Will the run continue?

15th May '09 by MrT

7 comments 2421 reads

Thought it worth initiating forum coverage on Salamander, not least given the links with Soco. I can't confess to be an expert, other than what I have gleaned from public sources:

Asia-focused independent exploration and production company with 21 licences across Indonesia, Thailand, Vietnam, Lao PDR and the Philippines. Founded by James Menzies, Nick Cooper and Andrew Cochran in 2005. Listed on LSE in 2006.
According to website, Salamander entered 2009 producing in the region of 11,500 boepd and expects daily production to average between 15 and 17,000 boepd during 2009. By the end of 2009, Salamander will operate over 65% of its production.
Tried to buy Serica Energy last year in a hostile deal but pulled its £124 million all-share offer, blaming the global financial turmoil and falling oil prices. http://business.timesonline.co.uk/tol/business/markets/article4988615.ece
Ended 2008 with a net debt position of $54.0 million (cash and cash equivalents of $103.0 million, with outstanding borrowings of$157.0 million)
Recently boosted by good news at Bualang oil field, as discussed elsewhere on the Forums - http://www.stockopedia.com/news/announcement/SMDR/090511smdr000349.htm
Bounced back from January lows, up c. 70%

Looks rather interesting to me given the Asian focus and the operational momentum but I am sure there are wiser heads out there with views to share....

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StrollingMolby

15th May '09

Good idea, MrT. Also worth noting that 3i got their 17% away en block to other institutions without the price suffering (though would it be higher if they hadn't been trying to offload their position?)

MrT

Well noted, I had missed that! I see that their Director, Mike Sibson, has come off the Board too.

http://www.stockopedia.com/news/announcement/SMDR/090515smdr004916.htm

http://www.stockopedia.com/news/announcement/SMDR/090515smdr005191.htm

ryanandbethan

I'll add my 2 P worth as well.

A few things from the 2008 AR

In order to provide greater cash flow certainty and comfort in delivering its 2009 capital budget and plan, theGroup has put in place hedges against a portion of its 2009 oil production. These hedges involved selling forward a proportion (2,500 barrels per day) of its 2009 oil production at $53.83 per barrel, and buying put options against a further 1,500 barrels of oil per day at $54.00 per barrel for the second half of 2009. These hedges are designed to provide greater cash fllow certainty whilst retaining upside exposure to potential future commodity price strength. (p3)

Near term SP drivers

Start of production at the Kambuna gas-condensate field which is expected at themid-year 2009.
Spudding of south Sebuku (30mmBoe prospect) in June 09 (25% SMDR)

Anyone have any views on the debt ?

Yes, I couldn't work out whether to be spooked by the change in the net debt position from end 07 to end 08, i.e. from net cash of $91.6m to net debt of $54m. In the prelims (http://www.stockopedia.com/news/announcement/SMDR/090325smdr4237p.htm), they speak with surprising pride of the fact that "our cash position and balance sheet, which was restructured ahead of the mid-year deterioration in the capital markets, means we are well placed to deliver our work programme.... Having completed a debt refinancing in May 2008, a re-determination of debt availability under that facility during December 2008 and the closing of a $200 million equity fundraising during the summer of 2008, Salamander entered 2009 in a clear position to fund its exploration, appraisal and development activities" but the fact is that they are net levered. In fairness, I don't know how much of the deterioration in the financial position in 2008 was due to inorganic acquisitions (e.g. GFI Oil and Gas Corporation).

At 1 January 2008, the Group had cash and cash equivalents of $116.9 million, with outstanding borrowings of $25.3 million, equivalent to a net cash position of $91.6 million. During 2008, the Group's net cash outflow totalled $15.4 million (2007:
$37.1 million) with debt increasing by $135.2 million (2007: nil). After exchange adjustments of $1.5 million (2007 $1.8 million), the Group's total cash and cash equivalents at 31 December 2008 totalled $103.0 million, with outstanding borrowings of
$157.0 million, equivalent to a net debt position of $54.0 million.

emptyend

Worth noting that Benchmark Advantage Fund has just announced they have over 10% - up from under 3% previously!:

http://www.investegate.co.uk/Article.aspx?id=200905151547123667S

...and that Credit Suisse have over 3%:

http://www.investegate.co.uk/Article.aspx?id=200905151121083388S

...and that 3i seem to have completely sold out from over 17%...and resigned from the board:

http://www.investegate.co.uk/Article.aspx?id=200905151113443378S

[edit- oops sorry I see you knew that last bit......been out all day]

3i seem to be on a cash-raising mission. They must have a stack of underwater investments so they are liquidating those that have done OK (at the same time as raising fresh equity)

doverbeach

26th May '09

IMS on 18 May http://www.salamander-energy.com/investor-centre/regulatory-news/rns-story.aspx?RnsID=1242626416nRnsR3662S updates the cash figures:

Total available funds as of 31 March 2009
were $104 million and net debt was $72 million.

2009 drilling program about to kick off:

The South Sebuku-2 exploration well, East Kalimantan, Indonesia is expected to spud
later this month [May]. The Phu-Kheng-1 exploration well in northeast Thailand is
expected to spud in June 2009 with the Si That-3 well to be drilled back to back
utilising the same rig.

I asked at the AGM last year about these wells and was told the following:

date	country	license / well name	type	SMDR%	oil/gas	size & chance of success
Q3 08	Thailand	L27/43 "Phu Kheng"	explo	27%	gas	multi TCF in place, expected to flow but commercial?
Q4 08	Thailand	L13/48 "Si That-3"	appraisal	16%	gas	1.2 TCF 1 in 3
Q4 08	Indonesia	Bengara 1 "S.Sebuku"	explo	35%	oil	30mb 1 in 3or4

Obviously some of their dates have slipped!

CEO raided his piggy bank last week: http://www.investegate.co.uk/Article.aspx?id=200905260903557907S

Salamander announces that it has received notification from James Menzies, Chief Executive, that on 22 May 2009 he purchased 20,000 Ordinary shares in the Company at a price of 184 pence per share. As a result, Mr Menzies is now interested in a total of 1,981,158 ordinary shares in the Company representing 1.3% of the issued share capital.

salty64

19th Jun '09

Two RNS released today, the second replaces the first as they said that they were spudding SS-2, when it is SS-1. I expect it's hot out there now ; 0 )

http://www.investegate.co.uk/Article.aspx?id=200906190856161752U

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MrT

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