Shell to buy UK’s Cove Energy for $1.8 billion

Royal Dutch Shell Plc, Europe's largest oil company, has agreed to buy Cove Energy Plc after raising its bid to £1.12 billion ($1.8 billion) in cash, securing a stake in gas fields discovered off Mozambique.

Shell, based in The Hague, said in a statement today that it had increased its initial $1.6 billion approach to match a bid made by Thailand's state-controlled oil and gas group PTT Exploration & Production Pcl, in February. Shell increased its offer for Cove to 220 pence a share from 195 pence, matching a rival proposal from Thailand's PTT (PTTEP). The board of London-based Cove agreed to the Shell bid.

The African explorer put itself up for sale in January after reporting one of the world's largest natural gas discoveries in a decade off the coast of Mozambique. It has an 8.5 per cent interest the Rovuma Area 1 natural-gas block that may hold 30 trillion cu ft of the fuel. The gas will supply a liquefied natural gas plant that can ship fuel across the Indian Ocean to Asian markets.

''Shell represents an excellent partner for all the stakeholders,'' Cove executive chairman Michael Blaha said in the statement. The oil company has ''extensive project development, operating and marketing experience in the entire liquefied natural gas value chain''.

Cove climbed as much as 5.5 per cent and traded at 225.5 pence at 12:21 p.m. in London. The stock has almost doubled this year.
Today's bid represents a 42 per cent premium to Cove's share price before Shell made its first offer. The seller is being advised by Standard Chartered.

''PTT is currently considering its options and will make a further announcement as and when appropriate,'' the company said separately, adding that there is no certainty it will make another offer.