Shell launches $1.8bn Cove takeover

Anglo-Dutch supermajor Shell announced it had reached an agreement with Cove Energy on the terms of a recommended cash offer which values the latter at £1.12 billion ($1.8 billion).

Shell said it would offer 220 pence per share for the entire issued and to be issued share capital of Cove, which is 12.8% higher than the 195 pence per share offer it proposed earlier this year that valued the company at £992.4 million.

The revised offer price represents a 95.6% premium to the closing price 4 January share price when Cove first announced the company could be sold.

Shell said the directors of Cove considered the offer to be “fair and reasonable” and intended to unanimously recommend shareholders accept the offer.

Cove’s main asset is an 8.5% stake in the Rovuma Offshore Area 1, in Mozambique, where another operator Anadarko estimates recoverable reserves could top 30 trillion cubic feet of natural gas.

It also holds a 10% stake in the Rovuma Onshore Area in Mozambique, as well as 10%-25% interests in seven deep-water blocks in Kenya.

“The proposed acquisition of Cove’s portfolio would mark Shell’s entry into exciting new hydrocarbon provinces, in Mozambique and Kenya, with significant potential for new [liquefied natural gas] from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa,” Shell said in Tuesday’s statement.

“Adding Cove’s assets to Shell’s portfolio would strengthen and further diversify Shell’s existing global LNG portfolio of production and development projects.”

Shell’s offer is conditional on approval from the government of Mozambique for the change of control of Cove Mozambique and the Rovuma Area 1 interest.

Its offer for Cove matches that of Thailand’s state oil company PTTEP which was tabled just days after Shell made its initial bid.

While the formal sale process of Cove was concluded on Tuesday with the closure of the data room, Shell noted that competing offers for the London-listed independent could still be made.

PTTEP put out a statement on Tuesday in response to Shell’s firm offer saying it would consider its options and make a further announcement “as and when appropriate”, adding there could be no certainty it would make another offer for Cove.

Source: Upstream Online


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