Bloomberg News

African Explorer Cove Energy Jumps to Record on Sale Plan

January 06, 2012

(Updates share price in the second paragraph.)

Jan. 5 (Bloomberg) -- Cove Energy Plc, a U.K. explorer focused on East Africa, jumped to a record in London after putting itself up for sale.

Cove climbed percent 11 percent to 124.75 pence, the highest since the stock was first sold in May 2005. That valued the London-based company at about 613 million pounds ($945 million).

The company’s decision to carry out a formal sale process could provide a “strategic opportunity” for international oil companies to enter an under-explored region, analysts at Deutsche Bank AG said in a note.

Cove holds an 8.5 percent stake in the Rovuma Area 1 off Mozambique, which is operated by Anadarko Petroleum Corp. The partners have found 15 trillion to 30 trillion cubic feet of recoverable gas, enough to support production of liquefied natural gas to supply Asian markets. Anadarko said last month it’s also considering the sale of some of its Mozambique assets.

“With the development of this resource potential likely to require significant capital expenditure and with a number of smaller industry players having equity in the two blocks, the Cove acreage could offer a springboard for larger industry players,” Deutsche Bank analysts Elaine Dunphy and Mark Bloomfield wrote in the report.

‘Prized LNG’

Cove, which said more than a year ago that it would look to “monetize” before going into full development in Mozambique, is also working with Total SA of France and BG Group Plc to search for oil and gas off Kenya. It opened its data room last month to interested bidders in its Mozambique project.

“Far East buyers look likely for what we see as prized LNG position in East Africa,” Stuart Joyner, an analyst at Investec Securities in London, wrote in an e-mailed report.

The latest Eni SpA discovery of the Mamba South in Area 4 “may help to increase the commerciality of Cove’s project,” he said.

Standard Chartered Bank and Cenkos Securities Plc are advising Cove on the sale.

The U.K.’s Takeover Panel has agreed that potential buyers don’t have to be publicly identified and has waived the 28-day deadline for making a bid, Cove said.

--Editors: Stephen Cunningham, Randall Hackley.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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