Shell / Anadarko - bigger fish Never mind the minnow, talk to the big fish. Earlier this year Shell was keen enough on a gasfield off Mozambique to bid for Cove Energy, whose main asset is its 8.5 per cent stake in the Rovuma basin project. The UK oil major's opening bid was already 107 per cent above Cove's undisturbed price. Shell drew the line at 220p a share (a 134 per cent premium) leaving Thailand's PTT Exploration and Production's 240p offer as the only bid. But Shell knew it had other ways in to Rovuma. It should be no surprise that Shell is said to be talking to Anadarko Petroleum of the US, the leader of the project with a 36.5 per cent stake. Shell only ever saw Cove as the first step in winning a bigger slice of the action; the Aim-traded exploration company has first dibs on partners that sell. The partners know Shell has liquefied natural gas experience. More important, given the UK major's gearing of just 10 per cent and $13bn of cash flow from operations in the first quarter, Shell has the financial clout to step in when the real capital expenditure is needed to bring Rovuma to fruition. Then, Anadarko and other partners, such as Mitsui of Japan (with 20 per cent) and Bharat Petroleum and Videocon Industries of India (with 10 per cent each), could sell down to fund their share of capex. Shell showed discipline in walking away from Cove, implying that it felt that Rovuma's potential was already fully priced in. Trouble is, Anadarko investors will expect at least the juicier PTTEP offer price for the US company's bigger stake. On that basis, Shell would have to pay £5.2bn if Anadarko sold out altogether - still less than 3 per cent of Shell's market capitalisation. Mozambique's offshore gasfields have also attracted Total of France and Eni of Italy. Smaller fry, such as Ophir Energy, are up the coast. Size still matters, but so does first-mover advantage.