Linc Energy Limited (ASX:LNC) Records 'Oil Shows' In The Arckaringa Basin
Linc Energy Limited (ASX:LNC) Records 'Oil Shows' In The Arckaringa Basin

Brisbane, Feb 9, 2010 AEST (ABN Newswire) - Linc Energy Limited (ASX:LNC) (PINK:LNCGY) is pleased to announce interim results from the first round of drilling in its Arckaringa Basin Petroleum Exploration Licenses (PEL's) aimed at assessing the suitability of the Permian Mount Toondina coal seams for Underground Coal Gasification (UCG) and, indirectly, also assessing the Coal Seam Gas (CSG) potential at the selected locations.

In October 2009, Linc Energy mobilised 'Boart Longyear Rig 9' to the Arckaringa Basin, South Australia where it currently holds seven Petroleum Exploration Licenses prospective for UCG, CSG and conventional petroleum. Six wells were drilled, of which four cut large diameter core over the Upper Mount Toondina sequence for geotechnical analysis, specialised coal gasification testing and coal seam gas analysis. Two of the wells have been completed as piezometers to provide a baseline for ground water behaviour in the area.

Heavy flooding postponed the final two wells in the 'PEL' program along with drilling aimed at appraising conventional coal mining in selected areas held under mineral Exploration Licenses (EL's). Subject to weather conditions, it is anticipated that finalisation of the program will occur early in the second quarter of 2010.

The results of the coal exploration program are shown below:
-------------------------------------------------
Well Name      Net Coal  Number of   Depth Range
                 (m)       Seams         (m)
-------------------------------------------------
Howard Hill-1   20.4        15       77.2 - 184.0
Nuba-1            -          -            -
Albany-1A       24.9        11      273.1 - 400.4
Albany-2        30.9        10      273.1 - 404.6
Mount Bray-1    17.3        10      170.5 - 297.6
Maglia-1        25.6        13      203.1 - 448.6
-------------------------------------------------
Multiple coal seams were intersected in every well with the exception of Nuba-1 that intersected basement without penetrating the Mount Toondina formation. Individual seams of up to 6 metres thickness were identified by geophysical logging. Detailed analysis is ongoing.

OIL SHOW

During drilling of Maglia-1, oil shows and a strong petroliferous odour were observed within cored sandstones at 366.4 to 369.4 and 393.4 to 396.4 metres coring depth. Subsequent laboratory analyses of the Maglia-1 oil samples by 'Geotechnical Services' have confirmed a low pristane to phytane ratio and the presence of norhopanes in the biomarker fraction, which is typical of a carbonate based source. An abundance of C27 steranes relative to C29 counterparts, indicates the likelihood of an algal based origin with the analysis of the aromatic fraction indicating a very high level of thermal maturity (>1% RO).

Based on the analysis to date, it is likely that the source of the oil is shallow marine carbonates of the Cambrian Ouldburra Formation and not from within the host Permian Mount Toondina sands. Investigations continue into the transport mechanisms for migration of the older oil in to the Permian coal sequence at this location. Numerous oil and gas shows with comparable geochemical properties have been recorded in similar pre-Permian sediments in the adjoining Officer Basin to the west which border Linc Energy's PEL 117.

In addition to the discovery of an active petroleum system in the Arckaringa Basin, the Cambrian carbonate sediments are known to have reservoir potential as evidenced by water flows and petrophysical analyses from the nearby Cootanoorina-1 stratigraphic well, drilled by the South Australian Government in 1967. Cootanoorina -1 also recorded the presence of hydrocarbons by way of fluorescence cut but was terminated prematurely due to limitations of drilling equipment.

Good reservoir attributes have also been encountered in historical drilling of the overlying Permian Boorthana and Mount Toondina Formations, the latter of which is where the Maglia-1 oil show was encountered although this well, targeting UCG appraisal, was not drilled on any structural trap. All of the potential reservoir units that occur in this area are considered to have adequate and extensive regional seals.

Prior to Linc Energy undertaking its current drilling and exploration program, the basin had remained largely unexplored with only three follow up 'petroleum exploration' wells being drilled in the basin since the Cootanoorina well in 1967, one of which is interpreted to have been drilled off structure and two which were drilled in an area where the Cambrian carbonates were absent.

The oil show at Maglia-1 is interpreted to be residual in nature but represents the most significant find in the history of the Arckaringa Basin, in which Linc Energy Ltd holds over 74,000 square kilometres with a 100% interest. Based on these results, Linc Energy is moving quickly to reprocess existing seismic and acquire additional detailed gravity and seismic information in order to better understand the distribution and thickness of the older pre-Permian sediments that are believed to be the origin of oil found in Maglia-1 as well as identifying potential structural traps. Based on that work, a targeted exploration program is planned.

Continued evaluation and appraisal of the Mount Toondina coal measures for UCG and CSG will occur in parallel with this program as part of Linc Energy's UCG exploration program.

Mr Peter Bond, Linc Energy's CEO, commented that "the completion of our initial exploration program in the Arckaringa PELs is a significant milestone and the results have confirmed my belief in the energy bearing potential of this vast acreage and reinforces the reasoning why we purchased SAPEX in the first place. The oil show encountered at Maglia-1 is extremely exciting. It takes the prospectivity of this basin for petroleum to the next level; one where the existence of an active petroleum system is now proven. We will progress our plans with increased confidence and vigour as a result of this important discovery, which I believe is just the first of many exciting announcements concerning Linc Energy's traditional oil and gas assets. I look forward to updating the market with our exploration plans for this and other areas in the near future."

Contact

Information for Media:
Mr Peter Bond
Chief Executive Officer
Tel: +61-7-3229-0800
Email: pab@lincenergy.com.au

ASX Contact:
Mr Craig Ricato
Company Secretary
Tel: +61-7-3229-0800
Email: craig.ricato@lincenergy.com.au

Information for investors:
Ms Janelle van de Velde
Manager, Investor Relations & Corporate Communications
Tel: +61-7-3229-0800
Email: janelle.vandevelde@lincenergy.com.au



Related Companies

Linc Energy Limited         
Boart Longyear Limited         

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