A City banker who recently helped fund San Leon Energy (LON:SLE) says he is not surprised that someone’s interested in buying the junior oil and gas company.
News of an approach sent San Leon shares about 16% higher on Monday morning, rising 8.5p to 62p, in what was an otherwise dreadful morning across the rest of the stock exchange.
A brief stock exchange statement confirmed speculation in Ireland’s weekend newspapers that a bid approach had been received.
“I do not know who is preparing a bid, but it hardly surprises me,” Oliver Stansfield, chief executive of Brandon Hill Capital, lead banker in June’s £29mln capital raise, told Proactive Investors.
Stansfield does, however, think that investors would need to see a premium before they agree to sell.
“I would think that any bidder would have to pay at least 80p a share for the company,” he added.
Oisin Fanning, executive chairman of Dublin-based San Leon, was unavailable for comment. But a spokesman said: “Yes an approach has been made.
“However, there is no certainty that an offer may be made or as to the terms on which an offer may be made”.
Stansfield, meanwhile, highlighted that Toscafund - which invested £16mln as part of the recent funding - owns 41.47% of the company.
“At 60p a share currently the company has a market cap of £33mln.
“Given they have not just most of the cash left but also some very good assets the shares are cheap.”
San Leon has a spread of assets in Poland, Ireland, Morocco and Albania, but the immediate value is thought to lie in some acreage in Poland and the Celtic Sea in Ireland.
In Poland, San Leon Has a 35% interest in the Rawicz field and adjacent acreage where together with its joint venture partner, it has made one of the biggest conventional gas discoveries.
Mean recoverable reserves (P50) have been put at 100mln cubic feet of gas following a positive drilling result and flow test of 4.5mln standard cubic feet a day (MMscf/d).
First production is expected in the first quarter of 2016.
The potential cash flow for 2016 is put at US$10-15mln. Fanning has put the value of this asset at US$150mln
The other near term value asset, assuming a farm-in partner can be found to develop it, is the Barryroe discovery in Ireland. There is thought to be 266 mln barrels of recoverable oil in the field.
San Leon, with a 4.5% net profit interest (NPI), could benefit to the tune US$230mln of the field, based on lower oil price assumptions made by the company itself.
Obviously, the detail of the approach is thus far undisclosed and so shareholders will have to wait, but, they can do so in the knowledge that they own one of very few shares to see positive territory in London this Monday.
Are you actually being serious - this is the best price ? Now you are reaching fella - that would be a first and no mistake - If a bid does get tabled this will move very quickly before suspension - the norm you will find
Ha Ho I ain't the one holding a short here crappping it
I just bought some at 60 as I'm pretty convinced that this should be much higher today than where we are now had the news come out not today, which clearly is one of the worst days of the year for the stock markets. Malcy is absolutely right and this is cheap even without an outside bidder. The interesting fact is that someone is clearly looking at this gas play and if it not Tosca it will be pretty interesting to see what price the purchaser will have to pay to buy the company, and Tosca, out. Gas in Europe is very appealing and IMO things will get pretty interesting over the next few days/weeks. Let's sit back and see what happens, but IMO it will be very interesting.
you mean your opinion. It will 80p minmum as a starting point, and that was a discount at the time of tosscas placing. Looks like a deal being done with tossca, who will vote it through and get what they want through the back door. 120p imo
Expect some consolidation as stakes start being built imo before the official offer.
Looks to me that the market is weighing the options up of a T/O. And is concluding thar the par value will be alot less than 100.p. in fact there is a remote possibility that SLE could end the day in the red. Let's face it - apart from a multimillion IOU to pay avobone, what does SLE have? It's rawicz acreage is now mainly preserved for PNR. Barryroe will be unlikely to produce this decade, and a rogue drill somewhere in a disputed region. More cash required, could do with a takeover - but it's not going to be a golden handout - its a buyers market, and maybe this may be the best price SLE will be worth.
On a day when there is red ink all over the market and in the oil sector especially, the sight of San Leon up by 15% is a lighthouse in the fog of despond for investors. The company has announced this morning that they have received an approach from a ‘possible offeror that may or may not lead to an offer being made’. Whether or not this leads to anything and who might be the potential bidder we will have to wait and see but there is little doubt that on the simplest cash flow analysis, buying this company on the stock market may be cheaper than doing the hard graft yourself, particularly as the market for gas in Europe hasn’t heard of the world markets catastrophes.
Even at this price I will be out of pocket GDP 25K Jeez - so much for investing for the long term - long term and with some oil luck this could have recovered - now like most long term holders,I came in with the Aurelian take over with high hopes that there was a sound future with prices to climb well above above 14p (old money) - Jeez!
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