Offer Update: Withdrawal of Proposed Offer by Salamander Energy plc ("Salamander") for Serica Energy plc ("Serica")



    
    /NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR PART, IN OR
    INTO OR FROM AUSTRALIA, JAPAN OR THE UNITED STATES OF AMERICA OR ANY
    OTHER RESTRICTED JURISDICTION/
    

    LONDON, Oct. 21 /CNW/ - On 29 September 2008, Salamander announced a
Proposed Offer for Serica under Rule 2.4 of the City Code on Takeovers and
Mergers (the "Takeover Code").
    The Board of Salamander has decided, in light of the continued
uncertainty in the capital markets and volatility in the price of crude oil,
to withdraw the Proposed Offer.
    Commenting today, James Menzies, Chief Executive of Salamander, said:
    "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 has never been in a stronger position, both financially and
operationally. The company has developed an extensive 2009/10 development,
appraisal and exploration drilling campaign and remains fully funded to
execute this exciting programme. Group production is expected to increase by
60% to 16,000 boepd in 2009, driving associated increases in cash generation.
    Yesterday we announced the award of the South East Sangatta PSC in
Indonesia, demonstrating our continued ability to expand the portfolio
organically.
    We look forward to an active period with the drill-bit as we commence the
next phase of a drilling programme that will see at least 10 exploration wells
in 2009 exposing investors to circa 200 MMbbls of net unrisked prospective
resources."
    For the purposes of Rule 2.8 of the Takeover Code, Salamander reserves
the right to announce an offer or possible offer or make or participate in an
offer or possible offer for Serica and/or take any other action which would
otherwise be restricted under Rule 2.8 of the Takeover Code within the six
months following the date of this announcement in the event that:

    
    (i)   an agreement or recommendation from the Board of Serica is
          forthcoming;

    (ii)  there is an announcement by a third party of a firm intention to
          make an offer for Serica;

    (iii) Serica announces a "whitewash" proposal for the purposes of Rule 9
          of the Takeover Code or a reverse takeover; or

    (iv)  there is a material change in circumstances.
    

    THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER TO SELL, OR AN INVITATION
TO SUBSCRIBE FOR OR PURCHASE, ANY SECURITIES OR THE SOLICITATION OF ANY
APPROVAL IN ANY JURISDICTION, NOR SHALL THERE BE ANY SALE, ISSUANCE OR
TRANSFER OF THE SECURITIES REFERRED TO IN THIS ANNOUNCEMENT IN ANY
JURISDICTION IN CONTRAVENTION OF APPLICABLE LAW.

    The distribution of this announcement in jurisdictions other than the
United Kingdom and Canada may be restricted by law and therefore persons into
whose possession this announcement comes should inform themselves about, and
observe, such restrictions. Any failure to comply with the restrictions may
constitute a violation of the securities laws of any such jurisdiction.

    This announcement has been prepared for the purposes of complying with
the applicable rules and regulations of the FSA, the London Stock Exchange,
the TSX Venture Exchange, the Takeover Code and Canadian securities
legislation and will be governed by English law and be subject to the
jurisdiction of the courts of England. The information disclosed may not be
the same as that which would have been disclosed if this announcement had been
prepared in accordance with the laws and regulations of any jurisdiction
outside of the United Kingdom.





For further information:

For further information: Enquiries: Salamander Energy plc,
+44(0)20-7960-1580, James Menzies, Chief Executive, Nick Cooper, Chief
Financial Officer, Geoff Callow, Head of Corporate Affairs; Brunswick Group
LLP, +44(0)20-7404-5959, Patrick Handley, Nina Coad, Nina Soon; Oriel
Securities Limited, +44(0)20-7710-7600, Simon Bragg, Natalie Fortescue, David
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