Please ensure Javascript is enabled for purposes of website accessibility

East African Natural Gas Up for Grabs

By Aimee Duffy – Updated Apr 7, 2017 at 8:31PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Who will buy Cove Energy?

London-based Cove Energy has put itself up for sale. Cove has an 8.5% stake in a natural gas play off the coast of Mozambique. Analysts hypothesize that one of many Asian gas buyers will make a bid for the company.

A closer look
An 8.5% stake doesn't seem like much, until you realize that it's a percentage of one of the biggest offshore natural gas finds in the last 10 years.

The Rovuma Area 1 offshore block was discovered by Anadarko Petroleum (NYSE: APC) at the end of August. Originally thought to hold 6 trillion cubic feet of gas, Anadarko came back at the end of November with an announcement that early well results indicate that recoverable reserves are probably closer to a whopping 15 to 30 Tcf of natural gas.

Cove Energy is expected to sell for more than $1 billion. Anadarko, for that matter, may also be in the market to sell a stake in its Mozambique assets to offset the burden of its $4 billion payment to BP for its role in the Macondo well blowout in the Gulf of Mexico in 2010.

Prospective buyers
So, who wants Cove's gas? One upside to picking up these assets is that Anadarko is also planning an LNG export facility in the area, something that has appealed to Asian gas buyers in the past. China's Sinopec (NYSE: SHI) has an Australian joint venture with ConocoPhillips for just that reason. And in fact, Sinopec is one of the companies analysts expect to be interested in Cove.

Tokyo Gas and Korea Gas may also be in the mix. Japan and South Korea are the world's two largest natural gas importers, though China is eventually expected to overtake them.

Indeed, it is the Chinese companies that have been particularly active of late. PetroChina (NYSE: PTR) recently announced that it purchased the remainder of a Canadian oil sands McKay River project in Alberta. The company had held a 60% stake in the project since 2009.

Foolish takeaway
Technological advances have unlocked global oil and gas supplies, which means the industry is rife with mergers, acquisitions, and joint ventures right now. It can be difficult to stay on top of all the activity, but utilizing free Internet tools like Twitter and My Watchlist can help keep you up to speed on industry updates and analysis.

Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. If you have the energy, check out what she's keeping an eye on by following her on Twitter, where she goes by @TMFDuffy.

The Motley Fool owns shares of Devon Energy. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

PetroChina Company Limited Stock Quote
PetroChina Company Limited
PTR
$43.03 (-1.36%) $0.59
Anadarko Petroleum Corporation Stock Quote
Anadarko Petroleum Corporation
APC
Sinopec Shanghai Petrochemical Company Limited Stock Quote
Sinopec Shanghai Petrochemical Company Limited
SHI
$14.20 (-5.33%) $0.80

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.