Stocks climb following promising discovery

Linc Energy disclosed a promising shale oil discovery in the Arckaringa Basin in South Australia, saying it encountered an oil shale resource more than 124 metres thick at a depth of 854 metres. The company suggested that, at around 100 metres thickness, an oil shale deposit of more than 200 billion tonnes may be present.

Shares in Linc Energy surged after the disclosure, closing up 22.5 cents at $1.90 and rallying off 12-month lows, reflecting strong short-term investor interest in the discovery news.

The Arckaringa Basin is in South Australia and is the location of Linc Energy’s reported shale oil encounter. For investors, the basin is important because significant shale oil resources there could affect the company’s future production potential and valuation, subject to further appraisal and recoverability.

Preliminary analysis indicated potential oil yields of about 25–45 litres per tonne of shale. The company also noted that only part of the material could be processed, so actual recoverable oil would be a modest portion of the overall resource.

Linc Energy said the shale oil can be processed underground and used as a fuel or as refinery feedstock, according to the company’s statement on the discovery.

No. The company said a deposit of over 200 billion tonnes may be present if the shale is around 100 metres thick, but it also cautioned that only part of the material can be processed and the recoverable portion would be modest compared with the overall resource estimate.

Linc Energy’s chief executive, Peter Bond, commented on the discovery, stating that at around 100 metres thick an oil shale deposit of over 200 billion tonnes may be present. His statement accompanied the company’s disclosure of the Arckaringa Basin encounter.

Everyday investors should remember the data are preliminary: the thickness and potential yields are initial findings, recoverable material is expected to be only a modest part of the total resource, and further appraisal, technical work and commercial assessments are needed before production or value can be confirmed. The market reaction can be volatile around such news.