Linc Energy Cuts Costs to Ensure Profits
Linc Energy (ASX:LNC) (OTCQX:LNCGY) today provided an update on the outcome of the review of business operations and resulting budget cuts that was initiated 90 days ago.
Linc Energy has undertaken a detailed review of all aspects of the business with a particular focus on cost saving initiatives whilst driving its core focused commercial outcomes. The outcome of this review has been a reduction of 60 employees across Linc Energy. Approximately 90% of these positions are attributable to the Corporate and Clean Energy divisions without affecting any core areas of the business.
It is worth noting that many of the budget cuts were completed in the Company’s Denver and Casper offices on the back of the consolidation of the Company’s oil operations, which are now being run out of Houston, with further cuts actioned in the Brisbane office.
Following the restructure, Linc Energy continues to employ over 400 employees across Australia, USA, Europe and Uzbekistan and retains its technical expertise in UCG, GTL and (Co2) EOR. One-off costs associated with the restructuring will be approximately AUD0.5m and will be provided for in the results for the financial year ending 30 June 2012.
The average Quarterly cash burn for Linc Energy over the 12 months to 31 March 2012 was approximately AUD38.2m per Quarter (not including the Oil and Gas division) and this will be reduced to a Quarterly average for next year (2013) to approximately AUD19m per Quarter (excluding the Oil and Gas division – which is self-funding).
Linc Energy’s total budget (excluding some oil and gas capital requests) will be able to be fully-funded from the positive cashflows from the USA oil business, which is expected to yield an operational cash surplus of AUD15m for the Company for FY13.