Homepage
PR Newswire
16-02-2015, 02:19 PM
Linc has announced its 2Q (1H20141231) results and divestment of its conventional coal assets:
Unaudited Second Quarter and Six Months to December 2014 Financial Statements Announcement
http://infopub.sgx.com/FileOpen/Linc_Ene...eID=334932
16 February 2015
LINC ENERGY SELLS ITS CONVENTIONAL COAL BUSINESS TO UNITED MINING GROUP & RETAINS RIGHTS TO A POTENTIAL US$590M IN FUTURE REVENUE
http://infopub.sgx.com/FileOpen/LNC%20se...eID=335162
For the second quarter ended 31 December 2014, the Group has recognized a loss before tax of AUD$165.4 million. This is primarily as a result of an internal impairment assessment recorded against Gulf Coast assets triggered by a downward movement of oil prices during the quarter. It should be noted that a significant percentage of this impairment could be reversed as oil prices improve (under IFRS accounting standards).
An impairment expense of AUD$117.8 million has been recorded for the second quarter 31 December 2014 primarily due to the impact of lower oil prices on the book valuation of the Company’s Gulf Coast and Wyoming assets. The impairment is not driven by a decline in Proved reserve volumes which have not changed materially since the last reserves report.
Net cash (outflow) from operating activities for 1H = - AUD 34.163 million (consists mainly of financing cost)
As at 31 December 2014, unutilised sources of liquidity amounted to AUD 103.7 million which is the balance of cash and cash equivalents at reporting date.
Subsequent to the quarter end, the Company has redeemed USD 50 million (about AUD 61 million) of the Convertible Notes at par plus accrued interest on the 5th January 2015.
The second tranche of sales proceed of AUD 65 million from Carmichael Royalty is due to be received on or before 9 October 2015.
Hence, I don’t see Linc being in any short term liquidity problem – not for the calendar year of 2015 at least - beyond that it is harder to predict..........................
That said, I was a bit disappointed with the terms of the divestment of its conventional coal assets to the United Mining Group – with upfront cash of AUD 5 million only – the rest of the "payment" is in the form of future revenue sharing (royalty) potentially worth USD 590 million – like the Carmichael Royalty, there is lack of certainty on the timing of future cash flow……………………..making valuation very difficult indeed……………..one thing good about the Revenue Sharing Agreement is it does not require any further capital expenditure by Linc.
As I have said before, being an E&P company, if Linc is no good at "P", let’s just concentrate on "E". “Proven” assets could be sold to others who could manage P better – not a bad business model, I reckon.
Selling assets at “discount” is still ok, as long as there is still plenty left for shareholders after the discount.
The revenue sharing business model is not a bad model if Linc does not have to come out with any capital expenditure – as long as there is greater certainty on the timing of cash flow which is critical……..
Well, with the conventional coal assets being “divested” now ………………………..may be the next one should be conventional oil assets in the USA ……………
“Post completion of the Umiat 23H horizontal well in Alaska, the Company received expressions of interest from a number of parties interested in participating in the development of the Umiat project. The Company continues to engage with these parties in confidential negotiations while continuing to progress its permitting and development plans for the field.
During January 2015 (subsequent to quarter), the Company completed a pre-appraisal Project Cost Estimate for the Umiat project using consultants NANA Worley Parsons. The report reinforced the viability of the project, concluding that a development scenario for a 30 year, 50,000 BOPD facility with nitrogen injection, including twenty-four (24) production wells and eleven (11) injection wells requires capital expenditure, net of tax rebates, of approximately US$1bn (2015 US dollars) including contingency.”
May be another potential “Revenue Sharing” opportunity in the making………………….revenue from 50,000 BOPD at USD 55 a barrel is about USD 1 billion a year…………………..interestingly the report reinforced the viability of the project...............wondering what is the cost of production?……………….
Meanwhile, "E" work is still ongoing in Arckaringa Basin- it is still early day to draw any meaningful conclusion………..
