Cove Energy/Shell - FT.com Cove Energy was always Shell's to lose. Now it has conceded defeat. The oil and gas multinational made a 195p-a-share cash bid for Cove in February, before increasing it to 220p in April. Cove's board recommended it. Why the interest? The Aim-traded exploration company has an 8.5 per cent stake in an offshore drilling licence alongside Anadarko Petroleum, Mitsui and others in the Rovuma basin off Mozambique's coast that will feed a liquefied natural gas project. Shell's initial offer prompted a 220p-a-share counterbid from state-backed PTT Exploration & Production of Thailand, later upped to 240p, so winning the allegiance of Cove's board. But investors have held out for more. On Monday, Shell, which only last week extended its offer, said that it would not increase it or be drawn into a Takeover Panel auction. Not surprisingly, Cove's shares fell 13 per cent to 238p - tuppence below the level of PTT's £1.2bn offer. Since an auction requires more than one participant, the chances of stimulating a new one now look slim. Cove's shareholders will have to be content if 240p a share is the most they get. Shell's opening offer was already 73 per cent above Cove's undisturbed price, while its increased offer represented a 96 per cent premium. PTT's offer represents a staggering 113 per cent premium. To set this in context, Cove paid a bagatelle for its stake: $3.3m. Shell, of course, hoped to increase its stake as project partners exited when the heavy capital expenditure was required, using its financial firepower. Cove would have been small beer for Shell, but shareholders should at least be encouraged by its pricing discipline in the face of an escalating bidding war. The multinational's exploration expertise should mean it has no shortage of other fish to fry off the coast of Africa.