2009-08-15-2008-12-01-2008-12-01

Withdrew offer to acquire company.

Salamander Energy Plc, London, (London: SMDR) has withdrawn its offer to acquire Serica Energy Plc, London, (London Aim: SQZ) in an unsolicited bid valued at approximately US$181.6 million "in light of the continued uncertainty in the capital markets and volatility in the price of crude oil," the company reported. Salamander chief executive James Menzies says, "The board continues to believe in the strong strategic logic for consolidating Serica's Asian portfolio within a larger entity. We consider that the proposed offer represented a fair relative valuation of the two companies and that the share exchange terms proposed provided both sets of shareholders with exposure to current cash flow, production growth and significant upside through a broad exploration portfolio. "However, following the rejection of our proposed offer by Serica's board and against the backdrop of deteriorating equity, debt and commodity markets, we have elected not to proceed and have decided to withdraw our proposed offer." Salamander had offered to exchange one Salamander share valued at approximately US$3.08 each per three Serica shares. Serica has approximately 176.5 million shares outstanding. Serica rejected the offer, claiming Salamander's proposal "failed to reflect both the underlying value and potential which exists in Serica" and is "opportunistic and unwelcome." Serica chairman Tony Craven Walker says, "We are glad that Salamander has decided not to proceed with its hostile all-paper approach as this now allows both companies to get back to the business of growing their assets for the benefit of shareholders. It is the view of the Serica board that Salamander's proposed offer significantly undervalued Serica's core assets, put no value on its growth prospects, paid no premium for change of control and would have greatly diluted Serica shareholders' exposure to its material upside potential. As a result the proposed offer did not represent fair relative valuation of the two companies and was rejected unanimously by the Serica board. Walker says the offer came just at a time when Serica is commencing a nine-month drilling program, which has the potential to totally transform the company. "Serica's strategy has been to use its expertise to secure the rights to large undrilled gas prospects including particularly those which it has identified in U.K. and Irish waters, an area in which Salamander has no expertise and which lies well outside Salamander's area of focus which it states as being Southeast Asia," he says. "With an increasing amount of sector consolidation occurring, we remain fully mindful of opportunities for acquisitions that present themselves at times such as these. However, any transaction must take full recognition of strategic intent, the balance of assets and the additional value that can be generated for shareholders." Menzies says the withdrawal does not reflect any financial weakness on Salamander's part. "Salamander has never been in a stronger position, both financially and operationally. The company has developed an extensive 2009-2010 development, appraisal and exploration drilling campaign and remains fully funded to execute this exciting program. Group production is expected to increase by 60% to 16,000 barrels of oil equivalent per day in 2009, driving associated increases in cash generation." Serica's assets include assets offshore the U.K., Ireland, Norway, Indonesia and Vietnam and onshore Spain. Proved and probable reserves as of Dec. 31 were 19.3 million barrels of oil equivalent. Pro forma, Salamander would have had an increased Asian portfolio, including a large consolidated position in the Kambuna gas-condensate field offshore Indonesia. Production would be approximately 19,000 barrels of oil equivalent. Proved and probable reserves would be more than 75 million barrels equivalent. JPMorgan Cazenove Ltd. was financial advisor to Serica.