Royal Dutch Shell and the board of Cove Energy have agreed on Shell's offer of $1.8 billion for the London-listed company whose main asset is a stake in the Rovuma Area 1 natural gas field offshore Mozambique and its LNG project.
"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 LNG from recent gas discoveries offshore Mozambique," Shell said after Cove's directors accepted its bid.
"Cove shareholders who accept the Offer will be entitled to receive 220 pence in cash for each Cove Share, valuing the company at 1.12 billion pounds ($1.8Bln)," Shell added.
The Cove Board said: "Shell represents an excellent partner for all the stakeholders in the Rovuma LNG project given its extensive project development, operating and marketing experience in the entire LNG value chain.
"We are confident, following our discussions with the Government of Mozambique, that timely consent for Shell's offer will be forthcoming," it added.
Cove put itself up for sale in January, with interested bidders attracted by its 8.5 percent stake in the feed-gas resources of a huge LNG project under development in Mozambique comprising six liquefaction Trains, and led by Anadarko of the US.
Analysts said Shell had not yet won the bidding for Cove as Thailand's state energy company PTT could still come up with an improved offer, though interest from Indian companies seems to have faded.
"It will be interesting to see whether PTT now trumps Shell's offer, which only matches PTT's original offer, although Shell's latest offer is recommended by the board of Cove," said Vikki Kosmalska of London financial consultants Smithfield.
"An Indian consortium was also at one point considering entering the contest for Cove, but they seem to have gone quiet.
"I also note that the Cove price has been trading above the level of the Shell offer which indicates that investors are expecting a higher offer," said Kosmalska.