(vested) - warning.............high risks counter............
Unaudited Second Quarter and Six Months to December 2014 Financial Statements Announcement
http://infopub.sgx.com/FileOpen/Linc_Ene...eID=334932
16 February 2015
LINC ENERGY SELLS ITS CONVENTIONAL COAL BUSINESS TO UNITED MINING GROUP & RETAINS RIGHTS TO A POTENTIAL US$590M IN FUTURE REVENUE
http://infopub.sgx.com/FileOpen/LNC%20se...eID=335162
For the second quarter ended 31 December 2014, the Group has recognized a loss before tax of AUD$165.4 million. This is primarily as a result of an internal impairment assessment recorded against Gulf Coast assets triggered by a downward movement of oil prices during the quarter. It should be noted that a significant percentage of this impairment could be reversed as oil prices improve (under IFRS accounting standards).
An impairment expense of AUD$117.8 million has been recorded for the second quarter 31 December 2014 primarily due to the impact of lower oil prices on the book valuation of the Company’s Gulf Coast and Wyoming assets. The impairment is not driven by a decline in Proved reserve volumes which have not changed materially since the last reserves report.
Net cash (outflow) from operating activities for 1H = - AUD 34.163 million (consists mainly of financing cost)
As at 31 December 2014, unutilised sources of liquidity amounted to AUD 103.7 million which is the balance of cash and cash equivalents at reporting date.
Subsequent to the quarter end, the Company has redeemed USD 50 million (about AUD 61 million) of the Convertible Notes at par plus accrued interest on the 5th January 2015.
The second tranche of sales proceed of AUD 65 million from Carmichael Royalty is due to be received on or before 9 October 2015.
Hence, I don’t see Linc being in any short term liquidity problem – not for the calendar year of 2015 at least - beyond that it is harder to predict..........................
That said, I was a bit disappointed with the terms of the divestment of its conventional coal assets to the United Mining Group – with upfront cash of AUD 5 million only – the rest of the "payment" is in the form of future revenue sharing (royalty) potentially worth USD 590 million – like the Carmichael Royalty, there is lack of certainty on the timing of future cash flow……………………..making valuation very difficult indeed……………..one thing good about the Revenue Sharing Agreement is it does not require any further capital expenditure by Linc.
As I have said before, being an E&P company, if Linc is no good at "P", let’s just concentrate on "E". “Proven” assets could be sold to others who could manage P better – not a bad business model, I reckon.
Selling assets at “discount” is still ok, as long as there is still plenty left for shareholders after the discount.
The revenue sharing business model is not a bad model if Linc does not have to come out with any capital expenditure – as long as there is greater certainty on the timing of cash flow which is critical……..
Well, with the conventional coal assets being “divested” now ………………………..may be the next one should be conventional oil assets in the USA ……………
“Post completion of the Umiat 23H horizontal well in Alaska, the Company received expressions of interest from a number of parties interested in participating in the development of the Umiat project. The Company continues to engage with these parties in confidential negotiations while continuing to progress its permitting and development plans for the field.
During January 2015 (subsequent to quarter), the Company completed a pre-appraisal Project Cost Estimate for the Umiat project using consultants NANA Worley Parsons. The report reinforced the viability of the project, concluding that a development scenario for a 30 year, 50,000 BOPD facility with nitrogen injection, including twenty-four (24) production wells and eleven (11) injection wells requires capital expenditure, net of tax rebates, of approximately US$1bn (2015 US dollars) including contingency.”
May be another potential “Revenue Sharing” opportunity in the making………………….revenue from 50,000 BOPD at USD 55 a barrel is about USD 1 billion a year…………………..interestingly the report reinforced the viability of the project...............wondering what is the cost of production?……………….
Meanwhile, "E" work is still ongoing in Arckaringa Basin- it is still early day to draw any meaningful conclusion………..
(vested) - warning.............high risks counter............
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.