Shell puts in more time on Cove Energy offer

LONDON Thu Jun 14, 2012 7:08am EDT

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LONDON (Reuters) - Royal Dutch Shell (RDSa.L) has given itself more time to decide the next move in its battle to buy Cove Energy COVE.L, extending the acceptance deadline on its $1.8 billion bid as it vies with Thailand's PTT Exploration and Production PTTE.BK for an entry into East Africa's big new offshore gas play.

Shell said on Thursday it was extending the deadline for Cove shareholders to accept its 220 pence per share cash offer by another two weeks until June 27 after receiving valid acceptances for just 4.8 percent of the shares by the time of the last offer period closing at 0800 EDT on Wednesday.

Analysts still believe that Shell will increase its bid to trump PTT's 240 pence per share offer worth $1.9 billion.

Shares in Cove, which have already been trading well above PTT's offer were up 0.2 percent at 264.5 pence by 0500 EDT, valuing the business at just under 1.3 billion pounds ($2 billion).

"I think Shell will come back," Investec analyst Stuart Joyner said. "They could possibly pay up to 300 pence per share, possibly more, given the recent discovery."

Cove's partner in Mozambique, U.S. firm Anadarko Petroleum Corp (APC.N), earlier this week announced a further major offshore gas find there.

Analysts at Mirabaud Securities said Shell's move to extend the offer deadline reinforced suspicions that the company was working on an improved offer.

A 300 pence per share offer would value Cove at just under 1.5 billion pounds, according to Thomson Reuters data.

"If Shell comes back with a higher offer, that would probably finalize it," Joyner said. "I don't see PTT coming back a third time ... I would imagine a 300 pence per share offer would probably finalize this."

Meanwhile the head of Africa-focused French oil producer Maurel et Prom (MAUP.PA) on Thursday dismissed speculation that Shell (RDSa.L) had also approached it about a possible takeover.

LUCRATIVE EAST AFRICA

East Africa is set to become one of the world's largest gas exporters supplying energy-hungry Asia, after a string of major discoveries across Mozambique and Tanzania, which has attracted the interest of major oil firms.

Cove's main asset is an 8.5 percent stake in the finds made by Anadarko off the coast of Mozambique, where plans are afoot to build large plants to ship the gas abroad as liquefied natural gas.

Analysts said an announcement on Thursday by Statoil (STL.OL) and ExxonMobil (XOM.N) about the discovery of another large gas deposit off the coast of Tanzania only added to the attractions of the area for Shell.

"Shell are very keen to get into the East African gas story," Investec's Joyner said. "Shell is effectively locked out of the key areas of movement (in East Africa)."

Joyner said Shell had to make an acquisition to enter East Africa, but added that other companies with positions there, including Statoil, Exxon, Anadarko and Italian oil group Eni (ENI.MI), were unlikely to sell.

"That's really why they are going for Cove so aggressively."

The bidding war for Cove started after Shell's initial $1.6 billion offer in February was trumped by PTT's offer of $1.8 billion.

The oil major then raised its offer to match PTT's bid, but this attempt too was thwarted by PTT, which countered with a $1.9 billion, 240 pence per share bid in May.

(Editing by Elaine Hardcastle and Greg Mahlich)

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