Australia Oil Fields Direct Investors To Linc Energy

Linc Energy (ASX:LNC), an Australian energy company headquartered in Brisbane, has recently announced its discovery of up to 233 billion barrels of oil in the Arckaringa Basin. The Australian government is hoping this development can allow the country to transform into an oil exporter and retain its energy self-sufficiency.

Linc Energy (ASX:LNC) stock price over the past year:

At first glance, this piece of news may make investors extremely bullish on Linc Energy; with the price of oil hovering around 96 dollars a barrel, this could translate to huge growth for the company. Before coming to such conclusions, however, we must explore some important issues associated with the recent discovery.

The Arckaringa Basin’s reserves consist of shale oil, as opposed to conventional crude. Shale oil comes from sedimentary rock and the conversion process into liquid form proves extremely costly and difficult. CEO Peter Bond predicts that in the worst case scenario, only 3.5 billion can be extracted, which would still render 336 billion dollars for a company with around 3 billion in yearly revenues.