Thailand’s PTT Exploration has gained ground in the bid for Mozambique-focused explorer Cove Energy by offering £1.22 billion pounds ($3 billion), highlighting international interest in East African gas finds. The bid trounces Shell initial bid putting PTT in pole position for the oil production outfit’s assets.
Cove management said on Wednesday, hours ahead of a deadline for investors to accept Shell’s bid, it now backed PTT’s 240 pence (38 cents) per share bid, after earlier supporting Shell’s 220 pence (35 cents).
Sources close to the bidding process said around 70 per cent of Cove shares were in the hands of risk arbitrage hedge funds, whose strategy sway the way of the highest bidder in the takeover situation. The investors will likely be waiting for a counterbid from Shell.
Cove has an 8.5 per cent stake in massive gas finds offshore northern Mozambique. Project leader Anadarko Petroleum plans to build large plants to freeze the gas to liquefied natural gas for export in ships.
The Mozambican government had earlier consented to Shell’s bid, favouring the oil giant’s expertise in developing gas fields. According to one dealer, his could be a stumbling block for PTT as Maputo may prefer an established LNG operator like Shell compared to other partners in the Anadarko led consortium, which have no experience of launching an LNG plant.
PTT sees Cove as an opportunity to secure energy resources to help power Thailand’s economy. Shell, the leading Western oil group in the LNG business, hoped Cove would be a springboard to a major presence in East Africa.
The East African region is set to become one of the largest gas exporters in the world, executives operating in the region believe, after Anadarko, Eni, Statoil, Tullow Oil, BG Group and others announced major discoveries across the horn of Africa.
Shell declined comment on PTT’s bid.
Whoever buys Cove will have to pay a capital gains tax to Maputo, which Shell has estimated at around $200 million, pushing the value of PTT’s bid above $2 billion, as the company’s shares closed at 224 pence on Tuesday.
