Linc Energy Limited (ASX:LNC) Acquires Oil Producing Asset in Wyoming, USA

Brisbane, Feb 25, 2011 AEST (ABN Newswire) - Linc Energy Limited (ASX:LNC) (PINK:LNCGY) is pleased to announce that its wholly owned subsidiary, Linc Energy Petroleum (Wyoming) Inc., has acquired three producing oil fields (approximately 27,856 acres) from Rancher Energy Corp., securing immediate oil production and a significant CO2 enhanced oil recovery (EOR) opportunity.

The three oil fields have been acquired from Rancher Energy Corp., a Nevada corporation currently in Chapter 11 bankruptcy, for a total consideration of US$20 million. Prior to entering Chapter 11 bankruptcy, Rancher Energy Corp. had acquired the three fields for a total consideration of approximately US$70 million. The Linc acquisition of the Rancher Energy assets was approved by the United States Bankruptcy Court on February 24, 2011 and completion of the transaction is expected in March 2011.

The three fields purchased from Rancher Energy are "Big Muddy", "South Glenrock B" and "South Cole Creek". The fields, located 15 miles east of Casper, Wyoming, have combined production of 146.6 million barrels of oil to date from an estimated Original Oil in Place (OOIP) of 466.6 million barrels of oil.

Independent reports commissioned by Rancher Energy indicate that the fields have the potential to increase recoverable oil by up to 70 million barrels from enhanced oil recovery (EOR) techniques utilising CO2 flooding operations.

Big Muddy field

Big Muddy field was discovered in 1917 producing from the Upper Shannon sandstone at a depth of 984 feet (300m). The primary reservoir in the field was the Second Frontier (sometimes referred to as the Second Wall Creek) at a depth of 3100 feet (945m). The State of Wyoming Oil and Gas Conservation Commission (WOGCC) reports that the field has produced 53.8 million barrels of oil to date.

Historically the field has produced from the Shannon, Niobrara, Frontier, Dakota and Lakota sandstones. Volumetric calculations indicate that the Second Frontier alone has 255 million barrels OOIP with primary and secondary recovery efforts to date in the Second Frontier having only recovered 12.5%.

South Glenrock field

South Glenrock field was discovered in 1950 producing from the Dakota formation at a depth of 5,880 feet (1,792m). The WOGCC reports that the field's cumulative production is 75.7 million barrels of oil to date. The field has produced from the Dakota and two separate sands in the Muddy Sandstone, however other intervals that have had oil shows in the field are the Shannon, Frontier and Niobrara.

Volumetric analysis of the three primary producing intervals indicate an OOIP of 170.3 million barrels of oil, with a 44% recovery factor to date.

South Cole Creek field

South Cole Creek was discovered in 1948 producing from the Lakota formation at a depth of 8,300 feet (2,530m). The Lakota and Dakota formations are the two primary producing horizons in the field. Other zones of interest or production include the Shannon, Muddy, Frontier, Niobrara and Mowry. The WOGCC reports that to date the field has produced 17.1 million barrels of oil.

Volumetric calculations indicate 41.3 million barrels OOIP, with a recovery factor of 41% to date.

Key terms of the Agreement

The key terms of the Asset Purchase Agreement between Linc Energy and Rancher Energy are as follows:

1. The purchase price of the assets is US$20 million (less adjustments).

2. The assets purchased consist primarily of oil & gas leases, property interests (including all overriding royalty interests held by Rancher Energy) and wells upon the Big Muddy, South Glenrock and South Cole Creek oil fields located in Converse County and Natrone County, Wyoming.

3. The total area of these leases is approximately 27,856 acres.

Linc Energy holds significant coal leases in the Powder River Basin and is currently permitting its first underground coal gasification (UCG) operation in that region, with the first gasification operations expected to commence later this year (2011). The acquisition of the Rancher Energy oil fields is the first strategic acquisition by the Linc Energy of producing North American petroleum assets which deliver immediate revenue whilst also providing an entry point into the established EOR market utilizing the valuable CO2 stream produced from UCG operations and other CO2 sources.

Peter Bond, CEO of Linc Energy, said, "We recognized some time ago that significant value could be delivered to our shareholders if we combined UCG operations with Enhanced Oil Recovery from depleted oil fields using CO2 flooding. We have been diligently working on assessing UCG and EOR opportunities in the USA for over 12 months and announced our intentions to enter this market at the end of 2010. The Rancher Energy deal represents the first step in this process and is a milestone for our expanding North American oil operations."

"Over the coming months we will continue to work on many other oil and EOR opportunities, whilst our experienced Linc Energy Wyoming operations team looks to optimize and increase current oil production upon the three oil fields we've just purchased from Rancher. There is considerable potential for Linc to increase oil production from traditional methods whilst we start to execute EOR upon these oil fields. Once you start the CO2 flood, the studies completed by Rancher on these fields show that Linc Energy can potentially increase oil production from a few hundred barrels/day to 10,000 to 20,000 barrels/day of oil with recoverable oil from EOR being in the 50 million to 100 million barrels. The cash flow from these Rancher oil fields is potentially very significant and the announcement today by Linc Energy of the Rancher purchase, which comes with immediate oil revenue is a great step forward for Linc Energy and its EOR plans," Mr. Bond CEO of Linc Energy said.

Contact

Information for Media: Greg Meyer Media Manager Phone: +61-7-3229-0800 E-mail: greg.meyer@lincenergy.com.au ASX Contact: Brook Burke Company Secretary Phone: +61-7-3229-0800 E-mail: brook.burke@lincenergy.com.au Information for Investors: Anton Rohner Chief Financial Officer Phone: +61-7-3229-0800 E-mail: anton.rohner@lincenergy.com.au http://www.lincenergy.com.au