Linc Energy Limited, an Australian firm with plans to conduct underground coal gassification in the Powder River Basin, has snagged three oil fields for $20 million in a bankruptcy sale.
Linc will use the carbon dioxide byproduct of the coal gassificition — in which coal is literally cooked underground to produce gas for sale — to boost production of the three fields, purchased from Nevada-based Rancher Energy Corp.
“The Rancher Energy deal represents the first step in this process and is a milestone for our expanding North American oil operations,” said Peter Bond, Linc’s chief executive, in a media release.
The three producing fields purchased are Big Muddy, South Cole Creek and South Glenrock B. The fields — one discovered in 1917 and the others in 1948 and 1950 — have combined production of 146.6 million barrels of oil to date. Rancher had previously purchased the same fields for $70 million.
The Australian firm made the purchase of the three oil fields — covering approximately 27,856 acres — through Linc Energy Petroleum (Wyoming) Inc., a wholly owned subsidiary. Rancher is currently in Chapter 11 bankruptcy proceedings.
The three fields hold an estimated 467 million barrels of oil. According to Linc, independent reports commissioned by Rancher Energy indicated the fields could produce an additional 70 million barrels from a technique known as carbon dioxide flooding. In
that technique, carbon dioxide is injected underground to help force out more oil.
Linc announced its purchase agreement Friday. It expects the deal to close in March.