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.
Frequently Asked Questions about this Article…
Linc Energy says it is shifting from the ASX to Singapore to expand its investor base and improve access to international investors. The company sees Singapore as an emerging regional oil and gas hub where it can trade in its time zone and where single entrepreneurs with large holdings are accepted—advantages it believes may better support its growth plans.
The disclosure triggered a sharp market reaction: the announcement wiped about 10.5% off the company’s value and the shares fell 14.8 cents to $1.257. Trading was later suspended in late session so Linc could complete an acquisition of some coal assets.
Linc’s CEO said he considered a US listing but found US investors were mainly interested in the oil and gas value of its shale assets. Listing in the US would likely have forced the company to split its assets into two, so Linc opted to pursue Singapore instead.
The article highlights a prolonged downswing in valuations across unconventional energy companies, rising community opposition to coal seam gas activities, regulatory issues and criticism of technologies like underground coal gasification. Companies in the sector have seen share-price pressure and some have been dumped after regulatory problems.
Linc promotes underground coal gasification, which has faced public and regulatory criticism. That negative sentiment can depress valuations and make it harder to raise funds—both important considerations for investors betting on Linc’s strategy.
Yes. The article notes Cougar Energy was fined for contamination in Queensland, and other explorers like Dart Energy, Molopo and Metgasco saw their shares dumped amid regulatory issues in the coal seam gas exploration sector—examples of the regulatory risks investors face.
Potentially. The piece notes there is only one oil and gas explorer listed in Singapore (Kris Energy at the time), but if Linc builds an investor base there other companies might follow its lead. If the strategy doesn’t work, Linc may revert to splitting assets and seeking a US listing.
Investors should weigh the reasons Linc gives—broader international access and an oil and gas hub—against the sector headwinds: falling valuations, regulatory scrutiny, and criticism of underground coal gasification. Monitor updates on the Singapore listing, the announced coal assets acquisition, and any regulatory developments before making investment decisions.
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