Salamander Energy Share Discussion Threads

[speedsgh] 27/10/2014 20:23

abcd - thanks. lots of good stuff to chew over. i'm afraid i'm a natural cynic although that does tend to aid me with management of my own expectations. hopefully a deal at a reasonable price can be achieved here in the relatively short term. however, regardless of the price that may be achieved, it will still be damage limitation for me as i am averaging c190p... unless an acquiror really takes leave of their senses! one can but live in hope. GLTA

[abcd1234] 27/10/2014 18:15

loads of upside potential discussed in the broker notes above....
I hope that provides some market view for you / yur question above, Speedsgh :)

[abcd1234] 27/10/2014 18:12

David Round round at BMO notes speculation that CEPSA previously made a bid for Salamander at circa 144p


Round’s around 140-149p in valuing this



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BMO View:

We would be surprised if management were to recommend an offer at or around the suggested price of £275 million, particularly given their stance just a few months ago, apparently rejecting an offer at a much higher price. There is no clarity on CEPSA’s approach.
Whilst the reported deal would offer a healthy ~32% premium to the current share price, the shares were trading at this level only a month ago, prior to heightened oil price concerns. The weakness in Brent has affected valuations; however, we expect management would agree with our view that the fall in the share price has, to some extent at least, been unwarranted.
We do not rule out a deal at a higher price but believe companies looking to take advantage of the recent pull-back in share prices will find it difficult given the speed of the de-rating.

Our Core NAV currently stands at 111p/sh, although this includes the Sona deal. Stripping this out would reduce our NAV by around 10%. Recent deals, however, highlight the attractiveness of the portfolio to 3rd parties; we currently value 2P reserves at Bualuang at US$17.3/bbl and Sinphuhorm at US$5.8/bbl but note recent deals have transacted at US$19.1/bbl and US$13.2/bbl respectively.

If we mark to market our Core NAV increases to 140-149p/sh.


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FT Alphaville 27/10/14

[abcd1234] 27/10/2014 18:11

Canaccord have a target of 140p

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Valuation

Salamander trades at 57% of our Central NAV (10% discount rate and US$100/bbl crude), a 16% discount to the sector at 68%.

At 103p/sh SMDR would trade at 74% of our Central NAV, a 9% premium to the sector, which may not be considered too bad in the current market environment.

At US$90/bbl long-term Brent crude SMDR trades at 65% of our Central NAV, a discount to the sector at 81%. At 103p/sh SMDR would trade at 83% of our Central NAV, which would put the stock at a modest 2% premium to the sector.

With two potential bidders there is the potential for an offer to be made at a premium, and perhaps a more substantial premium to the sector multiple, and we retain our BUY rating.

Our target price is set at our Central NAV assuming US$100/bbl crude. In this note we show sensitivities at US$90/bbl and US$80/bbl.

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[speedsgh] 27/10/2014 16:54

Specul82 - Thanks for your reply re IAE. I personally would be v surprised to see IAE get involved here. Their strength is in their focus + experience in North Sea. Think any further acquisitions are likely to be focused there.

Why do you envisage the SMDR board recommending a takeover at 135p? Whilst most would probably welcome it with open arms, the board are rumoured to have rejected out-of-hand an informal 159p offer just a few months back + today's rns makes it quite clear that they would prefer to remain independent + go with the SONA deal. I get the impression that to accept a lower offer now would damage egos which naturally is far more important than shareholders' interests!? - sarcasm intended! Best chance for us lowly PIs is for major shareholders to force the board to conclude a deal. Aimho.

[pineapple1] 27/10/2014 16:32

Yes a bid is not good for holders unless in at recent lows which is unlikely to be many here.

