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Shell aims to buy Cove for US$ 1.8 billion

Oilfield Technology,


In a recent statement, Shell has announced that it has agreed to purchase Cove Energy for US$ 1.8 billion in order to access East Africa’s vast, and largely untapped gas reserves.

Shell is not the only company bidding to take over Cove Energy, PTTEP has also made an offer. Shell chose to match PTTEP’s bid, rather than beat it, reportedly betting that its expertise would help win over shareholders. In a sign that things might be moving in Shell’s favour, Cove’s directors recommended Shell’s offer over PTTEP’s.

The Thai company released a statement, saying that, “PTTEP is currently considering its options and will make a further announcement as and when appropriate.”

The interest of these two companies and the possibility of a bidding war has some analysts predicting that Cove’s shares are likely to “trade at a slight premium on the hope that PTTEP will trump Shell.”

Although an agreement between Shell and Cove has been reached, competing offers from other companies can still be made. However, the deal includes a break clause that would see Cove paying £11.1 million if it decides to go with another bid.

Shell released the following statement, “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.”

 

Adapted from various sources by David Bizley

Read the article online at: https://www.oilfieldtechnology.com/exploration/24042012/shell_agrees_to_buy_cove_energy/

 

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