Salamander Energy Share Discussion Threads

[nigelpm] 15/1/2015 14:57

Remember the SONA deal is still on anyway

[nigelpm] 15/1/2015 13:28

The market is just being a miserable sod. In the meantime the oil price is rising and the OPHR deal is still on track.

[ed 123] 15/1/2015 13:18

nigelpm.

Ah, maybe, but the market appears even more pessimistic than myself. At 58p the market is saying there's a significant risk (50%?) of the Ophir takeover not completing.

My view, fwiw, 90% chance of Ophir takeover, 5% chance of someone else bidding and winning, 5% chance no bid succeeds and Salamander stays independent.

I presume that the documents couldn't be printed until Salamander's operational update had been produced.

I'm guessing, lawyers approving draft documents yesterday, printing today, posting tommorow. Bid from CEPSA on Monday.

.............. Market says there's almost nil chance of that! :-(

[nigelpm] 14/1/2015 20:53

They were prepared to pay £1.20 + 20p contingent before the oil price crash.

If anything Ed you are being too pessimistic!

Oil futures up over $2 since UK close.

[ed 123] 14/1/2015 15:27

Hmmm .... Ophir's formal offer is to be posted to Salamander's shareholders very soon. That event would free up CEPSA to make its own offer. I wonder ....

A cash offer of say 85p might be enough. The assets are performing well and Bualuang might produce for another 10 (?) years. CEPSA could afford to take a long term view here .......

OK, hands up, on a dismal day for the market I've put on my rose-tinted blinkers.

[cwa1] 14/1/2015 07:19

Just in case anyone misses it in the welter of stake announcements, etc:-

14 January 2015

Salamander Energy plc

("Salamander" or the "Group")

Operational and Corporate Update

Salamander Energy plc issues the following operational and corporate update that includes unaudited information and may be subject to further review.

Highlights
-- 2014 average production of 14,200 boepd
-- Bualuang field and the Sinphuhorm field both produced record high annual rates
-- Kerendan Gas Processing Facility is nearing completion

-- Renegotiations on the Kerendan gas sales agreement are expected to complete shortly with significantly more favourable terms
-- Net debt as at 31 December 2014 of US$380 million with cash and funds of US$118 million

-- Scheme Document in relation to the offer by Ophir Energy plc to be posted today; shareholders of Salamander and Ophir to vote on 6 February 2015; the Scheme expected to become effective 2 March 2015

-- Intention to terminate the sale of an effective 40% interest in the Greater Bualuang Area with mutual agreement by SONA, satisfying a condition of the Ophir Offer

Chief Executive, James Menzies, commented:

"We are delighted to report that production has been strong in the second half of the year following the completion of the latest phase of Bualuang development. Measures taken to reduce Bualuang operating costs have been implemented and negotiations are underway on the Kerendan Gas Sales Agreement which we expect to result in significantly more favourable terms. In addition, we have today released documentation with regards to the offer from Ophir Energy plc which we expect will complete this quarter."

Asset Overview

Thailand

Having drilled and completed a sequence of wells in the T4, T2 and T5 reservoirs, including some dual-lateral wells, production from the Bualuang field during the second half of the year averaged 15,100 bopd, exceeding management expectations. The full year average production for Bualuang of 12,500 bopd is the highest annual rate in the history of the field. Production averaged 9,900 bopd in the first half of the year when the field had to be shut in for six weeks. Enhancing the cash flow from these volumes, an infrastructure upgrade was completed in August with the installation of the Suksan Salamander Floating Storage and Offtake Vessel ("FSO"). These upgrades have significantly reduced costs, with Salamander on track to deliver the targeted $25 million per annum reduction in operating costs, and extended the field's operating life.

Salamander continues to collect and analyse new well data from the most recent drilling campaign associated with the Bravo Well Head Platform. Bualuang's strong second half performance is being used to review the field's further development potential including options for the third platform, Charlie, which will enable the development and commercialisation of additional resources.

In Northeast Thailand, robust gas demand continued to drive strong production growth from the Sinphuhorm field, with output in 2014 setting a record at 105 MMscfd (c.1,700 boepd net to Salamander). Elsewhere in Northeast Thailand, a FEED study for the Dong Mun gas field development is progressing and commercial discussions are underway with candidate buyers of the gas.

Indonesia

Salamander's Kerendan Gas Processing Facility ("KGPF") is nearing completion, though a few weeks behind schedule due to very dry conditions making the logistics of river-borne transportation difficult. The wells are ready to produce and the pipelines connecting the well pad to KGPF and KGPF to the PT PLN (Persero)("PLN") power plant are in the final stages of installation.

PLN's power plant and transmission lines have progressed over the year but PLN has recently amended its schedule to mid-2015 readiness citing delays with importation of equipment and the difficult logistics of the Kerendan site. The delay is being factored into the economic assessments underpinning negotiations of an increased gas price in the Kerendan gas sales agreement ("GSA"). Management believe that these negotiations will complete during the first quarter resulting in a gas price substantially higher than the existing GSA and sufficiently high to at least preserve Salamander's project economics.

The Indonesian upstream regulator, SKKMigas, has recommended the approval of the Plan of Development for the Tutung gas field in the Bontang PSC. Formal approval is now awaited from the Ministry of Energy.

Corporate

At 31 December 2014 net debt had fallen to $380 million and total cash and funds equalled $118 million. The Group's investment programme across its predominantly operated portfolio is largely discretionary, and capex to which the Group is currently committed in 2015 totals circa $40 million.

As announced at the time of Salamander's interim results in August 2014, the Group has hedged 1,200 bopd for calendar year 2015 at an average price of $103.30/bbl.

