Shell Withdrawal Clears Way for PTT Cove Acquisition

Global major Shell has cleared the way for Thailand's PTT Exploration & Production (PTTEP) to take over Cove Energy after withdrawing from the race to acquire the Irish company.

Cove, which has an 8.5 per cent stake to one of the world's largest gas discoveries, the Area 1 field, was to be placed for auction today between rival bidders Shell and PTTEP. However, yesterday Shell said that it would not be entering the auction, sticking to its earlier offer of 220 pence per share of Cove bring its overall offer on the company to £1.12 billion.

However, following an offer from PTTEP to acquire the stakes for 240 pence per share, the board of Cove says it "strongly recommends" that its shareholders accept the bid. 

"The board of Cove, having already recommended the PTTEP Offer, continues to believe that it is in the best interests of Cove’s shareholders to accept the PTTEP Offer," a statement from the company said today.

Cove decided to sell in January this year following a series of successes in Mozambique. The Area 1 field, in which it holds an 8.5 per cent stake is estimated to have reserves of between  the 24-50 trillion cubic feet. A second field in Mozambique, the Rovuma field in which the company holds a 10 per cent stake, is also highly prospective for gas.