--Thailand PTT Exploration plans to delist Cove Energy's
shares
--Cove acquisition to boost reserve base, improve Thai energy
security
(Updates with background on Cove assets, Thai energy security
implications, LNG output expectations)
By Oranan Paweewun and Gurdeep Singh
BANGKOK--Thailand's PTT Exploration and Production PCL
(PTTEP.TH) is on track to complete its acquisition of Cove Energy
PLC (COV.LN) after 91.4% of Cove's shareholders accepted the Thai
company's cash offer, with a next step being a planned delisting
from the London Stock Exchange's Alternative Investment Market.
After outbidding Shell Exploration and Production (XL) B.V., a
wholly owned subsidiary of Royal Dutch Shell, PTT Exploration will
now need to focus on how quickly it can capitalize on Cove's key
assets--highly promising natural gas blocks off Mozambique--and in
so doing increase Thailand's energy security for the country.
In an initial move, PTT Exploration will seek consent from
Mozambique's Ministry of Mineral Resources to take control of Cove,
the Thai firm said in a statement to the Stock Exchange of
Thailand. It will keep open its offer for the remaining Cove shares
until further notice.
Cove has an 8.5% participating interest in the Rovuma Project in
Mozambique, which has estimated gas reserves of up to 60 trillion
cubic feet. It also has a 10% stake in the Rovuma Onshore Area,
also in Mozambique, as well as interests ranging from 10%-25%
across seven Kenya deep-water offshore blocks.
The east African coast is seen as a major new frontier area for
gas given recent world-class finds off Tanzania and Mozambique,
including in the blocks Cove has shares in.
The acquisition will help PTT achieve its goal of tripling its
hydrocarbon production by 2020, which is only possible via
acquisitions of assets overseas, analysts said.
PTT Exploration had said recently it plans to get an additional
200,000 barrels of oil equivalent a day through mergers and
acquisitions as part of its effort to achieve a production goal of
900,000 barrels of oil equivalent a day by 2020.
The national petroleum exploration and production company now
pumps around 300,000 barrels of oil equivalent, and it could
produce another 400,000 barrels a day from existing projects in the
pipeline, Chief Executive Tevin Vongvanich said Thursday.
PTT Exploration has aggressively expanded its business into
overseas mainly through merger and acquisitions amid limited
petroleum resources at home.
The company in 2010 acquired a 40% stake in Statoil ASA's oil
sand projects in Canada for $2.28 billion.
Anadarko Petroleum Corp. (APC), which holds a 36.5% operating
stake in Rovuma, has said that discoveries so far could support an
initial two-train liquefied natural gas project, with a final
investment decision coming as soon as next year and initial
production by 2018.
The project, which will need advanced technology and heavy
investment, will face tough competition from a raft of Australian
LNG projects already in production or being developed, and may also
have to compete with new shale gas sales from the U.S. or
elsewhere.
"Bringing an oil major into the project will defeat the very
purpose of PTT Exploration's acquisition of Cove," said Facts
Global Energy analyst Hun Sung Yen based in Singapore, in response
to questions on whether an additional partner is needed.
Cove has announced a plan to raise its capital via an issuance
of up to 650 million new shares, 403.4 million of which will be
placed to its parent PTT PCL (PTT.TH), which has pledged to
subscribe to the new shares. Their pricing will be finalized
through a book-building process to determine institutional
investors' demand. As of 0924 GMT, PTT Exploration's stock was flat
at THB152.
PTT Exploration wants to ship the gas from the Mozambique fields
to Thailand as part of the country's efforts to secure its
long-term energy needs, and the consortium led by Anadarko that
operates the Rovuma license does have the technical know-how to
develop the project, said Mr. Hun.
Write to Oranan Paweewun at oranan.paweewun@dowjones.com and
Gurdeep Singh at gurdeep.singh@dowjones.com
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