Shell Sets Eyes On East Africa Player Cove Energy

To buy company with assets onshore & offshore East Africa in Mozambique, Tanzania & Kenya.

Shell Exploration and Production (XL) BV, a subsidiary of Royal Dutch Shell Plc, The Hague, The Netherlands, (NYSE: RDS.A) has bid to acquire Cove Energy Plc, London, (London Aim: COV) for £992.4 million (US$1.55 billion) in cash.

Shell will offer 195 pence (US$3.06) in cash for each Cove share. The offering represents a 73.3% premium to the closing price of 112.5 pence (US$1.77) per Cove share as of Jan. 4, the last business day prior to Cove's announcement of the sale process for the company; and 28.5% to the average closing price of 151.75 pence (US$2.38) per Cove share over the five business days ending Feb. 21.

Cove has assets onshore and offshore East Africa in Mozambique, Tanzania and Kenya. These include interests in the Rovuma onshore and Rovuma offshore area in Mozambique, Mnazi Bay in Tanzania and several blocks offshore Kenya.

Shell already has interests in Tanzania, and the acquisition of Cove would mark Shell's entry into new hydrocarbon provinces in Kenya and Mozambique, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa.

In Mozambique, the Rovuma offshore basin is a frontier exploration area that holds large resources of gas reserves, suitable for LNG projects such as those of Shell. According to Cove, the play represents the potential for more than 30 trillion cubic feet of gas and six LNG trains. Shell understands that bringing these resources on stream is a strategic priority for the Mozambican Government in order to foster further economic and community development in the country, and Shell is committed to being a partner in that process.

Morgan Stanley & Co. Ltd. is financial adviser to Shell. Standard Chartered Bank is financial advisor to Cove. Cenkos Securities Plc is nominated advisor and broker to Cove.