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Investor Linc Newsletter

December 2011 /20


Interview with Phil Targett

Age                                        60

Type of employment              Recently retired Meteorologist

Interests                                 Bike riding, swimming, caravanning, travelling, share investing.

Home town                            Perth

Family situation                    Married, 3 children.

Share experience                  Investing for about 13 years.

Purchased shares in Linc Energy  January 2007


1.         How did you hear about Linc Energy and what attracted you to investing?

I first heard about Linc Energy in a share newsletter in mid- December 2006, about six months after its initial listing on the ASX and bought my first shares in January 2007 when the share price was 26 cents.

My background training is in science and the technology is what first attracted my attention to Linc Energy. As I read more, the previous history of Underground Coal Gasification (UCG) in Russia and the above ground gasification of coal and conversion to liquids by Sasol in South Africa provided confidence that the technology should work. With a growing view that the world was at or near peak oil production and demand would continue to rise, a new source of competitively priced diesel fuel seemed to be a wonderful investment opportunity with potential for capital gains and a strong, long lived income stream.

2.         UCG accesses the energy from coal without taking it from the ground. Was this an influencing factor in your investment decision?

Yes it was.  The technology of utilising coal without the large disturbances caused by mining it then disposing of waste products was very attractive because it is an environmentally friendly and scientifically elegant use of otherwise “stranded” coal resources. Also, the fact that UCG can utilise “stranded” coal that otherwise has little use or monetary value and Gas-to-Liquids (GTL) turn it into a high value, high demand commodity was attractive as an early investment in a significant future energy source.

3.         Linc Energy has a diverse resource portfolio (coal, oil and gas) around the World. What does this mean to you as an investor?

Since I first invested in Linc Energy it has grown and expanded into a more diverse energy company. The diversity of resources will provide Linc Energy investors with a larger and more stable income stream over time. It will also provide Linc Energy with broader opportunities to grow the business which means better returns for shareholders.  Linc Energy is acquiring coal and oil and gas assets before the increased value of these assets is realised through the application UCG technology. In the future Linc Energy investors will benefit from the upward revaluation of these assets when the market recognises their true value and the scale of Linc Energy’s holdings

4.         What is your view on Linc Energy’s expansion into Enhanced Oil Recovery and the recent purchase of oil producing fields in North America?

This seems to me to be a very good strategic move by Linc Energy due to the ever increasing demand on oil.  With the increase on demand, oil suppliers will struggle to keep up supply with declining oil field production and the very expensive cost of the development of new sources of oil. Producing oil fields will provide rapid cash flow to Linc Energy while application of Linc Energy’s proprietary UCG technology to create carbon dioxide for Enhance Oil Recovery will increase the volume of oil produced at a competitive price. These developments leverage Linc Energy’s expertise in UCG and will generate funds necessary for business development and expansion and protect shareholder value from dilution with capital raisings.

5.         Where do you see Linc Energy in ten years’ time?

Having observed Linc Energy’s development over the last five years, the next ten look very exciting indeed. In ten years’ time, the current market uncertainties will be history and I expect Linc Energy will have achieved its aspirational goal of 50,000 barrels of oil production a day and probably a lot more. I anticipate there will be diverse UCG operations in a number of countries around the world and several UCG and GTL facilities on stream. Once the GTL design has been finalised, it appears to be relatively easy to replicate so after the first facility is operating, more should follow at a relatively quick pace.  On today’s prices, the 50,000 barrels of oil alone will generate earnings of 1.5 to 2 billion dollars and on top of that there will be other income generating operations, so the current unloved share price will be a distant memory and look like an absolute ‘steal’.

6.         Would you recommend Linc Energy stock to family, friends, or other acquaintances?

I have recommended Linc Energy to family, friends and anyone else who is interested enough to listen!