Shell Offers to Buy Cove Energy at 73% Premium (RDS-A, APC)
Royal Dutch Shell plc (NYSE: RDS-A) has reportedly offered $1.58 billion to acquire London-based energy company Cove Energy PLC. The offer is a 73% premium to Cove’s average closing price over the past five days. Cove’s main asset is an…
Royal Dutch Shell plc (NYSE: RDS-A) has reportedly offered $1.58 billion to acquire London-based energy company Cove Energy PLC. The offer is a 73% premium to Cove’s average closing price over the past five days.
Cove’s main asset is an 8.5% stake in a natural gas field offshore of Mozambique in East Africa that is 35.6%-owned and operated by Anadarko Petroleum Corp. (NYSE: APC). The field is believed to hold up to 30 trillion cubic feet of natural gas. The Wall Street Journal cites an estimate that Shell is paying about $4.10/thousand cubic feet of gas for Cove.
That may sound like a lot when compared with US natural gas prices of around $2.50/thousand cubic feet. But in Asia, the likely target buyer for the gas, natural gas currently costs around $16/thousand cubic feet.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.