Linc Energy (ASX:LNC) Quarterly Report For The Period Ended 30 June 2010

Brisbane, July 26, 2010 AEST (ABN Newswire) - On 29 June 2010, Linc Energy (ASX:LNC) (PINK:LNCGY) successfully demonstrated the ability to generate cleaner electricity from alkaline fuel cell technology from the synthesis gas produced from its Chinchilla Demonstration Facility's Underground Coal Gasification (UCG) operations. This onsite trial was conducted following successful trials at AFC Energy's UK facilities with mock synthesis gas alike Linc Energy's UCG syngas composition.

This achievement demonstrated that UCG and hydrogen fuel cell technology is a feasible route to achieve the optimum cleaner electricity from stranded, sub-economic coal resources.

Linc Energy has an exclusive agreement with UK-based AFC Energy for the application and delivery of hydrogen fuel cell technology to its UCG technology.

UCG and GTL at the Chinchilla Demonstration Facility

In June, Linc Energy reported that its UCG Generator 4 has operated for 120 continuous days (and is still operating today), with a total of 19 world-firsts achieved to date. The introduction of the coil tubing unit to provide faster down-hole drilling was cited as one of the world-firsts in UCG technology.

The Gas to Liquids (GTL) conceptual design study for the proposed South Australian commercial facility was completed with Aker Solutions at the end of February, on time and within budget. The study confirmed Linc Energy's business case for a commercial scale UCG to GTL complex. From the study, it was determined that per tonne of coal (on a dry ash free basis) that 1.7 barrels of liquid fuel and 1.9 (converted barrel equivalent) of electricity could be produced. Linc Energy's focus is now to optimise capital efficiency through the modularisation of plant equipment to reduce construction costs. Modifications to the GTL equipment and processes have been successful.

Progress in the United States

Linc Energy has now acquired over 180,000 acres of coal lease tenure and work continues on the first UCG trial operation in Wyoming's Powder River Basin. This includes the evaluation of site geology, hydrogeology, environmental conditions, access, and infrastructure for potential UCG sites. Linc Energy Chief Executive Officer cited support from the Wyoming Governor Dave Freudenthal.

Linc Energy also announced that it secured over 120,000 acres of traditional oil and gas leases in Alaska from GeoPetro Alaska LLC, for which natural gas prospects are well advanced.

Coal sale

The Company announced it has been working with various parties in the due diligence process for all three coal assets it seeks to divest. Linc Energy confirmed it had received written offers for each of the assets and is working with these parties to take these to formal binding sales agreements.

Linc Energy will announce the relevant coal sale transactions and their specific details in due course.

Linc Energy breaks news ground with UCG oxygen injection

On 19 May 2010, Linc Energy announced its UCG team has successfully commenced and commissioned its oxygen injection process at the Chinchilla Demonstration Facility. Within hours of commencing the oxygen injection process, increases to the gas flow rates were noticed. Linc Energy has found that oxygen enriched air (a mix of oxygen and air) is the most proficient, effective and economical solution.

Exploration activities

Drilling and exploration for the quarter totaled 48 holes with 10248 cumulative metres drilled. Key geographical areas of focus were the Walloway Basin, Emerald and the existing Chinchilla site. Early in the quarter, exploration operations in Queensland were again affected by wet weather, preventing access to a large number of sites.

Queensland

Emerald Update

In May, ground conditions allowed resumption of rehabilitation activities on drill hole sites located in EPC's 980, 1267 and 1228. At the end of the quarter, 10 sites remained outstanding. Numerous site visits were undertaken in support of the sales process.

Biloela Update

Wet weather continued to hinder access to sites prepared earlier in the year. Late in the quarter, field visits were undertaken and drilling is scheduled to recommence shortly.

Dalby Update

Discussions continued with overlying petroleum tenement holders through the Industry Consultative Committee (ICC) to coordinate access to Surat Basin coal exploration leases. This process is ongoing.

Galilee Update

During the quarter, further work was undertaken on conceptual mine development scenarios for MDLa 372 / EPCa 1690. The work continues to validate Linc Energy's earlier view that the tenement is capable of large scale, low cost, thermal coal production. Significant third party interest has been shown in this tenement and numerous site visits were undertaken during the quarter.

Pentland Update

The Company continues to market the Pentland coal deposit with numerous site visits undertaken during the quarter. The recently announced upgrade of the Townsville to Mount Isa railway passing through the tenement has the potential to enhance the transportation options.

Chinchilla Update

During the quarter, the Linc Energy drill rig completed work on construction of piezometers and monitoring bores around Generator 4. The rig then commenced work on a data acquisition program in MDLa 407 focussing on determination of cleat and fracture orientation and aperture size.

