My share club has some Salamander shares and we are offered a Rights issue. The question is, should we? I know they were partners in the Soco Thailand Bualuang venture and found some oil. Soco then sold out for a nice profit, and Salamander is now raising capital to develop the Thai oilfield further and also for a venture in Indonesia.
Does anyone have any further knowledge or a view on this investment|:
MD.
Salamander Rights issue; I think the share club should accept because;
- The sum of money involved is very small.
- The sale price of the shares is 49% less than the previous market price. 100 million new shares will be issued.
- Salamander is doing well, it recently went into profit, $112 million in 2011.
- Year end cash is $85 million. Nett debt $210 million.
- The money will be mainly used to develop its Bualuang oilfield (offshore Thailand), where it was in partnership with Soco. Salamander expects new equipment will save about $25 million per annum, and increase the life of the oilfield plus the amount of oil to be recovered. In addition, they are seeking a second rig to explore the Thai blocks B8/38 and G4/50, anticipated to be available in November / December, to drill 6 new wells. They plan to drill explo wells on the north Kutei basin Indonesia. The company thinks its prospects have 530 million barrels with a 25% chance of success, but I have seen corporate hype before and will believe it when I see it!
