£1bn Cove move will take Shell into ‘vital’ East African sector

INVESTORS in oil and gas explorer Cove Energy were rewarded yesterday after Royal Dutch Shell offered nearly £1 billion for the company in order to get its hands on its East African gas assets.

Cove’s main asset is an 8.5 per cent stake in a drilling area off the coast of Mozambique, where operator Anadarko says reserves could top 30 trillion cubic feet of natural gas.

Analysts said Shell would probably approach other parties in the project and offer to buy part of their stakes. Irene Himona, oil analyst at Societe Generale, said: “As the number one liquefied natural gas player, Shell absolutely must be in East Africa.”

Shell said it had a “firm intention” to make a 195p per share cash bid, valuing the firm at £992.4 million, which Cove’s directors said they would recommend to shareholders. The offer is a 70 per cent premium on Cove’s 4 January share price, when the firm put itself on the market, and 25 per cent above Tuesday’s closing price.