Shell in £1bn bid to snap up Cove Energy
ROYAL Dutch Shell yesterday announced a £992.4m bid for Cove Energy as it seeks to expand its footprint in the East African market.
Cove’s main asset is an 8.5 per cent stake in the Rovuma Offshore Area 1 in Mozambique where more than 30 trillion cubic feet of natural gas has already been identified.
Shell has been concentrating on its gas business, which is now almost equal in size to its oil operation. The energy giant has offered 195p per share in cash, which Cove’s management said they would recommend to shareholders.
Cove’s three most senior executives – chief executive John Craven, chairman Michael Blaha and finance director Michael Nolan – are in line for a £31m windfall if they sell their shares after a successful deal.
The firm’s partners on the Rovuma project include Anadarko, Mitsui, Bharat Petroleum, Videocon, and ENH. Sources said it was unlikely that Shell would settle for just 8.5 per cent of Rovuma in the long term and could target buying up a bigger slice.
In the meantime Shell needs to win approval from the Mozambique government for the Cove deal. Cove also has interests in Tanzania and Kenya. Irene Himona, oil analyst at Société Générale, said: “Shell absolutely must be in East Africa.”
Separately, Shell said Malcolm Brinded, its gas exploration and production operations chief outside the Americas, would step down.