Consider the following facts about San Leon Energy (SLE). In December, the Nigeria-based oil and gas producer confirmed it had received an indicative takeover bid of 80p a share from Chinese investor Geron Energy. Since then, three further potential bidders have entered the frame. At the same time, near-60 per cent shareholder Toscafund Asset Management has been picking up any spare stock it can find, and last week appointed boutique investment bank Hannam & Partners to "educate a small number of parties on the key assets and valuation of San Leon".
- Big discount to net asset value
- Four potential bidders
- World-class OML 18 asset
- Major shareholder seeking an exit
- Country risk
- Payment issues
But while this flurry of activity all points to a sale, shares in the Aim-traded company have spent all of 2017 trading below 60p. Now, at 49p, the share price not only represents 60 per cent upside to the indicative Geron proposal, but is also half the net-asset-based valuation broker SP Angel has ascribed. Whether or not a definitive bid materialises, we think investors have a value opportunity on their hands.