Bloomberg News

Cove Reports New Indian Ocean Gas Discovery Off Mozambique

May 15, 2012

Cove Energy Plc (COV), the U.K. explorer that’s agreed to be bought by Royal Dutch Shell Plc (RDSA), reported a new gas find off Mozambique, increasing the size of its discoveries in the east African nation by as much as 66 percent.

The Golfinho exploration well, drilled by partner Anadarko Petroleum Corp. (APC:US), found 7 trillion to 20 trillion cubic feet of recoverable gas, according to a statement today. The discovery was separate to the existing Prosperidade find, which holds as much as 30 trillion cubic feet. In total, the Rovuma Area 1 block where Anadarko and Cove are exploring may hold more than five times the U.K.’s existing gas reserves.

“The well results are indicative of the upside that the potential acquirers of Cove Energy have priced into their offers,” FirstEnergy Capital Corp. wrote in an e-mailed report. “We anticipate further consolidation in the region as the size of the discoveries becomes even more attractive to super majors.”

Shell, Europe’s largest oil company, agreed to buy Cove last month, after raising its bid to 1.12 billion pounds ($1.8 billion), or 220 pence a share, and matching a rival offer from Thailand’s PTT Exploration & Production Pcl. (PTTEP) Cove has an 8.5 percent interest in Rovuma Area 1. The fields will supply liquefied natural-gas projects that export to Asia.

Cove rose 2 percent 228 pence in London. The stock has almost doubled this year.

‘Close Proximity’

“This new gas accumulation is independent and separate to the Prosperidade gas complex,” said Cove’s Chief Executive Officer John Craven. The find “could be advantageously developed, given its close proximity to the shore.”

PTT, which is still considering whether to raise its bid, has declined to comment on the new discovery.

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 (ENI) of Italy, BG Group Plc (BG/) of the U.K. and Statoil ASA (STL) of Norway also discovered gas off Mozambique and Tanzania.

Anadarko holds 36.5 percent of Rovuma Area 1, Japan’s Mitsui & Co. 20 percent, India’s Videocon and BPRL Ventures 10 percent each and Mozambique’s state oil company 15 percent.

To contact the editor responsible for this story: Stephen Cunningham at scunningha10@bloomberg.net


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Companies Mentioned

  • APC
    (Anadarko Petroleum Corp)
    • $110.02 USD
    • 0.13
    • 0.12%
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