the share price is so far off the mark.
"I'm looking for a catalyst. We were close to signing to go to the NYSE. Singapore is looking to be an oil and gas hub, and they don't mind single entrepreneurs with large holdings - and you can trade within our time zone."
There is only one oil and gas explorer listed in Singapore - Kris Energy, which listed in July and has a market worth of $S1.2 billion. However, if Linc succeeds in building an investor base, others may follow its lead. If it does not work, Linc may revert to splitting its assets and seeking a US listing.
With one of the largest oil refining centres, Singapore has emerged as a regional hub in the oil and gas exploration sector, with a number of operators setting up shop over the past few years.
Valuations across the sector have been pressured, with share prices of the likes of Dart Energy, Molopo and Metgasco all dumped due to regulatory issues in the coal seam gas exploration sector.
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Linc Energy said it is shifting from the ASX to Singapore to tap an emerging regional oil and gas hub, expand its investor base and improve access to international investors. The move also follows a prolonged downswing in valuations in the unconventional energy sector and criticism of the underground coal gasification technology Linc has been promoting.
When Linc disclosed the planned move the stock dropped sharply — the announcement wiped about 10.5% off its value as the shares fell 14.8 cents to $1.257. Trading was later suspended so the company could complete an acquisition of some coal assets.
The article says UCG, the underground gasification technology Linc is promoting, has attracted criticism and regulatory scrutiny. A related company, Cougar Energy, was fined for contamination in Queensland, and Linc is looking at using the technology in South Australia — all of which has contributed to sour investor sentiment in the sector.
Linc’s CEO Peter Bond considered shifting the listing to the US but found US investors were mainly interested only in the company’s oil and gas (shale) assets. That would have forced Linc to split the company in two, so he opted to pursue Singapore instead.
A Singapore listing could broaden Linc’s investor base and give better access to international buyers in an oil and gas hub, potentially improving liquidity. However, the disclosure has already shown the stock can be volatile, and if the strategy fails the company may split assets or seek a US listing, which could change investor exposure.
The article points to a prolonged downswing in market valuations driven by rising community opposition in parts of Australia and regulatory issues. It notes several companies such as Dart Energy, Molopo and Metgasco saw their share prices dumped amid regulatory concerns in the coal seam gas exploration sector.
CEO Peter Bond said private equity carving up Linc’s assets would put the company at roughly $6 a share in round figures and that he was looking for a catalyst. He added Singapore suits the company because it’s developing as an oil and gas hub, doesn’t object to single entrepreneurs with large holdings, and allows trading in Linc’s time zone.
According to the article, Linc suspended trading late to complete an acquisition of some coal assets while it pursues the planned move to Singapore. If the Singapore listing doesn’t build a suitable investor base, the company may revert to splitting its assets and seeking a US listing.
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