(Updates with analyst comment in third paragraph.)
Feb. 24 (Bloomberg) -- PTT Exploration & Production Pcl, Thailand’s only listed oil and gas company, offered 1.1 billion pounds ($1.7 billion) for Cove Energy Plc, trumping an earlier bid for the African explorer by Royal Dutch Shell Plc.
PTT Exploration offered 220 pence for each Cove share, 13 percent more than Shell’s proposal, according to a statement today. Cove surged as much as 25 percent in London trading, indicating investors are betting on further bids.
“We think Shell is the Mozambique government’s preferred bidder and will likely raise its offer to 240 pence” a share, said Stuart Joyner, an analyst at Investec Securities in London.
Cove holds an 8.5 percent stake in a block off Mozambique where Anadarko Petroleum Corp. has found as much as 30 trillion cubic feet of gas. That would be enough to justify production of liquefied natural gas to supply Asian markets.
Cove said in a separate statement that the formal sale process for the company will continue and it reserves the right to reject any approach.
Earlier this week, Shell bid $1.6 billion to buy Cove to gain a foothold in Mozambique. Jon French, a London-based spokesman for Shell, declined to comment today when asked whether the company would be prepared to raise its offer.
Cove traded up 22 percent on the day at 237 pence as of 3:50 p.m. local time. Other African explorers also gained, with Ophir Energy Plc rising as much as 13 percent and Afren Plc climbing 4.8 percent.
East Africa’s fields offer a fresh source of gas supply for Asia, where China and India are the world’s fastest-growing major economies. Eni SpA of Italy and Statoil ASA of Norway have also discovered natural gas off Mozambique and Tanzania.
Statoil’s Executive Vice President for Exploration Tim Dodson today declined to say whether Norway’s largest oil company would be interested in joining the race for Cove.
Cove has already been working with Total SA and BG Group Plc to explore off the coast of Kenya. Last year, it joined Cairn Energy Plc to bid for exploration licenses off Lebanon.
Standard Chartered Bank is advising Cove, which put itself up for sale last month. UBS AG is advising PTT Exploration.
The sale is dependent on approval from the government of Mozambique.
--Editors: Stephen Cunningham, Will Kennedy.