Shell Gets Its Way in Mozambique (RDS-A, APC)

Oil supermajor Royal Dutch Shell plc (NYSE: RDS-A) has finally nabbed British-based Cove Energy PLC in a deal worth $1.8 billion. In late February shell made an offer of $1.58 billion for the firm, whose major asset is an 8.5% stake in a natural gas field offshore of Mozambique in East Africa that is 35.6%-owned and operated by Anadarko Petroleum Corp. (NYSE: APC). The field is believed to hold up to 30 trillion cubic feet of natural gas.

Shell is paying a 95.6% premium to the closing price on January 4th, the date on which Cove announced that the company would be sold. Thailand’s PTTEP PLC had topped Shell’s original bid for Cove with a bid of $1.8 billion, the same amount Shell has finally agreed to pay for Cove. PTTEP has indicated only that it is considering its options.

Under the terms of the deal, Cove may seek other bids, but must pay a break-up fee of about $18 million should it choose to accept one.

Paul Ausick