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Linc Energy ltd – UCG in Southern Africa

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Dr Jannie Lourens, Commercial Manager Clean Energy, from Linc Energy Ltd has presented at the Botswana Coal and Energy Conference. If you would like more information about the conference, please visit …

Dr Jannie Lourens, Commercial Manager Clean Energy, from Linc Energy Ltd has presented at the Botswana Coal and Energy Conference. If you would like more information about the conference, please visit the website: http://bit.ly/13MkVsy

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  • 1. UCG in Southern AfricaApril 2013
  • 2. Linc Internal Reserve Report SummaryAssumptions• Effective date of 1/1/2012• Includes Wyoming Powder River Basin reserves only• 7/1/2011 Ryder Scott report was used as a starting point. Database was quality-checked, production volumes were rolledforward, and curves were refit, if necessary• Pricing– Base price deck of $96.19/bbl and $4.12/mcf held flat for the life of the properties– Price deck determined using SEC methodology of averaging prices on the first day of each month for the previous 12months– A negative differential of $0.06/bbl was applied to the base price deck• Lease Operating Expense– LOE was increased from the Ryder Scott report to reflect actual operating costs based on trailing 9 month data– The higher LOE is a result of the previous operator not adequately maintaining the properties during the last monthsof its ownership, thus requiring Linc to perform additional work in order to get the property back in order. This level ofrehabilitation work is not expected continue in 2012– Average LOE is ~$215,000/monthOil Gas Equiv. PV-10Category (Mbbl) (MMcf) (Mboe) % Oil ($M)PDP 730,296 730,296 100% $11,294PSIPNPPUDTotal 730,296 0 730,296 100% $11,294This presentation contains forward looking statements that are subject to risk factors associated with the US Oil and Gas business. It is believed that the expectationsreflected in these statements are reasonable, but they may be affected by a range of variables and changes in underlying assumptions which could cause actual results ortrends to differ materially, including but not limited to price fluctuations, actual demand, currency fluctuations, geotechnical factors, drilling and production results, gascommercialisation, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic andfinancial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates.The oil resource estimates for the Alaska Region in the announcement were compiled by Scott J. Wilson of Ryder Scott Company LP who is qualified in accordance with ASXlisting rule 5.11 and who has consented to the form and content in which this statement appears.The oil resource estimates for the Wyoming Region in this announcement were compiled by James L. Baird of Ryder Scott Company LP who is qualified in accordance withASX listing rule 5.11 and who has consented to the form and content in which this statement appears.The oil resource estimates for the Gulf Coast Region in the announcement were compiled by Robert L. Walker of Haas Petroleum Engineering Services, Inc. who is qualifiedin accordance with ASX listing rule 5.11 and who has consented to the form and content in which this statement appears.The Valuations for the Alaska Region and Wyoming Region were compiled by Wood Mackenzie. Wood Mackenzie does not warrant or represent that the information isappropriate or sufficient and has not taken into account the purposes for which the information is used and you acknowledge and agree that if you use or reply upon theinformation for any purpose then you do so entirely at your own risk.The Prospective Resources estimates presented in these reports have been prepared in accordance with the Petroleum Resources Management System (PRMS) approvedin March 2007 by the Society of Petroleum Engineers, the World Petroleum Council, the American Association of Petroleum Geologists, and the Society of PetroleumEvaluation Engineers by DeGolyer and MacNaughton by John W. Wallace (consultant) and Gustavson Associates by Michele Gregg Bishop, each of whom is qualified inaccordance with ASX listing rule 5.11 and has consented to the form and content in which their respective prospective resource estimate appears. Prospective Resources arethose quantities that are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects.Application of any geological or economic chance factor does not equate prospective resources to contingent resources or reserves. Pg, the probability of discoveringreservoirs that flow petroleum at a measurable rate, has been applied to the Risked Mean volumes. Low, best, and high estimates in this table are P90, P50, and P10,respectively. There is no certainty that any portion of the prospective resources estimated herein will be discovered. If discovered, there is no certainty that it will becommercially viable to produce any portion of the prospective resources evaluated.The information in this report, where indicated, relating to coal resources is based on information compiled by Troy Turner, who is a member of the Australian Institute ofMining and Metallurgy who is employed by Xenith Consulting Pty Ltd. Mr Turner has sufficient experience which is relevant to the style of mineralisation and type of depositunder consideration and to the activity which they are undertaking to qualify as a competent person as defined in the 2004 Edition of the ”Australasian Code for ReportingExploration Results, Mineral Resources and Oil Reserves”. Mr Turner consents to the inclusion of the report of the matters based on their information in the form and contextin which it appears.The information in this announcement relating to coal resources is based on information compiled by Jeremy Busfield, who is a member of the Australian Institute of Miningand Metallurgy and who is employed by Minecraft Consulting Pty Ltd. Jeremy Busfield has sufficient experience which is relevant to the style of mineralisation and type ofdeposit under consideration and to the activity which they are undertaking to qualify as competent persons as defined in the 2004 Edition of the ‘Australian Code for ReportingExploration Results, Mineral Resources and Ore Reserves’. Jeremy Busfield consents to the inclusion in the announcement of the matters based on their information in theform and context in which it appears.All $ are presented in US$, unless otherwise specified.
