Thailand’s PTT Exploration and Production stands the sole bidder for Irish owned Cove Energy after Royal Dutch Shell pulled out of the race for the oil and gas explorer.
Shell has "decided not to revise its offer of 220 pence in cash for each share of Cove, and not take part in the auction procedure," the Hague-based Shell, Europe’s largest energy producer, said yesterday in a statement.
The 240 pence-a-share proposal from PTTEP, which plans to spend about $20 billion on expansion by 2016 to triple daily output, remains the highest bid, valuing Cove at £1.2 billion (€1.5 billion).
Dublin-based Cove put itself up for sale on January 5th after reporting one of the world’s largest gas discoveries in a decade in Mozambique.
Hundreds of Irish investors are set to share in a multi-million euro payout if the sale to PTTEP goes ahead.
About 10 per cent of Cove’s shareholders are Irish, some of whom may have first bought shares in Cove for as little as 8 pence. They could share more than £112 million should the deal proceed.
PTTEP shares headed for their lowest close in more than two weeks on concern the company may need to raise funds to develop Cove's asset in Mozambique.
"PTTEP will definitely have to sell new shares to fund the acquisition," Naphat Chantaraserekul, an analyst at DBS Vickers Securities (Thailand), said today by phone.
"Cove will also need a large investment over the next few years. This would be a negative for PTTEP in the short term."
Cove slid 14 per cent to 238 pence yesterday in London, the steepest drop since August 4th, as investors withdrew bets on a higher bid after a five-month takeover battle.
Founded in 2003, Coves main asset is an 8.5 per cent stake in the Rovuma Offshore Area 1, in Mozambique, which holds between 15 trillion to 30 trillion cubic feet of recoverable gas. Cove is listed on the London Stock Exchange.
The company’s CEO is Irishman John Craven, a petroleum geologist, and former Petroceltic boss. Its finance director is Irishman Michael Nolan, the former chief executive of AIM listed mining company Minmet.
Additional reporting: Bloomberg
