Royal Dutch Shell plc (RDS-A: Quote, RDSA.L, RDS-B, RDSB.L) Wednesday announced an offer to acquire Cove Energy plc (COV.L, CNVGF.PK) for 195 pence per share in cash or a total value of approximately 992.4 million pounds ($1.56 billion). Cove Energy's Board anticipates recommending the proposal as and when Shell makes it firm.
Such a firm offer by Shell, however, is contingent upon the written consent of the Republic of Mozambique's Minister of Mineral Resources, as spelled out in Cove Energy's Exploration and Production Concession Contract regulating its 8.5 percent participating interest in the Mozambique Rovuma Offshore Area 1 block.
The present offer comes in the wake of Cove Energy's decision of January 5, 2012 seeking potential buyers for the company, and offers a 73.3 percent premium to the closing price of a Cove Energy share on January 4, 2012.
The acquisition is seen as heralding Shell's foray into hydrocarbon provinces located in Mozambique, and add to its East African interests, which currently are restricted to Tanzania. Also of value are potential new LNG discoveries off the coast of Mozambique. The Rovuma offshore basin, according to a Cove Energy estimate, may potentially contain in excess of 30 trillion cubic feet of natural gas reserves as well as 6 LNG trains.
On February 21, Cove Energy announced the divestment of its interest in the Mnazi Bay Concession in Tanzania to Wentworth Resources Ltd. (WRL.L) in a transaction that also saw the termination of a 4.95 percent royalty from the Rovuma block, thus increasing Cove Energy's profit share from the Mozambique resource.
Shell made the offer through its indirect subsidiary, Shell Exploration and Production, XL, BV.
Cove Energy shares are currently trading up by 25.57 percent, or 39.50 pence, at 194.00 pence per share on the AIM platform of the London Stock Exchange.
At present, RDSB.L is down 0.24 percent, or 5.50 pence, at 2,328.00 pence per share on the LSE. At close on Tuesday, RDSA.L traded at 2.303.50 pence per share on the London Stock Exchange.
by RTT Staff Writer
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