  • 3. About Linc Energyo Diversified global energy companyo Global headquarters in Brisbane, Australiao Regional offices:Europe North America Australia- London - Houston - Chinchilla- Krakow - Denver - Adelaide- Anchorage- Caspero Listed on the Australian Securities Exchange (ASX) and inthe US (OTCQX)
  • 4. Linc Energy Summary4 World-leader in UCG. The only company in theworld to have produceddiesel and jet fuel fromUCG syngas. Target of 6,000 bopd foryear end was achieved in2012. Targeting 8,000-9,000bopd by end 2013. Winter drilling program atUmait, Alaska hascommenced Wyoming EOR project Major holder of coalresources in QLD, SA,Wyoming and Poland. Carmichael Royalty –Linc Energy will receive $2per tonne of coal producedfor the first 20 years ofproduction at Adani’sCarmichael Coal Project. Extensive Arckaringa Basinacreage position in SouthAustralia. Two independentlycommissioned technicalreports from DeGolyer &MacNaughton andGustavson Associatesconfirm the high potentialfor shale oil of thisacreage.Linc Energy is focused onconventional and unconventionaloil and gas productionUCGOil & Gas CoalShale OilConventional Unconventional
  • 5. UCG commercialisation a priority with Exxaro and D.Tek announcements in Q4 2012. Furtherprogress expected on UCG commercialisation activities in 2013.Oil Production exceeded targeted goal of 6,000 BOPD (gross) by 31 Dec 2012, having doubledproduction in one year. Further production and reserve growth expected in 2013.Umiat Oil Field (2P Reserves of 155 MMBOE) appraisal program has commenced with flow testresults expected by Apr-2013.Investment within UCG, shale and coal has now brought these assets to the point ofcommercialisation. 2013 capex will be focused on oil production on the Gulf Coast andappraisal of the Umiat oil field in Alaska.Technical reports for Arckaringa Basin shale assets suggest significant potential. Barclays Bankappointed to advise on strategic options.Adani’s Carmichael project on track to first coal. Linc Energy holds $2 per tonne (indexed toCPI) royalty over the Carmichael coal project. Adani expects to mine 60Mtpa at full production.Non-core coal assets to be divested to ensure focus on core business.Linc Energy – Key Messages5
  • 6. Underground Coal GasificationUCG to GTL Demonstration Facility in Chinchilla
  • 7. Linc Energy’s UCG Commercialisation• Linc Energy has invested ~A$200M developing its proprietary UCGtechnology over the past 9 years.In 2012 it reached the point of commercialisation without the need foradditional capital investment.• Linc Energy’s business model consists of commercialising our world leadingposition comprising of the following:Licensing fee, Royalty, Consulting fee, and/or a Carried Equity participationin the project.• Targeting strategic licence agreements and/or joint venture arrangementsin four key focus areas:China/Mongolia, North America, Southern Africa, Russia/Eastern Europe• Agreements announced in Q4 2012 with Exxaro (Sub-Saharan Africa) andDTEK (Ukraine). Further announcements expected in Q2 2013.• Linc Energy operates the only UCG to GTL facility in the world.