[specul82] 27/10/2014 16:23

I have no doubt that there will be an offer for the company by either Ophir or cepsa before the end of the week Depending on who is closer to the management then we will see an offer I guess around 135 a share which we will then see the management asking the shareholders to agree to However the best we can look for is a hostile takeover battle and see an escalation of the price to realise the true value of this share which many people would say that is is at least double what it is now Regarding the depressed oil price then if you care to look at the forecast for the price of oil then they are still forecasting oil to be over $100 a barrel in the new year

[apfindley] 27/10/2014 16:12

Looking goodSome profits going into GWMO where their jorc coming before end of the month as stated by director in the TipTv interview.

[pineapple1] 27/10/2014 16:05

I very much doubt bidders will be falling over themselves to bid this dramatically higher. They could just wait and it will get cheaper still judging by the action in the sector.
imho

[brancho] 27/10/2014 16:02

puff,
thanks, so a normal market reaction. I did think that it might be the situation that a rejection could lead to a higher offer and hence up

[puffintickler] 27/10/2014 15:21

Brancho

Down

At the moment there is a "bid premium" of around 15p in the price because there are predators who will have to pay over the market price to get a deal. If they walk away then the bid premium goes and the price returns, more or less, to where it was, in this case 80p ish.

Lots of other things can happen to make the price do something different, but in principle it goes back down.

[specul82] 27/10/2014 15:06

Hi speedshgJust speculation as Ithaca increased its debt to allow for expansion I think that if it were to bid for salamander then it would become an international player and get more recognition

[speedsgh] 27/10/2014 14:39

Sorry for O/T...

specul82 - "What about Ithaca are they also looking to expand into the eastern hemisphere".

I cannot recall IAE stating that they have such ambitions? Where have you got this info from if you don't mind sharing?

[brancho] 27/10/2014 14:29

Sorry, being ignorant here.....'shares can only go one way'. Could someone state the (to most posters here) obvious to me as new to board - up or down. TIA
B

[specul82] 27/10/2014 14:26

We could have a great bidding war Ophir Cepsa Perhaps sona will return to the table with a complete offer by raising some more money What about Ithaca are they also looking to expand into the eastern hemisphereOr even a major after all at this price this is a bargain

[cumnor] 27/10/2014 13:01

Agree, Pineapple. Smdrs attraction is the location of its assets where gas is scarce and demand high. Can see other bidders at these prices

[pineapple1] 27/10/2014 12:57

Give me the SONA deal and a tasty divi rather than £1 for the lot. Bol..cks to that. I can wait for higher prices ,hopefully through organic growth and drill bit success.
I suspect this is purposely a low ball offer to see what reaction they get. You can always go up in price.
imho

[tradesmarter1] 27/10/2014 12:21

hxxp://www.sharesmagazine.co.uk/news/market-report-oil-drags-on-footsie#.VE44xvmsX4E

[speedsgh] 27/10/2014 12:19

Agreed but I also can't see one of them stumping up 140p a share when 159p was rejected only a few months ago when the price of oil was much stronger.

TBH I'm not expecting anything to come of this. The SMDR rns makes it fairly obvious that, whilst not dismissing the talks out of hand, they don't see value in the numbers being discussed (not that the SMDR board would recognise value if it slapped them round their faces) + that they would prefer to continue down the SONA deal route. The only thing that might change this is if major shareholders force the SMDR BOD to agree a sale. I'm not holding my breath.

[specul82] 27/10/2014 12:10

I don't think the shareholders will let it go for 110 a share bearing in mind there was 159 on the table a few months ago

[speedsgh] 27/10/2014 12:08

Today's Times article states "Ophir Energy, the FTSE 250 explorer, is closing in on a possible £275 million deal, but Salamander said it was seeking clarity on the terms of the deal. Another suitor, Cepsa, the Spanish group controlled by Ipic, the Abu Dhabi investment fund, is also circling."

£275m = c110p/share

[sporazene2] 27/10/2014 12:02

smdr bod have put themselves in a very weak position here. suitors know they are under incredible pressure to get a deal done, oil price is weak, much weaker than last time around. i would be delighted with 140p.