Monday, February 27, 2012
When independent Cove Energy put itself for sale on the market, the industry probably did not think that a bidding war for the company would erupt; however, that is exactly what could be in the works. Last week the company reportedly received a bid from one of the world’s largest oil companies, Royal Dutch Shell Plc for $1.6 billion and Thailand’s PTTEP upped the ante bidding $1.7 billion.
It is not known if Shell will increase its offer.
The two bids are a significant amount for a company that only holds stakes in two countries, Kenya and Mozambique, and not very big stakes at that. But the company’s asset in Mozambique, where it has a 8.5% stake, is the stake driving the bidding. Cove is one of the partners in the Rovuma Offshore Area 1 Concession that has seen hit after natural gas hit.
While the bidding price may still seem a bit excessive to some ,it is in line with the company’s current market capitalization of $1.1 billion. Cove’s current market capitalization is roughly double what it was at the close of the business year 2010. Its value in its 2010 Annual Report came in at $690 million.