  • 8. UCG Benefits• Small footprint• Increases available energy resourcescost effectively• Compatible with many other land users• Less infrastructure• No fugitive methane release• Less water intensive• Minimal waste• CO2 Sequestration friendly
  • 9. UCG Video Presentation
  • 10. Clean Energy DivisionFocus:o Commercialisation of UCG using world leading proprietarytechnologyo Identification of UCG suitable coal resources and partneringon global coal and downstream opportunitieso Integration of syngas with downstream applicationso CO2 Captured and Sequesteredo Enhanced Oil Recovery (EOR)o Geo-sequestration
  • 11. Versatilityof Syngas11
  • 12. Linc Energy’s UCG HeritageAngren, Uzbekistan: 51 years operating experience 92% owned by Linc Energy UCG to electric powerChinchilla, Australia: 12 years operating experience 100% owned by Linc Energy Development of commercial UCGtechnology World’s only UCG to GTL operationUzbekistan, 51 yearsChinchilla, 12 years
  • 13. UCG HighlightsUCG Gasifiers:o 4th Generation Gasifier (G4): Continuous operation over project design life (+2 years)o 5th Generation Gasifier (G5): Continuous operation sincestart up (October 2011) Producing GTL quality syngaswithin one hour of start-upo Independently asserted as“World’s Best Practice” in UCG
  • 14. UCG to GTL IntegrationUnique UCG to GTL capabilities:o Integration of upstream and downstream(technical & operations)o Stable syngas composition at large flowrateso Prediction and management of syngascomposition for optimal GTL operationso GTL production from: Syngas produced from multi-gasifieroperations Oxygen enrichment in gasifiers 4 & 5
  • 15. Corporate ResponsibilityLinc Energy’s Chinchilla UCG to GTL Facility
  • 16. Safety Performanceo Comprehensive systems for safe design and operation ofupstream UCG gasifiers and downstream facilitieso Excellent safety record over12 years of operation atChinchilla: No major injuries No site emergenciesUCG removes theneed to send minersunderground
  • 17. Groundwater ProtectionChinchilla 12 Year Performance:o Over 150 monitoring wells;10x beyond regulatory requirementso Over 45,000 groundwater samples havebeen taken and analyzedo No groundwater non-complianceincidents resulting from UCGoperations
  • 18. Environmental Performanceo Australia enforces very stringentenvironmental regulationso Linc Energy has passed extensive scrutinyby government and the communityo Chinchilla has the most extensive UCGenvironmental dataset internationallyo Low impact above ground (relative toconventional mining)
  • 19. Environmental PerformanceCO2 Abatemento CO2 stripping occurs during gas processing “ Carbon Capture & Storage (CCS) Ready ”o Enhanced Oil Recovery (EOR)o Carbon Capture and Storage (CCS)- Gasifier cavity- Onshore and offshore storage options
  • 20. • Dec 2012: Signed comprehensive Term Sheet with ExxaroResources for the joint development of UCG projects in Sub-Sahara Africa• Exxaro granted a non-exclusive licence to utilize Linc’s UCG IP• Linc Energy has the option to obtainup to 49% of equity in all UCGprojects• Exxaro has operatorship of all projects• Initial Consideration for the jointconceptual study and licenceagreementUCG Commercialisation in South Africa:Business Model
  • 21. • The Exxaro partnership will enable UCG and Downstreamopportunities to be developed for licence fee and royaltyconsiderations• Market opportunities areelectricity in the mediumterm, and liquid fuels inthe longer term• Completion of the formalagreements is targetedfor end of April 2013• Early works on site characterisation, drilling and explorationand the preparation for the Concept phase has already startedUCG Commercialisation in South Africa:Opportunities
  • 22. • Linc is regarding Botswana as a key area for commercialising ourUCG technology• Since early 2011 Linc Energy has evaluated several coal resourceopportunities with the aim to develop UCG and downstreambusinesses• In early 2012 Linc Energyapplied for a number of coalProspecting Licences• Linc Energy is evaluatingseveral potential smallerscale energy opportunitiesUCG Commercialisation in Botswana
  • 23. • Linc Energy is establishinga Regional office to:• Manage the Exxaropartnership’s interests locally• Major focuson stakeholder management• Development of otheropportunities inSub-Sahara AfricaUCG Commercialisation in the Region
  • 24. Dr Jannie LourensCommercial Managerjannie.lourens@lincenergy.com+61 8 8405 8700+61 7 3229 0800www.lincenergy.com.auThank You