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UK energy group eyes Salamander in SE Asia push

LONDON, November 22, 2014

British oil and gas explorer Ophir Energy offered to buy Salamander Energy for  £267 million ($419 million) to expand in southeast Asia.

Ophir could be getting a bargain, analysts said, after a possible rival in the bidding process walked away. But shareholders might be less happy about taking on Salamander's $250 million debt, as well as the all-stock nature of the deal.

"We expect arbitrage between the two to weigh heavily on Ophir's share price," Societe Generale analysts said in a note.

Salamander's shares rose as much as 5.8 per cent to 96 pence. Ophir's stock fell as much as 7.1 per cent to 167.4 pence, also hit by disappointing drill results in Tanzania.

The recent drop in oil prices has renewed appetite for deals, posing a dilemma for oil companies keen to pick up bargains but under pressure to cut costs.

A consortium led by Spain's Compania Espanola de Petroleos (Cepsa) had been considering making an offer of 121 pence in cash and one contingent value right of up to 24 pence per share for Salamander.

Cepsa said on Monday the consortium had decided not to proceed - leaving the way clear for Ophir.

BMO Capital Markets analyst David Round said the offer was "slightly disappointing". While making strategic sense for both companies, he said it fell "a long way short of previous expressions of interest".

Ophir's offer of 0.5719 shares for every Salamander share values Salamander at £266.9 million (          ), based on Ophir's closing price of 180.1 pence on Thursday.

Salamander has 259.13 million shares outstanding, according to Thomson Reuters data.

The acquisition would give Ophir an oilfield already in production off Thailand's coast and a gas development in Indonesia.

The offer is conditional on Salamander cancelling its deal with Malaysia's Sona Petroleum Bhd to sell 40 per cent of two oil and gas blocks in the Gulf of Thailand.

Though almost all of Ophir's assets are scattered throughout African waters, the company has recently acquired acreage in Myanmar and Indonesia.

"They have to inject some sort of fresh momentum into what is a lacklustre story," FirstEnergy Capital analyst Gerry Donnelly said. "Africa itself, for Ophir, is getting just too expensive."-Reuters




Tags: Ophir Energy |

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