Linc Energy Limited (ASX:LNC) Update on the Purchase of ERG Resources Texas Gulf Coast Oil and Gas Assets

Brisbane, Aug 8, 2011 AEST (ABN Newswire) - Linc Energy Limited (ASX:LNC) (PINK:LNCGY) is pleased to announce that, after further discussions with ERG Resources L.L.C ("ERG"), a general agreement has been reached between the two groups which will allows the parties to progress the sale process of ERG's USA Gulf Coast oil and gas assets to Linc Energy over the coming weeks.

All of the original deadlines will be extended so as to ensure that ERG can address Linc Energy's queries and questions regarding title and oil reserves, as well as a number of general risk assessments issues. The parties have agreed to work together cooperatively so as to undertake a more detailed review of these issues within the extended timeframe.

In addition, both ERG and Linc Energy have agreed to hold off all legal proceedings until further notice.

The focus of the Linc Energy team has always been to ensure that all material issues concerning the purchase of the ERG Texas and Louisiana Gulf Coast assets were de-risked through detailed due diligence with the active and open cooperation from ERG. The fact that Linc Energy felt that this objective could not be achieved under the original process was the reason for the delivery of the termination notice by Linc Energy and the cause of the dispute. Significantly, based on recent positive discussions and interaction, Linc Energy now believes that with the additional assistance which ERG have agreed to provide the due diligence team, material risks can be addressed and the transaction should be able to be completed in a timely manner so as to achieve the significant upside which ownership of these assets represents for Linc Energy shareholders.

The parties are currently working to complete the due diligence on outstanding issues by the end of August, with closin to occur on a date to be agreed in September.

Mr Peter Bond, CEO of Linc Energy, said "It has always been my focus that with any asset purchase by Linc Energy, that we aim to do two things very well. The first is that we purchase good assets at good value. The second is that we ensure that we minimise the downside risk to Linc Energy through competent and detailed due diligence. If the ratio of good value versus risk causes a material concern then, simply put, you can't do the deal. That said, I was always confident that the underlying value and quality of the ERG asset package was something worth the hard work to secure and all we had to do was ensure that Linc Energy was not carrying an excessive amount of risk. That is why we as a company perform such a detailed due diligence of the assets we purchase."

"Over this past two weeks, Linc Energy and ERG have been very open in our negotiations and discourse. On the back of the promises that ERG has made to me and Linc Energy, and on the basis that ERG will continue to cooperate with an open-book philosophy, then Linc Energy can get on with managing the due diligence process and addressing material issues with the confidence that we require. And in doing so, I am confident this deal should now be completed."

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: Justyn Peters General Manager Investor Relations Phone: +61-7-3229-0800 E-mail: anton.rohner@lincenergy.com.au http://www.lincenergy.com.au