Tuesday 6 December 2016

Huge windfall for Craven and Nolan as Shell set to buy €1.2bn Cove Energy

Published 23/02/2012 | 05:00

IRISH oil veterans John Craven and Michael Nolan are set to share a windfall worth tens of millions of euros after Royal Dutch Shell made an agreed £992m (€1.2bn) bid for Dublin-based Cove Energy.

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Mozambique-focused Cove's senior management said yesterday they would recommend to shareholders. Together, they own around 5pc of the company in shares and stock options, which means they are set to share around €45m.

The agreement, which has yet to be approved by shareholders, is a triumph for Belfast-educated Mr Craven, who is known to many Dublin investors as the founder of Algeria-focused Petroceltic.

Many investors have followed Mr Craven and now stand to make a return from Cove, which has seen its share price rise 70pc so far this year.

Cove's main asset is an 8.5pc stake in an off-shore field in Mozambique, where operator Anadarko has found more than 30 trillion cubic feet of natural gas.

Japan's Mitsui and Indian groups Bharat Petroleum and Videocon also own stakes in the license

Mr Craven will share the proceeds from the sale with finance director Michael Nolan, who once headed Dublin-based mining company Minmet, and industry veteran Michael Blaha.

While the company has a strong institutional following, around 10pc of the shareholders are thought to be Irish. They were attracted to the company by Dolmen Stockbrokers, which raised money for Cove Energy shortly after Mr Craven took over.

Cove Energy was formed from the shell of an AIM-listed resources company called Lapp Platts, which was originally a nickel exploration firm that was spun out from Irish-based Minmet a decade ago. Minmet was set up by former Taoiseach Charlie Haughey's son Conor Haughey together with the late Bernie Cahill.

Mr Craven spent just over €2m buying the gas exploration acreage, which subsequently was found to contain massive amounts of gas.

East Africa has been kind to Irish investors. Shares in Tullow Oil, which has a listing on the Dublin stock exchange and was founded by Irishman Aidan Heavey, hit a record high earlier this week after the company signed an agreement to sell a stake in a gas field in Uganda.

Cove Energy was set up in late 2003 and later bought information from Minmet on platinum and nickel mining rights in Sweden, Finland, Norway and Ireland.

Gas

Mr Craven and Mr Blaha joined the company in 2009 and began looking for gas in Africa and the Mediterranean with a special focus on assets owned by companies in distress. The stake off Mozambique was bought a few months later.

Any deal to buy Cove, which also has interests in Tanzania and Kenya, is now subject to Mozambique government approval.

Neighbouring the Cove find, Italy's Eni has made its own major gas finds, while, north of the maritime border, Norway's Statoil has made a find in Tanzanian waters.

On Tuesday, the Tanzanian government said British gas and oil firm BG Group planned to step up its investment on the east African coastline, fast becoming a major gas hub with a $500m investment this year.

Analysts expect Mozambique could emerge as a major centre of liquid gas export for Asia.

Japan's wariness of nuclear power after the disaster at the Fukishima plant has contributed to expectations that Asia will continue to drive strong gas prices for years to come.

Morgan Stanley advised Shell on the bid, while Standard Chartered advised Cove.

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