It’s month 5 of the bidding process for COVE and whilst management have already recommended Shell’s 220p offer made on April 24th, other bidders are still out there.
When Shell first bid for Cove back in February with an offer of 195p, one imagines that they envisaged getting the deal done within 2 to 3 months. Due to other bidders and a resurgent market, that didn’t work out that way at all.
Today’s RNS throws another questionable problem into the pot for Shell – a new major gas discovery. Clearly – it’s a very nice problem to have but Shell will be acutely aware that this ‘new’ news will potentially see higher bids come into play. It’s one of those hazards in bidding for a company while they are undergoing transformational exploration.
It will be interesting to see how this pans out over the coming days/weeks as this recent result really does enhance COVE’s worth well beyond Shell’s 220p offer which now looks rather ‘dated’.
Tuesday May 15th 2012, Cove Energy PLC
Cove Energy PLC (COV.LN), the upstream oil and gas company, said Tuesday that the Golfinho exploration well made a new, major natural gas discovery nearly 20 miles northwest of the Prosperidade complex within the Rovuma Basin Area 1 block, Offshore Mozambique
-Golfinho exploration well encountered separate and independent gas accumulation entirely in Area 1:
-20 miles northwest of the Prosperidade complex
-Only 10 miles offshore from planned onshore development facilities providing potential advantages for future development options
-Significant uplift in Area 1 Rovuma Offshore gas resources – Operator Anadarko estimates that the Golfinho area holds between 13 and 45 TCF, or trillion cubic feet, of gas in place and adds 7 to 20+ TCF in recoverable gas resources, in addition to the existing Prosperidade recoverable gas resource of 17 to 30+ TCF
-Well penetrated 193 net feet (59 net meters) of Natural Gas Pay encountered in two high-quality Oligocene fan systems:
-Age-equivalent to, but geologically distinct from, the previous discoveries in the Prosperidade complex
-Drilling to begin at the Atum-1 exploration well once operations completed at Golfinho
-Gas Tested at circa 100 mmscf/d, or million standard cubic feet per day, from upper layer in Barquentine 1
-Golfinho exploration well was drilled to a total depth of 14,885 feet in water depths of 3,370 feet. Once operations are complete at Golfinho, the partnership plans to mobilize the Belford Dolphin drillship to drill the Atum-1 exploration well.
-Results of its third flow test of the Oligocene zone at the Barquentine-1 well at the northern end of the Prosperidade gas complex in Area 1 Rovuma Offshore; testing of the Barquentine-1 well flowed at a facility-constrained rate of approximately 100 million cubic feet of natural gas per day.
-Shares closed Monday at 223.5 pence valuing the company at GBP1.1 billion