Linc shares soar after shale oil discovery

SHARES in Linc Energy surged following the disclosure of a promising shale oil discovery in South Australia yesterday, which the company said could contain more than 200 billion tonnes of oil shale.

By InvestSMART · 28 Sep 2011

By InvestSMART ·
28 Sep 2011

Comments

SHARES in Linc Energy surged following the disclosure of a promising shale oil discovery in South Australia yesterday, which the company said could contain more than 200 billion tonnes of oil shale.

Linc shares closed up 22.5? at $1.90, rallying off 12-month lows.

The company disclosed that it had encountered a shale oil resource more than 124 metres thick at a depth of 854 metres in the Arckaringa basin of South Australia.

"At around 100 metres thick, an oil shale deposit of over 200 billion tonnes may be present," the company's chief executive, Peter Bond, said in a statement. "It is a remarkable prospect that we have only just begun to properly explore."

The shale oil can be processed underground, Linc said, with the material extracted for use as fuel, or as refinery feedstock.

Preliminary analysis undertaken for the company indicates potential oil yields of 25 litres to 45 litres a tonne although only a portion of the material would be able to be processed so that any recoverable material would be a modest part of the overall indicated resource.

Linc is involved with other controversial technologies such as underground coal gasification which aims to tap deep coal reserves to produce synthesis gas, and technology to produce liquid fuels from gas.

With ongoing controversy and doubt surrounding these aspects of the company's operations, Linc has bought into oil and gas exploration acreage in the US, in both Alaska and Texas, recently.

It has also gained access to tenement areas in the Cooper Basin, where a drilling campaign has been planned.

Go to Google News, then click "Follow" button to add us.

Share this article and show your support

Frequently Asked Questions about this Article…

What did Linc Energy announce about its shale oil discovery in South Australia?

Linc Energy disclosed a promising shale oil discovery in the Arckaringa basin, reporting a shale oil resource more than 124 metres thick at a depth of 854 metres. The company said an oil shale deposit around 100 metres thick could indicate more than 200 billion tonnes of shale, a prospect it has only just begun to explore.

How did Linc Energy shares react to the shale oil discovery?

Shares in Linc Energy surged after the disclosure, closing up 22.5% at $1.90 as the stock rallied off 12-month lows following the announcement of the Arckaringa basin discovery.

Where exactly is the shale oil find and how deep is it?

The discovery is in the Arckaringa basin in South Australia. Linc reported encountering the shale oil resource at a depth of about 854 metres, with more than 124 metres of thickness encountered in the section described.

What potential oil yields did Linc Energy report from the shale material?

Preliminary analysis indicated potential oil yields of about 25 to 45 litres per tonne of shale. Linc also noted that only a portion of the material would be processable, so any recoverable oil would likely be a modest fraction of the overall indicated resource.

How can the shale oil be processed or used if recovered?

Linc Energy said the shale oil can be processed underground, then extracted for use either as fuel or as refinery feedstock, depending on how the material is developed and processed.

Are there controversies or operational risks tied to Linc Energy's technologies?

Yes. The company is involved in controversial technologies such as underground coal gasification and methods to produce liquid fuels from gas. The article notes ongoing controversy and doubt surrounding these aspects of Linc’s operations.

Is Linc Energy expanding its exploration outside Australia?

Yes. In addition to the Arckaringa and Cooper Basin activities (the latter with a planned drilling campaign), Linc has recently bought oil and gas exploration acreage in the United States, including areas in Alaska and Texas.

What should everyday investors consider about Linc Energy's shale oil discovery?

Everyday investors should view the news as an early-stage exploration update: the resource thickness and preliminary yield estimates are promising, but recoverable volumes remain uncertain and only a portion of the shale may be processable. The company also faces controversy over some technologies and is pursuing international acreage, so potential upside comes with technological, regulatory and execution risks.