Linc Says Australian Shale Assets Draw 70 Potential PartnersJames Paton
Linc Energy Ltd. said it’s been contacted by about 70 companies from North America to India to fund the development of shale oil prospects in central Australia.
“You’ve got the majors, but at the same token a lot of second-tier groups with big checkbooks,” Peter Bond, chief executive officer of the Brisbane-based company, said in an interview. “We’ve had about 70 inquiries.”
Linc has hired Barclays Plc to find a partner to develop shale oil prospects in the Arckaringa Basin that it says may be similar to acreage in the Bakken and Eagle Ford shale regions in the U.S. Any partner would follow global energy companies including Chevron Corp., ConocoPhillips, Statoil ASA and BG Group Plc in making shale bets in Australia to tap the world’s sixth-biggest potential resources of the fuel.
Linc’s shares rose 1.6 percent to A$2.55 in Sydney, while the benchmark S&P/ASX 200 Index fell 0.2 percent. The stock earlier rose as much as 5.2 percent to A$2.64.
“There’s a good likelihood of a partnership forming,” Paul Jensz, a Melbourne-based analyst at PhillipCapital Ltd., said today in a phone interview. “You’d think there would be a few majors involved. It’s risk management. They don’t want to be left out of a large new energy play,” he added.
Linc is seeking a partner to contribute as much as A$300 million ($307 million) to fund the shale oil exploration, Bond said yesterday in Sydney. Of the companies that have contacted Linc, there are a “lot of North American groups, but quite a few from Asia and India and Europe as well,” he said.
The potential resources in the South Australia state basin are estimated at 103 billion barrels of oil equivalent -- or 3.5 billion barrels “adjusted for probability” of success -- by Dallas, Texas-based consultants DeGolyer and MacNaughton, Linc said in January.
The company expects to reach an agreement about mid-year to sell as much as half of the project, Bond said in a Jan. 23 interview. Drilling at the Arckaringa Basin project may start by the end of the year, he said at the time.
“The challenge for Linc is it’s a new basin and it needs a lot of development to prove the hydrocarbons they’ve found are amenable” to drilling techniques such as hydraulic fracturing, or fracking, Jensz said, adding it may take longer for Linc to reach a deal. “It’s high-risk, high-reward.”