CORRECTED-UPDATE 2-Thai PTT trumps Shell with $2bln bid for Cove

Fri Feb 24, 2012 10:53am EST

By Tom Bergin

LONDON, FEB 24 - LONDON Feb 24 (Reuters) - Thai state-controlled oil and gas group PTT has trumped Shell's bid for Mozambique-focused Cove Energy Plc with a 220 pence-a-share bid worth 1.12 billion pounds ($1.76 billion).

News of the offer sent Cove shares 23 percent higher to 240.25 pence by 1530 GMT as investors bet on a bid war.

The emerging battle reflects the intense industry interest in East Africa, which is tipped to become a major natural gas producing region.

Cove has an 8.5 percent stake in the Rovuma Offshore Area 1, in Mozambique, where operator Anadarko said recoverable reserves could top 30 trillion cubic feet of natural gas.

The project partners plan to build plants to freeze the gas into liquefied natural gas (LNG) and ship it to Asian markets.

Italy's Eni has also made major gas finds in a neighbouring exploration block, while Norway's Statoil has made a major find in Tanzanian waters.

Cove kicked off a sale process in January and Shell attempted to pre-empt rivals by making an early 992.4 million-pound offer proposal, which was described by analysts when it was announced on Wednesday as "stretched".

PTT's PTT Exploration and Production unit said on Friday it planned a 220 pence per share bid which would be conditional on government approval and recommendation by management.

Shell declined to comment on whether it would increase its bid and Cove declined to say if other parties were planning bids.

Sources close to the matter said a wide range of parties had viewed Cove's "data room" and could yet bid.

Bankers and analysts had thought Cove's 8.5 percent stake might be too small to attract interest from oil majors.

However, Eni is expected to sell down some of its interest in its block and some smaller players with stakes in East Africa blocks are seen as acquisition targets, suggesting Shell or another oil major could build a significant position in the region.

Japan's reduction in focus on nuclear power after the disaster at the Fukishima plant has contributed to expectations that Asia will continue to drive strong LNG prices for years to come despite strong production growth due to shale discoveries.

In addition to Anadarko, Japan's Mitsui and Indian groups Bharat Petroleum and Videocon each own 10 percent stakes in the Rovuma licence.

UBS is advising PTT. Morgan Stanley advised Shell on its bid, while Standard Chartered advised Cove.

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