SHELL has made an agreed 992.4 million pounds (US$1.6 billion) bid for Mozambique-focused Cove Energy, offering a full price to open up a new gas frontier for the Anglo-Dutch oil major in East Africa.
The Anglo-Dutch supermajor has offered 195 pence per share in cash, which Cove’s directors said they would recommend to shareholders.
Cove's shares closed at 154.5 pence on Tuesday, and analysts at Citigroup said the “valuation looks stretched” in a research note.
The price is an over 70 per cent premium to Cove's closing share price on January 4, when Cove announced plans to sell, although investors were already betting on a bid at that point.
“Shell already has interests in Tanzania, and the acquisition of Cove would mark Shell's entry into exciting new hydrocarbon provinces in Kenya and Mozambique, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa,” the company said.
Cove’s main asset is an 8.5 per cent stake in the Rovuma Offshore Area-1, in Mozambique, where operator Anadarko has found over 30 tcf of natural gas.
Nearby, Italy's ENI has also made major gas finds while, north of the maritime border, Norway's Statoil has made a find in Tanzanian waters.
In December, Cove, which has interests in Tanzania and Kenya, had opened up a data room to certain parties who had expressed an interest in buying its 8.5pc stake in a LNG project in Mozambique.
Morgan Stanley advised Shell on the bid, while Standard Chartered advised Cove.
Gas News | Mozambique
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