After opening a data room with the intent to sell its 8.5% working interest in the Offshore Area 1 (Rovuma Block) in Mozambique, the Board of Directors has decided to offer the entire company.
The license in Mozambique is the site of multiple gas discoveries including Windjammer, Ironclad, Barquentine, Lagosta, Tubarao, and Camarão. Estimated recoverable gas reserves for the block range from 15 to 30 Tcf.
Smaller players such as Cove, Kosmos, Tullow, Mitsui, Galp and KOGAS along with larger international companies such as Anadarko and BG Group have been key players in recent successes in new African deepwater plays (both East and West Africa).
With the exception of ENI, which holds a 70% interest in the Mamba South gas discovery in Mozambique, the Global Competitors have not been involved.
The decision to sell is not surprising given the likely cost of developing the gas reserves through an LNG project, the extreme water depths (averaging around 5,000 feet), the lead time to commercial production, and Cove's size.
Because Cove's working interest is relatively small and development planning is at an early stage, the most likely buyers are probably its existing partners in Offshore Area 1. The partners include:
One advantage the partners gain by buying Coves share is that the interest could be effectively "banked" as a bargaining chip in coming gas sales agreement negotiations. However, it is also plausible that ENI might be prepared to make the deal in order to expand its position in the Rovuma Basin play and establish a long-term growth asset base in LNG for delivery to Pacific Basin markets.