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Although it has yet to come to a final decision on whether to table a counter offer, it was said that it is cautiously watching the situation in light of the recent fall in oil prices.

On 24 November, Ophir made a firm offer under which Salamander shareholders will receive 0.5719 new Ophir shares.

Despite the fall in oil prices, it is understood that there are no indications at this stage that Ophir intends to walk away from the Salamander deal. It would be hard pushed to do so now that it has made a firm offer, it was added.

Now that there is a firm bid for Salamander, Cepsa can launch a counter bid. A 18 November announcement from Cepsa, stating that it did not intend to make an offer, meant that it could not return with a bid under Rule 2.8 of the UK’s Takeover Code for six months, or three months at the target’s invitation.

The Cepsa consortium had previously proposed a 121p per share cash offer, plus a contingent value right of up to 24p per share in cash. One of the reasons it reportedly withdrew the offer was because it was not content with Salamander making public the details of the proposal. The Salamander board's reluctance to engage Cepsa was also believed to have been a contributing factor to the withdrawal.

Following OPEC’s decision not to cut production last week, the price of oil tumbled to a four-year low, causing oil and gas-related stock to fall across the board. West Texas Intermediate crude for January delivery was trading at USD 66.87 on Tuesday. At the time Salamander conducted an auction in May, futures were hovering above USD 110 a barrel.

The steep dive in oil prices also was a factor for another oil and gas group Dragon Oil [LON:DGO] withdrawing its bid for Petroceltic [LON:PCI], citing unfavourable market conditions.

If Cepsa were to return with a counter offer, it would have to overcome irrevocable undertakings and letters of intent in favour of the Ophir offer from Salamander management and some of its shareholders. Given the fall in the implied offer consideration, however, the undertakings are not seen as an insurmountable hurdle to overcome, it was noted.

Salamander’s share price has fallen from just under 90p per share last week – the day of OPEC’s meeting – to 76.75p on Tuesday. Based on Ophir’s share price today the implied offer price is GBP 0.82 per share.

Salamander directors, who together own 2.02% of the company, have given irrevocable undertakings to vote in favour of the transaction. SailingStone Capital Partners and Artemis Investment Management, which own 17.7% of Salamander, have also given irrevocable undertakings in favour of the deal subject to the absence of a counter bid that exceeds Ophir’s offer by 10%. Funds controlled by T. Rowe Price, which together accounts for 8.2% of shares, have given non-binding letters of intent in favour of the Ophir offer.

The deal is conditional on no material adverse change that is reasonably expected to result in “adverse change or deterioration in the business, assets, value, financial or trading position, profits, prospects or operational performance” of Salamander.

When questioned on a 21 November conference call about whether Ophir would seek to renegotiate the terms if the oil price continued to fall, the group’s CEO Nicholas Cooper said that he did not expect to revise terms. Even if the oil price fell a lot further “the break-even oil price on the assets we're looking to acquire is a long, long way below where we're currently seeing trading” so Ophir was not particularly bothered, he said.

Salamander, Ophir and Cepsa declined to comment.

Local reports said that executives from Sona Petroleum [KLSE:SONA] would meet with Salamander management to discuss their options in light of the Ophir bid, which is conditional on the Sona deal being voted down.