Operational and Corporate Update

Salamander Energy plc

4 th Floor, 25 Great Pulteney Street, London, W1F 9LT

Telephone: - 020 7432 2680    Fax: - 020 7692 5524

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM, ANY RESTRICTED JURISDICTIONS OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

14 January 2015

Salamander Energy plc

("Salamander" or the "Group")

Operational and Corporate Update

Salamander Energy plc issues the following operational and corporate update that includes unaudited information and may be subject to further review.

Highlights

·     2014 average production of 14,200 boepd

·     Bualuang field and the Sinphuhorm field both produced record high annual rates

·     Kerendan Gas Processing Facility is nearing completion

·     Renegotiations on the Kerendan gas sales agreement are expected to complete shortly with significantly more favourable terms

·     Net debt as at 31 December 2014 of US$380 million with cash and funds of US$118 million

·     Scheme Document in relation to the offer by Ophir Energy plc to be posted today; shareholders of Salamander and Ophir to vote on 6    
      February 2015; the Scheme expected to become effective 2 March 2015

·     Intention to terminate the sale of an effective 40% interest in the Greater Bualuang Area with mutual agreement by SONA, satisfying a
      condition of t
he Ophir Offer

Chief Executive, James Menzies, commented:

" We are delighted to report that production has been strong in the second half of the year following the completion of the latest phase of Bualuang development. Measures taken to reduce Bualuang operating costs have been implemented and negotiations are underway on the Kerendan Gas Sales Agreement which we expect to result in significantly more favourable terms. In addition, we have today released documentation with regards to the offer from Ophir Energy plc which we expect will complete this quarter."

Asset Overview

Thailand

Having drilled and completed a sequence of wells in the T4, T2 and T5 reservoirs, including some dual-lateral wells, production from the Bualuang field during the second half of the year averaged 15,100 bopd, exceeding management expectations. The full year average production for Bualuang of 12,500 bopd is the highest annual rate in the history of the field. Production averaged 9,900 bopd in the first half of the year when the field had to be shut in for six weeks. Enhancing the cash flow from these volumes, an infrastructure upgrade was completed in August with the installation of the Suksan Salamander Floating Storage and Offtake Vessel ("FSO"). These upgrades have significantly reduced costs, with Salamander on track to deliver the targeted $25 million per annum reduction in operating costs, and extended the field's operating life.

Salamander continues to collect and analyse new well data from the most recent drilling campaign associated with the Bravo Well Head Platform. Bualuang's strong second half performance is being used to review the field's further development potential including options for the third platform, Charlie, which will enable the development and commercialisation of additional resources.

In Northeast Thailand, robust gas demand continued to drive strong production growth from the Sinphuhorm field, with output in 2014 setting a record at 105 MMscfd (c.1,700 boepd net to Salamander).  Elsewhere in Northeast Thailand, a FEED study for the Dong Mun gas field development is progressing and commercial discussions are underway with candidate buyers of the gas.

Indonesia

Salamander's Kerendan Gas Processing Facility ("KGPF") is nearing completion, though a few weeks behind schedule due to very dry conditions making the logistics of river-borne transportation difficult. The wells are ready to produce and the pipelines connecting the well pad to KGPF and KGPF to the PT PLN (Persero)("PLN") power plant are in the final stages of installation.

PLN's power plant and transmission lines have progressed over the year but PLN has recently amended its schedule to mid-2015 readiness citing delays with importation of equipment and the difficult logistics of the Kerendan site. The delay is being factored into the economic assessments underpinning negotiations of an increased gas price in the Kerendan gas sales agreement ("GSA"). Management believe that these negotiations will complete during the first quarter resulting in a gas price substantially higher than the existing GSA and sufficiently high to at least preserve Salamander's project economics.   

The Indonesian upstream regulator, SKKMigas, has recommended the approval of the Plan of Development for the Tutung gas field in the Bontang PSC. Formal approval is now awaited from the Ministry of Energy.

Corporate

At 31 December 2014 net debt had fallen to $380 million and total cash and funds equalled $118 million. The Group's investment programme across its predominantly operated portfolio is largely discretionary, and capex to which the Group is currently committed in 2015 totals circa $40 million.

As announced at the time of Salamander's interim results in August 2014, the Group has hedged 1,200 bopd for calendar year 2015 at an average price of $103.30/bbl.

Offer from Ophir Energy plc

On 24 November 2014, Salamander and Ophir Energy plc ("Ophir") announced they had reached agreement on the terms of a recommended acquisition to be made by Ophir for the entire issued and to be issued share capital of Salamander (the "Ophir Offer"). Today, Salamander announced that the circular to shareholders in connection with the Ophir Offer (the "Scheme Document") is being published together with the associated Forms of Proxy. The Court Meeting and the General Meeting are scheduled to take place on 6 February 2015. Full details are contained in the Scheme Document. Ophir's Shareholder Circular and Prospectus in connection with the Offer are expected to be issued shortly with the Ophir General Meeting due to be convened for 6 February 2015. The Scheme is expected to become effective on 2 March 2015.