South Australia

Walloway Basin Update

During the quarter, resource drilling of the 'Orroroo' coal deposit was completed. The program successfully assessed the lateral continuity and thickness of the lignitic coal with large diameter cores evaluating both the overburden and coal properties. A second rig completed a hydrogeological program during the quarter with monitoring of water quality and pressures ongoing. A cultural heritage survey was undertaken at Yatina, south of Orroroo, where an exploration hole is planned to test a gravity anomaly in the upcoming quarter.

Arckaringa Basin Update

During the quarter, work was focussed on preparation of a 7 hole Arckaringa coal exploration program with cultural heritage surveys undertaken and the finalisation of permitting. Numerous studies were conducted to progress conventional hydrocarbon opportunities including reinterpretation of seismic data, enhanced gravity and magnetics and additional geochemical interpretation of the Maglia oil shows. Resumption of the 2009 Underground Coal Gasification and Coal Seam Gas evaluation program is scheduled to commence next month subject to rig movements.

Operational activities

Tenure Management Queensland

Within Queensland, Linc Energy currently holds 23 tenements under Exploration Permits for Coal (EPC's), with a further 6 under application (EPCa). One granted Mineral Development License (MDL) with a further four under application (MDLa), four Mining Lease applications (MLa) and four Petroleum Lease applications (PLa). Granted EPC's and those areas under EPC application combine to a total of 2785 sub-blocks, covering an area of approximately 9469 square kilometres. Total area covered under granted Mineral Development Licenses (MDL) and applications (MDLa) is 693 square kilometres. Total area covered under Mining Lease application (MLa) is 205 square kilometres and total area covered by Petroleum Lease application is 205 square kilometres.

Actions during this quarter:

- EPC 1525 - Cloncurry North: - Tenement acquired, first yearly rent paid

- EPC 1549 - Saxby: - Tenement acquired, first yearly rent paid

- EPC 1550 - Lily Pond: - Tenement acquired, first yearly rent paid

- EPC 909 - Jambin: - Renewal application successful, first yearly rent paid

- EPC 938 - Tipton South: Annual report and expenditure statement lodged

- EPC 980 - Teresa: Renewal application, nil relinquishment lodged

- EPC 526 - Pentland: Annual report and expenditure statement lodged

- EPC 910 - RathDowney: - Renewal application successful with relinquishment of 40 sub-blocks, first yearly rent paid

- EPC 908 - Wowam: - Renewal application successful, first yearly rent paid

- EPC 897 - Wilkie: - Renewal application, nil relinquishment lodged

- EPC 898 - Wilkie: - Renewal application, nil relinquishment lodged

- EPC 899 - Wilkie: - Renewal application, nil relinquishment lodged

- EPC 1226 - Teresa: - Nil relinquishment lodged

- EPC 1248 - Biloela: - Relinquished 22 sub-blocks

- EPC 1526 - Cloncurry South: - Work program variation request lodged

Tenure Management South Australia

Within South Australia, Linc Energy currently holds eight Petroleum Exploration Licenses (PEL's) and six current Exploration Licenses (EL's). Total area under PEL's is 74,027 square kilometres and total area held under existing EL's or those under application is 2800 square kilometres.

Actions during this quarter:

- EL 4502 - Arckaringa: Tenement renewed for a further 2 years.

- EL4501 - Williams Bore: Tenement renewed for a further 2 years.

- EL4272 - Cadaree Hill: 25% tenement relinquishment.

- EL 4273 - Mt Andrews: 25% tenement relinquishment.

- PEL124 Suspended for a further 12 months due to Department of Defence activities.

Tenure Management United States

Linc Energy Ltd holds over 173,000 acres over 157 separate leases in the Powder River and Williston Basin's, US. During the quarter, the Company announced it had secured over 120,000 acres of traditional oil and gas leases in Alaska from GeoPetro Alaska LLC. This acquisition completed after June 30th

For the complete Linc Energy Quarterly Report including Tenements Details, please click the following link:

http://www.abnnewswire.net/media/en/docs/63382-ASX-LNC-222298.pdf

Contact

Information for Media: Greg Meyer Media Manager Phone: +61-7-3229-0800 E-mail: greg.meyer@lincenergy.com.au ASX Contact: Craig Ricato Company Secretary Phone: +61-7-3229-0800 E-mail: craig.ricato@lincenergy.com.au Information for Investors: Glen Zurcher Investor Relations Manager Phone: +61-7-3229 0800 E-mail: glen.zurcher@lincenergy.com.au