PTTEP offers 1.1 billion pounds for UK-based Cove Energy

PTTEP’s bid tops an offer by Royal Dutch Shell to pay 992.4 million pounds or 195 pence per share for Cove, which has recently proven a natural gas exploration site in Mozambique.
If PTTEP can secure Cove, it will be the company’s second-largest purchase after it acquired a 40-per-cent stake in Kai Kos Dehseh oil sands project in Canada from Statoil Canada with US$2.28 billion (about Bt69 billion) in late 2010.
President and CEO Anon Sirisaengtaksin said PTTEP had submitted the offer to Cove to pay 220 pence per share or 1.12 billion pounds in total. The offer is just an announcement of its intention to buy Cove – the British firm has so far not agreed to any offers from bidders. There are many processes left before the deal is done.
Anon said the PTTEP proposal was subject to three conditions: a unanimous recommendation from Cove’s board of directors without any conditions; hard irrevocable support from Cove’s board for the offer; and consent from Mozambique’s Minister of Mineral Resources for the exploration and production in the Rovuma project. Cove holds an 8.5-per-cent stake in Rovuma.
PTTEP has submitted its offer to Mozambique’s Mineral Resources Ministry for approval. Cove’s board will consider this and the other offer and recommend one to its shareholders.
Other E&P (exploration and production) players recently named as interested in Cove are Korea National Oil Corp and China National Offshore Oil Corporation. They can still propose offers.
“It is uncertain whether or not we will win the deal, but we have strong intention to develop an oil and gas project in East Africa,” Anon said. “Consent from the Mozambi-que government is the important key factor for the deal.”
“We have explored the opportunities and studied potential projects in East Africa for a while. East Africa has abundant resources of good quality natural gas. One area that can provide world-class natural gas is Mozambique. We’ve been in the E&P industry for more than 30 years and our experience will help Mozambique develop this industry,” Anon said.
Rovuma Area 1, in which Cove holds an 8.5-per-cent stake, is forecast to have 15-30 trillion cubic feet of gas reserves.
Anon said the natural gas in that site was expected to have crude oil reserves as well. PTTEP aimed to develop the site to serve domestic demand and supply to Asian countries. Funds for this would come from the company’s cash flow and loans. PTTEP did not have a plan at present to increase its registered capital for the sake of mobilising funds.
“Our cash is enough for the deal,” he said.
Besides Rovuma Area 1, which is an offshore project, Cove also holds a 10-per-cent stake in the Rovuma onshore area, and a 10- to 25-per-cent interest in seven deepwater offshore blocks in Kenya, but exploration processes in these had not finished yet.