Broker snap: Strong read-across for Cove peers after Shell bid

22nd Feb 2012 09:49

Merchant Securities has highlighted potential for sector peers of Cove Energy after Royal Dutch Shell launched a bid for the AIM-listed oil and gas producer this morning.Shares in AIM-listed Cove Energy jumped after Anglo-Dutch integrated oil company Shell launched a bid of 195p per share. The deal values the east Africa-focused company at £992.4m, a 73.3% premium to the closing price of 112.5p on January 4th (the last day before Cove put itself up for sale). Amongst other things, Cove has a 8.5% stake in the Rovuma Offshore Area 1, Mozambique, operated by Anadarko. Merchant Securities analyst Brendan Long has said that the bid has a strong read-across for companies "that have discovered or are exploring for oil and gas resources that share a similar geological themes, often with higher equity stakes in the assets." Long highlights six companies - Rockhopper Exploration, Ophir Energy, Falklands Oil & Gas, Chariot Oil & Gas, Borders & Southern Petroleum and Tower Resources - all of which were rising strongly this morning. BC