Shell to buy Cove Energy for $1.6 billion

22 February 2012
By Rachael Fergusson
Mobile version
Share |
Shell filling station sign showing prices

A Shell filling station

Shell has made an agreed £992.4 million ($1.6 billion) bid for Cove Energy, offering a full price to open up a new gas frontier for the Anglo-Dutch oil major in East Africa.

Shell has offered 195 pence per share in cash, which Cove's directors said on Wednesday they would recommend to shareholders.

On Tuesday, Cove's shares closed at 154.5 pence, and analysts at Citigroup said the "valuation looks stretched" in a research note.

The price is an over 70 per cent premium to Cove's closing share price on January 4, when Cove announced plans to sell, although investors were already betting on a bid at that point.

Cove's main asset is an 8.5 per cent stake in the Rovuma Offshore Area 1, in Mozambique, where operator Anadarko has found over 30 trillion cubic feet of natural gas.

Nearby, Italy's Eni has also made major gas finds while, north of the maritime border, Norway's Statoil has made a find in Tanzanian waters.

Shell is the industry leader in freezing natural gas into liquefied natural gas (LNG) for export in tankers around the world, and so a presence in what is expected to emerge as one of the world's major LNG provinces is a logical step.

However, some bankers had questioned whether Cove's stake alone would make sense for an oil major like Shell. Big oil groups like to have material stakes of over 25 per cent in projects.

In addition to Anadarko, Japan's Mitsui and Indian groups Bharat Petroleum and Videocon own minority stakes in the Rovuma license, and the values of these interests could now be marked up.

Cove also has interests in Tanzania and Kenya.

Morgan Stanley advised Shell on the bid, while Standard Chartered advised Cove.

Latest Issue

E&T cover image 1607

"As the dust settles after the referendum result, we consider what happens next. We also look forward to an international summer of sport."

E&T jobs

  • Digital Forensic Specialist (Audio)

    Met Police
    • London
    • Circa £37,305 plus £3,406 location allowance

    You’ll contribute to a wide range of research and development activities.

    • Recruiter: Met Police

    Apply for this job

  • MetOp-SG Receiver Project Manager

    Science and Technology Facilities Council (STFC)
    • STFC Rutherford Appleton Laboratory, Harwell, Oxfordshire
    • £37,213 - £50,926 (depending on experience)

    Project Manager to oversee the development, production and test of spaceflight components and integrated receiver systems

    • Recruiter: Science and Technology Facilities Council (STFC)

    Apply for this job

  • Systems Engineer

    Reaction Engines Ltd
    • Abingdon, Oxfordshire
    • Competitive + Benefits

    Perform general systems engineering tasks as necessary with specific focus on electronic systems and instrumentation.

    • Recruiter: Reaction Engines Ltd

    Apply for this job

  • Production Manager

    Reaction Engines Ltd
    • Abingdon, Oxfordshire
    • Competitive + Benefits

    An amazing opportunity to plan, direct and coordinate all manufacturing operations and activities in line with company strategy and business plan.

    • Recruiter: Reaction Engines Ltd

    Apply for this job

  • Navigation Sensors Principle Engineer

    MBDA
    • Stevenage
    • Competitive Salary & Benefits

    What?s the opportunity? An exciting opportunity has arisen in a rapidly evolving international team with increasing capabilities.  The Navigation Sensors Group is responsible for the...

    • Recruiter: MBDA

    Apply for this job

  • Technology Manager - External Communications

    BAE Systems
    • Frimley, England, Surrey
    • Negotiable

    Technology Manager - External Communications Would you like Lead the technical delivery of the External Communications System (ECS) capability sustainment & evolution projects within the common ECS (cECS) Baseline Design Management (BDM) programme? Th

    • Recruiter: BAE Systems

    Apply for this job

  • Graduate Process Engineer

    EFFECT Photonics
    • Brixham, Devon
    • £20,000 to £25,000

    Join our exciting journey to deliver new standards in the availability of data bandwidth.

    • Recruiter: EFFECT Photonics

    Apply for this job

  • Senior Principal Materials Engineer

    MBDA
    • Stevenage
    • Competitive salary & benefits

    What?s the opportunity? A fantastic opportunity has arisen for an experienced materials engineer/scientist specialising in non-metallic materials and processing. You will be given responsibility for...

    • Recruiter: MBDA

    Apply for this job

  • Postdoctoral Research Associate

    The University of Liverpool
    • Liverpool, Merseyside
    • £32,600 - £37,768 pa

    Applications are invited for a Postdoctoral Research Associate in a brand new area of communications.

    • Recruiter: The University of Liverpool

    Apply for this job

  • Test Engineering Opportunities

    HMGCC
    • Hanslope Park, Milton Keynes
    • Salary offered will depend on skills and experience

    Push incredible innovations beyond their limits. Opportunities for Software, Hardware, EMC, Test and Inspection Engineers!

    • Recruiter: HMGCC

    Apply for this job

More jobs ▶

Subscribe

Choose the way you would like to access the latest news and developments in your field.

Subscribe to E&T