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Another Linc to shale oil

After announcing significant (‘significant’ may be quite an understatement for an estimated $20 trillion worth) shale oil deposits in South Australia in January, Linc Energy Limited (ASX: LNC) gave investors 1.496 billion more reasons to rejoice on Monday, sending its share prices climbing a further 8.89%.

The company announced that it had spudded the first well in its 2012-13 drilling program at its Umiat oil field, located in Alaska’s North Slope. It has been estimated that this field will contain over 1.2 billion barrels of oil in place, with 154.5 million Proved and Probable (2P) barrels of oil equivalent. This represents nearly $US1.5 billion worth, whilst Proved, Probable and Possible (3P) amounts to over $US1.82 billion. It is also estimated that at peak production, the company could produce up to 50,000 barrels per day.

Furthermore, Linc has been preparing itself for a bright future, recently appointing Stuart Jones as its new Chief Financial Officer, contributing his wealth of knowledge in financing oil and gas exploration.

Whilst Linc’s potential has been realised in the last six months, Linc’s competitors have recognised falling profits and share prices alike. Aquila Resource’s (ASX: AQA) negative cash flows in 2012 have been reflected in a 47.8% plunge in share price, whilst Santos (ASX: STO) has also fallen 3.7%. Despite a strong surge last year, shares of Maverick Drilling & Exploration (ASX: MAD) have also plunged 57% since their August highs.

Finishing trading on Monday at $2.94, Linc Energy has soared in excess of 400% since mid-November.

Foolish takeaway

Linc Energy’s recent upward trend has been a result of similar discoveries to that of Maverick Drilling and Exploration during 2012. In what seems a game of luck in the oil and gas industry, Linc Energy could have been dealt the ace of spades, but it remains to be seen whether the company can capitalise to the expectations of the market.

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More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead.  This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.

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