A Battle over Mozambique's Gas

abarrelfullabarrelfull wrote on 27 Feb 2012 08:16
Tags: lng mozambique pttep shell

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Mozambique is a country with no history of oil and gas industry, either upstream or downstream. However, recent discoveries are starting to put the country on the map as far as the industry goes. Large reserves of gas have been found and the future looks likely to bring not one, but two LNG projects.

Now a small share of one of these projects is being fought over. Cove Energy is a small AIM listed company that has acquired interest in two Mozambique concessions; a 10% net interest in the Onshore Rovuma concession, and 8.5% net interest in Rovuma Basin Offshore Area One.

First Shell made an offer:

  • Proposed Offer of 195 pence in cash for each Cove share.*
    • The Proposed Offer values the entire issued and to be issued share capital of Cove at approximately £992.4 million and would represent a premium of:
    • 73.3 per cent. to the closing price of 112.5 pence per Cove share as of 4 January 2012, the last business day prior to Cove's announcement of the sale process for the company; and
    • 28.5 per cent. to the average closing price of 151.75 pence per Cove share over the five business days ending on 21 February 2012, the last business day prior to the date of this announcement.

Soon after, PTTEP, the Thai E&P company made a counter offer:

  • PTTEP proposed the terms of a possible cash offer to acquire all the issued and to be issued share capital of Cove Energy Plc. for 220 pence* for each Cove share (the “Proposed Offer”). The Proposed Offer values the entire issued and to be issued share capital of Cove at approximately 1,119.6 million Pound Sterling (GBP).

All this for a company with no production and whose assets are in countries not known for their hydrocarbons. Cove's crown jewels are The Rovuma Project, which is a world class gas discovery and is estimated to have resources of up to 30 trillion cubic feet (“TCF”)

Mozambique looks like a country that we are going to be reading more about in the coming years, if two companies are bidding a billion pounds for just 8.5% of one of two major projects. Given the suitability of the location for supplying Asia with LNG, I wouldn't be surprised if we don't see more Asian gas giants looking for a piece of the action

See Mozambique Oil and Gas Profile for more information on this exciting new player in the world of Oil & Gas.

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