PTT Exploration Offers $1.7 Billion for Cove Energy, Topping Shell’s Offer

PTT Exploration & Production Pcl (PTTEP), Thailand’s only listed oil and gas company, offered 1.1 billion pounds ($1.7 billion) for Cove Energy Plc, trumping an earlier bid for the African explorer by Royal Dutch Shell Plc. (RDSA)

PTT Exploration offered 220 pence for each Cove share, 13 percent more than Shell’s proposal, according to a statement today. Cove surged 21 percent to 235 pence in London trading, indicating investors are betting on further bids.

“We think Shell is the Mozambique government’s preferred bidder and will likely raise its offer to 240 pence” a share, said Stuart Joyner, an analyst at Investec Securities in London.

Cove holds 8.5 percent of a block off Mozambique where Anadarko Petroleum Corp. (APC) has found as much as 30 trillion cubic feet of gas. That would be enough to justify production of liquefied natural gas to supply Asian markets. Cove (COV) said in a separate statement the formal sale process for the company will continue and it reserves the right to reject any approach.

Earlier this week, Shell bid $1.6 billion to buy Cove to gain a foothold in Mozambique. Jon French, a London-based spokesman for Shell, declined to comment today when asked whether the company would be prepared to raise its offer.

PTT Exploration’s bid values Cove at $4.6 per barrel of oil equivalent of resource and “is already hot in my view,” said Jason Kenney, an analyst at Banco Santander SA in Edinburgh. “I’d be surprised if a Western oil major would pay above this level as it looks expensive. Never say never though.”

Afren, Ophir

After the Thai offer, other African explorers also gained, with Ophir Energy Plc up 14 percent and Afren Plc (AFR) 4.5 percent.

East Africa’s fields offer a fresh source of gas supply for Asia, where China and India are the world’s fastest-growing major economies. Eni SpA (ENI) of Italy, BG Group Plc (BG/) of the U.K. and Statoil ASA of Norway also discovered natural gas off Mozambique and Tanzania. Statoil’s Executive Vice President for Exploration Tim Dodson today declined to say whether Norway’s largest oil company would be interested in joining the race for Cove.

Cove has been working with Total SA (FP) and BG to explore off the coast of Kenya. Last year, it joined Cairn Energy Plc (CNE) to bid for exploration licenses off Lebanon.

Standard Chartered Bank is advising Cove, which put itself up for sale last month. UBS AG is advising PTT Exploration.

The transaction depends on approval from the Mozambique government. The Thai government supports PTT Exploration’s bid.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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