Linc Energy in Shale Talks With Oil Services Company in U.S.James Paton
Linc Energy Ltd., seeking a shale exploration partner in central Australia, is in talks with two groups, including a U.S. oil services company, that are interested in helping to develop its prospects.
The company expects to start a five-well drilling program at the shale oil properties in South Australia’s Arckaringa Basin in February at an initial cost of A$15 million ($14 million), Peter Bond, chief executive officer of Brisbane-based Linc, said today in a phone interview.
Linc is moving ahead with the drilling plans “on the basis that one of the groups will commit between now and early next year to go in with us on that program,” Bond said. “It makes sense to get on with the drilling.”
The company, which hired Barclays Plc to help find a shale oil partner, said earlier this year that it had been contacted by companies from North America to India interested in funding the development. Chevron Corp., ConocoPhillips, BG Group Plc and Statoil ASA are among global energy companies that have made shale investments so far in Australia.
Shares of Linc rose 9.2 percent in Sydney to A$1.55, the most in two months, valuing the company at A$804 million. That compared with a 0.8 percent gain for the S&P/ASX 200 Index.
Bond said in January he expected to reach an agreement about mid-year to sell as much as half of the shale oil project and that drilling may start by the end of the year. Linc is seeking a partner to contribute as much as A$300 million to fund the exploration, Bond said in March.
The drilling plans are taking priority over the negotiations, Bond said today. Along with the shale services company, Linc is in discussions with a second group comprising a couple of overseas energy investment companies that are potentially interested in acquiring a stake in the project, he said, declining to comment further.