Cove Energy Rises Most in 6 Weeks on Mozambique Tax Decision
Cove Energy Plc (COV), the U.K. oil and gas explorer that offered itself for sale in January, rose the most in six weeks in London trading after the Mozambique government clarified taxes applicable in the event of a deal.
Cove climbed 4.2 percent, the most since Feb. 24, to 219 pence by the close.
The company faces a 12.8 percent tax on capital gains from a potential sale, Cove said today in a regulatory statement. Its main asset is an 8.5 percent interest in a natural-gas block off Mozambique with as much as 30 trillion cubic feet of the fuel.
“The rate is very good and a lot less than the market was expecting,” said Gerry Donnelly, an analyst at FirstEnergy Capital in London. “The country is in the nascent stages of developing what could be the biggest gas find of the past decade. They don’t want to scare away existing players and future investors.”
PTT Exploration & Production Pcl (PTTEP) bid 1.1 billion pounds ($1.8 billion) for Cove in February, topping an offer from Royal Dutch Shell Plc. (RDSA) Cove shares have dropped about 10 percent since Mozambique’s Mineral Resources Minister Esperanca Bias said March 1 that the company would face a tax if it’s sold.
“Discussions with possible offerers are ongoing,” London- based Cove said in the statement. “There can be no certainty that any offer will be made for the company, nor as to the level of any proposal or offer that may be made.”
To contact the reporter on this story: Brian Swint in London at email@example.com