Offer from Ophir Energy plc

On 24 November 2014, Salamander and Ophir Energy plc ("Ophir") announced they had reached agreement on the terms of a recommended acquisition to be made by Ophir for the entire issued and to be issued share capital of Salamander (the "Ophir Offer"). Today, Salamander announced that the circular to shareholders in connection with the Ophir Offer (the "Scheme Document") is being published together with the associated Forms of Proxy. The Court Meeting and the General Meeting are scheduled to take place on 6 February 2015. Full details are contained in the Scheme Document. Ophir's Shareholder Circular and Prospectus in connection with the Offer are expected to be issued shortly with the Ophir General Meeting due to be convened for 6 February 2015. The Scheme is expected to become effective on 2 March 2015.

SONA Transaction

In light of the recommendation of the Salamander Directors to vote in favour of the Ophir Offer, Salamander and Sona Petroleum Berhad ("SONA") intend to terminate by mutual agreement the previously announced Sale and Purchase Agreement in respect of an effective 40% interest in the Greater Bualuang Area. Once terminated with the consent of Ophir, such termination will satisfy the SONA condition to the Ophir Offer. Salamander notes that in SONA's press release to its shareholders, SONA states that it remains interested in acquiring a stake in the Greater Bualuang Area and intends to approach either Ophir or Salamander regarding a revised transaction post their respective shareholder meetings on 6 February 2015.

[cyan] 13/1/2015 13:02

Goodness! $45.65. When will this stop. Looks like the Saudis are going all out to break someone; is it US shale or Russia?

[cyan] 13/1/2015 10:26

Its about when oil recovers. But at the moment the collapse goes on and on;
Brent $46.20 now!

[wbodger] 13/1/2015 00:44

Convergence today? Scheme Document had to be posted by 15/01. OPHR went down 7% Monday afternoon, while SMDR just went down with the general decline. They must have got approval for the Scheme Document at the same conversion factor previously recommended.

The market looks disappointed, but some people might have been fooling themselves.

RNS Tuesday.

[bhoytrader] 12/1/2015 23:06

And the Saudi's are pumping like crazy (

[cyan] 12/1/2015 11:15

Brent $48.71 now. Looks like $40 most likely in weeks to come.

[cyan] 09/1/2015 17:04

BRENT falls through $50 ; Now $49.32

[cyan] 09/1/2015 14:16

Brent $50.38 now. I expect $40 by spring if not sooner

[dlm2602] 25/12/2014 13:45

Thanks Wb. The thing I worry about is that the arbitrage opportunity by selling OPHR and buying SMDR is increasing not reducing. I'm tempted to put on a spread bet to take advantage of this. But people in the market usually know more about what is happening than us PI's. The fact that this opportunity hasn't narrowed makes me feel this takeover is far from a done deal. I hope i'm wrong!

[lonrho] 25/12/2014 11:50

I guess there is also the question if all the deals fall through what is salamander worth. With an opex of about $20 dollars a barrel and a reducing tax rate percentage with the reduced oil price, despite the debt the shares are hardly expensive on a medium term view on a standalone basis.

[wbodger] 24/12/2014 22:58

Thanks dlm, and I will understand if you don't reply, it being Christmas and all.

But here goes, I did give some thought to a walk-away, but imo it is unlikely. Once the Scheme Document is posted it is hard to walk away, and I expect that will happen on time because they had to get a concession on account of the Court being closed until 11/01.

If they did pull out there would be a break fee, and anyway the GBA assets are very marketable. Imo anyone wanting OPHR would not see them as a problem, even if they did not want SMDR.

But most of all OPHR aren't going anywhere. It's a small chance that they would be bid for anyway, and especially small before mid-January, and after that I don't mind being taken over twice (once as SMDR, again as OPHR). I like OPHR at £1.165 but nothing is risk-free in this market.

Good luck anyway.

[dlm2602] 24/12/2014 21:47

Wbodger, I sold my OPHR shares and swapped them for SMDR to take advantage of the divergence weeks ago. However there are risks in this. 1) The deal doesn't conclude as expected because either OPHR walks away or attempts to renegotiate terms at a worse conversion rate for SMDR shareholders or 2)Someone makes an opportunistic bid for OPHR as cash is greater than companies mkt cap, conditional on pulling out of SMDR deal. I think the market is telling us that they do not expect the deal to complete as the divergence seems just too large. I took the view that OPHR are very keen to buy SMDR (I think the ex SMDR FD now holds the same post at OPHR so he knows exactly what he is buying and the worth of SMDR)and will want to see it through. However he cannot control any opportunistic bidder coming forwards and trying to take out OPHR. I topped up with some more OPHR shares just in case!

[wbodger] 24/12/2014 17:49

I'm struck by divergence between SMDR and OPHR*.5719 in the last week. I took a few in the expectation it's just noise, and convergence will resume. Meanwhile strength in OPHR doesn't hurt.

If the Scheme Document confirms the terms (.5719) I will have paid 1.165 per OPHR share which looks cheap. OPHR cash per share will decline when OPHR float increases because of the new shares, but cash burn will cease. It looks like a good deal for OPHR as well as SMDR holders.

After all, where would we be in this market otherwise? Not far from where we are perhaps, like every other oilie, and trying to attract attention.

Just glad we didn't get PMO.

[nigelpm] 23/12/2014 16:30

Highly likely IMHO if someone bids for OPHR they would pull the plug on the SMDR bid. I just think the chances of that are unlikely, certainly the 20% divergence covered the risk for me.

[lonrho] 23/12/2014 12:34

this only makes sense if their is going to be a bid for ophir on proviso that it drops the bid for smdr or one set of shareholders is thought likely to vote against the bid.