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Shell Goes All In on African Gold Mine

Shell Raises Cove Energy Bid to $1.8 Billion

Written by Brian Hicks
Posted April 24, 2012

Royal Dutch Shell (NYSE: RDS-A) upped the ante this week in the acquisition of Cove Energy (LON: COV), a London-based oil and gas company with primary assets in Africa and off the Mediterranean coast.

Shell increased its offer to $1.8 billion, 12 percent higher than its previous bid of $1.6 billion in late February of this year following Cove's decision to sell in the first few days of 2012 after reporting one of the world's largest gas discoveries in a decade off of Mozambique.

Shell's takeover of Cove Energy would grant Europe's largest oil company access to Cove's 8.5 percent stake in Rovuma Area 1, an LNG gold mine with natural gas reserves of up to 30 trillion cubic feet.

In February, Cove shares jumped a record 26 percent following Shell's original offer of 195 pence per share. Not surprisingly, the attention sparked a renewed interest in African oil; Shares of Ophir Energy and Afren, two other oil and gas companies with operations in Africa, climbed between six and seven percent. Shell's revised bid is 12 percent higher than its previous offering at 220 pence per share.

Analysts contend Shell's takeover is driven by its interest in East African natural gas to expand its LNG agenda. But Shell's not the only one cashing in on the acquisition:

“The board believes that the recommended cash offer from Shell Bidco provides very significant value to Cove shareholders.” – Michael Blaha, Cove Energy's chief executive

That's all for now,


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