Usually when an all-shares takeover deal is agreed the relative share prices of the two companies follow each other quite closely. That hasn’t been the case though with Salamander Energy (SMDR) which has received a takeover offer from Ophir, which has yet to be accepted.
Today’s announcement of Ophir’s bid for Salamander Energy (SMDR) comes with a price tag (115.9p a share) which is less than one hoped for however given the curse which is upon this company at present and the new 30% collapse in oil prices post my original tip (HERE) I believe this is the best outcome possible. The ofer is 2% ahead of my original tip, no disaster but this is clearly a disappointment.
Salamander Energy (SMDR) is now a true Conviction buy for me with the shares at 104.75p. I predicate a share price bounce in the short term and a material re-rating in 4Q. I thought the interims out yesterday were positive and confirmed my thoughts from my last piece HERE
Following my article HERE on Salamander Energy (SMDR), the share price has, as predicted, recovered from the lows seen after the failure of the NK2 well. There is more to go.
Clearly today’s news from Salamander Energy (SMDR) on NK2 is frustrating. It looked like a 50% COS well but it is not commercial. These are the risks we all take investing in the oil exploration sector. The well encountered two hydrocarbon bearing intervals but was considered sub commercial.
Following my first article (here) I have had a lot of questions and comments regarding Fully listed Salamander Energy (SMDR) and so I expand my view of its Far Eastern promise. The shares are still at 113p but my target share price remains 250p. Here’s why.
To newcomers, Salamander Energy (SMDR) is a complex beast with a medium sized market cap with assets in the Far East. Look under the bonnet and you will find over 100% upside for the shares from the near term drilling of the NK2 50% cos well, growing production, vastly reduced debts and an 11p dividend thrown in. And it seems like a prime takeover target. Buy at 113p – target 250p.
Salamander Energy (SMDR) shares have crumbled from 200p+ to a measly 102p – I cannot imagine shareholders are sending the board Christmas cards this year. But I sense a partial recovery is on the way.