SONA Transaction

In light of the recommendation of the Salamander Directors to vote in favour of the Ophir Offer, Salamander and Sona Petroleum Berhad ("SONA") intend to terminate by mutual agreement the previously announced Sale and Purchase Agreement in respect of an effective 40% interest in the Greater Bualuang Area. Once terminated with the consent of Ophir, such termination will satisfy the SONA condition to the Ophir Offer. Salamander notes that in SONA's press release to its shareholders, SONA states that it remains interested in acquiring a stake in the Greater Bualuang Area and intends to approach either Ophir or Salamander regarding a revised transaction post their respective shareholder meetings on 6 February 2015.

Enquiries:

Salamander Energy                                                                                          + 44 (0)20 7432 2680

James Menzies, Chief Executive Officer

Jonathan Copus, Chief Financial Officer

Goldman Sachs                                                                                                 + 44 (0)20 7774 1000

(Lead Financial Adviser to Salamander)

Andrew Fry, Managing Director

Nimesh Khiroya, Managing Director

Jefferies Hoare Govett                                                                                  + 44 (0)20 7029 8000

(Corporate Broker to Salamander)

Chris Zeal

Graham Hertrich

Macquarie Capital (Europe) Limited                                                                 + 44 (0)20 3037 2000

( Rule 3 Adviser to Salamander )

Jon Fitzpatrick, Senior Managing Director

Andrew Jones, Associate Director

Tulchan Communications                                                                                 +44 (0)20 7353 4200

( Communications Adviser to Salamander )

Martin Pengelley

Stephen Malthouse

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities or any vote for approval in any jurisdiction pursuant to the Offer or otherwise. The Offer will be made solely pursuant to the terms of the Scheme Document which contains the full terms and conditions of the Offer, including details of how to vote in respect of the Offer. Any decision in respect of, or other response to, the Offer should be made only on the basis of the information contained in the Scheme Document and the Ophir Prospectus.

This announcement has been prepared for the purposes of complying with English law and the City Code on Takeovers and Mergers (the "Code") and 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 of jurisdictions outside the United Kingdom.

The distribution of this announcement in jurisdictions outside the United Kingdom 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 law of any such jurisdiction.

Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for Salamander and no one else in connection with the Offer and the other matters referred to in this announcement, and will not be responsible to anyone other than Salamander for providing the protections afforded to clients of Goldman Sachs International or for providing advice in relation to the Offer or in connection with the other matters referred to in this announcement.

Jefferies Hoare Govett, a division of Jefferies International Limited ("Jefferies"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Salamander and no one else in connection with the Offer and the other matters referred to in this announcement, and will not be responsible to anyone other than Salamander for providing the protections afforded to clients of Jefferies, nor for providing advice in relation to the Offer or in connection with the other matters referred to in this announcement.

Macquarie Capital (Europe) Limited, which is authorised and regulated by the Financial Conduct Authority in the United Kingdom, is acting exclusively for Salamander and no one else in connection with the Offer and the other matters referred to in this announcement, and will not be responsible to anyone other than Salamander for providing the protections afforded to clients of Macquarie Capital (Europe) Limited or for providing advice in relation to the Offer or in connection with the other matters referred to in this announcement.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website

A copy of this announcement will be made available at www.salamander-energy.com no later than 12:00 noon (London time) on 15 January 2015 (being the business day following the date of this announcement) in accordance with Rule 30.4 of the Code. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Forward looking statements

Some of the statements in this announcement include forward-looking statements which reflect the Salamander group's (the "Group") or, as applicable, the directors' of Salamander (the "Directors") current views with respect to financial performance, business strategy, plans and objectives of management for future operations (including development plans relating to the Group's exploration and production). These statements include forward-looking statements both with respect to the Group and the sectors and industries in which the Group operates. Statements which include the words "expects", "intends", "plans", "believes", "projects", "anticipates", "will", "targets", "aims", "may", "would", "could", "continue", their negative variations and similar statements of a future or forward-looking nature identify forward-looking statements for the purposes of the U.S. federal securities laws or otherwise. All forward-looking statements address matters that involve risks and uncertainties many of which are beyond the control of the Group. Accordingly, there are or will be important factors that could cause the Group's actual results to differ materially from those indicated in these statements. These factors include but are not limited to the following factors:  declines in oil or gas prices; energy demand in South-East Asia;  accuracy of the estimates of the Group's reserves and resources;  the Group's ability to implement successfully any of its business strategies; the Group's ability to fund its future operations and capital needs through borrowing or otherwise; outcome of the exploration activities; increased operating costs; the Group's ability to obtain necessary regulatory approvals; competition in the markets where the Group operates; changes in tax rates; changes in accounting standards or practices; inflation and fluctuations in exchange rates; the impact of general business and global economic conditions; changes in political, economic, legal or social conditions in Thailand, Indonesia, or Laos; changes in the policies of the governments of Thailand, Indonesia, or Laos; and the Group's success in identifying other risks relating to its business and managing the risks relating to the aforementioned factors.

Any forward-looking statements in this announcement reflect the Group's or, as applicable, the Directors' current views with respect to future events and are subject to these and other risks, uncertainties and assumptions relating to the Group's business, results of operations and growth strategy. Each forward-looking statement speaks only as of the date of this announcement. Subject to any obligations under applicable law, rules and regulations, neither Salamander nor the Directors undertakes any obligation to publicly update or review any forward-looking statement or other information contained in this announcement whether as a result of new information, future developments or otherwise. All subsequent written and oral forward-looking statements attributable to the Group or individuals acting on behalf of the Group are expressly qualified in their entirety by this paragraph.

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