State-controlled Thai firm sole bidder for Cove

THAILAND’S ONLY listed oil and gas explorer is the sole bidder for Dublin-based Cove Energy after Royal Dutch Shell pulled out of the race for the East Africa-focused explorer.

Shell has “decided not to revise its offer of 220p in cash for each Cove share and not take part in the auction procedure”, said Shell, Europe’s largest energy producer.

The 240p a share proposal from state-controlled PTT Exploration and Production, which plans to spend about $20 billion on expansion by 2016 to triple daily output, remains the highest bid, valuing Cove at £1.2 billion.

PTT EP shares fell to a two- week low yesterday on concern the firm may need to raise funds to develop Cove’s Mozambique asset.

“PTT EP will definitely have to sell new shares to fund the acquisition,” Naphat Chantaraserekul, an analyst at DBS Vickers Securities (Thailand) Co, said by phone.

“Cove will also need a large investment over the next few years. This would be a negative for PTT EP in the short term.”

PTT EP slumped 1.2 per cent to 171 baht at the close in Bangkok, the lowest since June 29th.

The company’s chief executive, Tevin Vongvanich, declined to comment on the offer when contacted.

Cove slid 14 per cent to 238p in London on Monday, the steepest drop since August 4th, as investors withdrew bets on a higher bid after a five-month takeover battle.

Before Shell’s announcement, it had traded above the 240p offered by Bangkok-based PTT EP.

Cove’s largest asset is an 8.5 per cent holding in Mozambique’s Rovuma Area 1, where a group led by Anadarko Petroleum has found as much as 60 trillion cubic feet of recoverable natural gas, more than six times the UK’s existing reserves. Cove raised its estimate of the find in June.

“Assuming PTT EP can gain 90 per cent shareholder approval and conclude the deal – which seems likely, PTT EP now have a stake in the world’s most promising new liquefied natural gas frontier,” said Neil Beveridge in a note.

Mr Beveridge is a Hong Kong-based oil and gas analyst at Sanford C Bernstein and Co.

The deal would be the biggest overseas takeover by a Thai company. – (Bloomberg)