It has been an interesting year at San Leon Energy (SLE.L). After many years of struggling to create value from its existing asset base the company did a fairly impressive Nigerian deal in the summer of 2016. After a period of bedding down it emerged late in 2016 that San Leon was subject to a potential takeover from a mystery Chinese bidder and at a fairly sizable premium to the share price at the time. So the signals from San Leon towers were looking very promising indeed, I had hence rated this as a ‘BUY’ in both my previous posts. It has though gone very quiet from San Leon since the excitement of late 2o16 and we have so far had no formal update on the potential deal in the first two months of 2017. We did though get an operations update in the thick of ‘bury news’ season, on 3oth January 2016. In today’s piece I take a look at that Operations update and consider whether there was indeed bad news to bury and if so whether my BUY view on San Leon should change.
I previously wrote about San Leon (SLE) here and at that time in September my opinion was this was a BUY, with a preliminary target of 65p. At the start of this week things got interesting, a number of rumours were published by reputable news sources and subsequently confirmed by San Leon. Why then have the shares failed to respond anywhere close to the price?
I’ve been meaning to cover the return of San Leon for a while and today I’ve finally got around to it. Late in August San Leon return from suspension with the announcement of a deal in Nigeria and connected equity placing to the tune of £170m, at 45p a share. The shares today are trading just below the placing price at 44.62p, this gives an Enterprise value of around £195m, so is there plenty of value to be had here?