London, 30 May (AIM) - The Thai state oil company PTT on Tuesday announced that it has received written approval from the Mozambican government to go ahead with its offer of 1.9 billion US dollars to buy the British company Cove Energy.
Cove holds an 8.5 per cent share in the Rovuma Offshore 1 exploration area, off the coast of the northern Mozambican province of Cabo Delgado. The exploration area’s operator, the US company Anadarko Petroleum, has so far discovered up to 50 trillion cubic feet of recoverable natural gas. Cove also has a ten per cent stake in the Rovuma Onshore block.
Any takeover will require approval by the Mozambican government and will be subject to a 12.8 per cent capital gains tax.
PTT’s bid surpassed an earlier offer of 1.8 billion dollars from Royal Dutch Shell. Some commentators had thought that Shell would be preferred by the Mozambican government because of its experience in the liquefaction of natural gas.
According to PTT, “the receipt of this written consent confirms that Mozambique's government has strong confidence and trusts PTT's capability”.
PTT has raised finance for the proposed takeover through a one year bridging loan of 1.5 billion dollars from the Swiss financial company UBS.
The acquisition is now dependent on the shareholders of Cove accepting the offer. Shell’s offer of 220 pence per share remains valid until 13 June, and it has stated that it is still considering its options.
The share price of Cove Energy rose on Wednesday to 258 pence per share, well above the 240 pence offered by the PTT bid. This suggests that shareholders expect a further increased offer.
Anadarko holds a 36.5 per cent share of Offshore Area 1. Its co-owners are Mitsui of Japan (20 per cent), BPRL Ventures and Videocon (both of India, with 10 per cent each) and Cove Energy (8.5 per cent). The Mozambican government is represented by Empresa Nacional de Hidrocarbonetos which holds a 15 per cent interest in the fields. (AIM)
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