FT Alphaville " Cove Energy, after flirting with Shell, gets offered bigger ring Shell had set May 23 as the date for acceptance of its April offer of more than £1.1bn for Cove Energy. It could have been such a beautiful day... but Thailand's PTT Exploration has decided to come storming back into the picture with an improved of of 240p per Cove share. That values the company, and its 8.5 per cent stake in a licence to drill the Rovuma basin block off Mozambique, at near £1.2bn and has understandably turned the board's heads while giving the share price a 10 per cent pop: From the RNS: The Offer Price represents a premium of approximately: 1 9.1 per cent. to the offer of 220.0 pence per Cove Share announced by Shell Exploration and Production (XL) B.V. on 24 April 2012 (the "Shell Offer") which the directors of Cove have previously recommended; 2 155.3 per cent. to the Closing Price of 94.0 pence per Cove Share as of 12 December 2011, the last Business Day prior to Cove's announcement of the opening of the data room to certain parties who expressed an interest in the Rovuma Project; 3 113.3 per cent. to the Closing Price of 112.5 pence per Cove Share as of 4 January 2012, the last Business Day prior to Cove's announcement of the sale process for the company; and 4 6.6 per cent. to the average Closing Price of 225.1 pence per Cove Share over the five Business ending on 22 May 2012, the last Business Day prior to the date of this announcement. When Shell made its move in April, analysts at Caz made some decent points about the chance of a potential counter offer: Arguments in favor: (i) PTTEP has a lower return threshold than RD Shell for international growth. (ii) PTTEP's balance sheet can take it. (iii) Thailand is facing a looming energy deficit, made worse by Burma's economic opening which will ultimately lead to lower piped gas exports from Burma to Thailand. (iv) Following Fukushima, Thailand delayed the first of its 5 nuclear plants until 2023. Its primary energy policies are still set against coal fired power following the 1992 Mae Moh incident. LNG imports are a central component of the country's near and medium term energy solution. PTTEP is indirectly majority government owned. Arguments against: (i) The Mozambique government may have an undeclared preference for an experienced LNG operator, like RD Shell, to enter the project at this critical stage, not least given the cross-border competition with Tanzania's equivalent project, being led by BG Group. We note a similar issue around InterOil's Gulf LNG project in Papua New Guinea where RD Shell is the favored operator. (ii) RD Shell has a bigger balance sheet and deeper pockets than PTTEP. (iii) RD Shell could influence PTTEP's majority 65.3% owner, PTT, by offering it LNG supplies from its global portfolio. PTT owns the 5.0 MT pa Rayong re-gasification terminal on Thailand's west coast that was commissioned late 2011 and still largely relies on spot LNG supplies. And that last point may still represent a stumbling block as PTT needs the Mozambique government's consent for the bid to go ahead. Even without another bid from Shell, there may still be a little bit to run in this. Related link: The consummation of the Shell♥Cove romance? This entry was posted by David Keohane on Wednesday, May 23rd, 2012 at 8:49 and is filed under Capital markets. Tagged with Bid, Cove Energy.