Cove Energy Share Discussion Threads

[rus4] 08/3/2012 11:38

Fraserdean - That is a fantastic presentation By Galp Energia www.media-server.com m/p/zoh9ykqa
Fernando Gomez - Mozambique..."very stable democratic country."
" We have no reason to suspect that the tax system will change in Mozambique" ( 3 hours and 8 minutes)

Carlos Alves "negotiation taking place about unitisation"

[fraserdean] 08/3/2012 10:20

Ta, GALP held their capital markets day Monday, they have stake in Area 4 and loads of downstream stuff, they said from their current talks they believed there would be no change to the tax system in Mozambique.

[rus4] 08/3/2012 09:23

Thanks Plunger You may come back in when prices start start motoring again

[plunger2] 08/3/2012 09:18

If there's any news on Barq you'll hear it from APC at/before their Investor conference on 13/3/2012 - see their website. I expect they'll be asked about the Moz tax situation as it has serious implications for them if/when they farm out; not to mention if they were themselves taken over.
I have decided to exit COV. Playing for a 25/30p upside from here relative to trying to assess what a bunch of Moz politicians will do seems too risky; obviously if there were a market shake out and Mozzie in-fighting this thing could drag on or worse - but who knows?
Good luck to those left - last one out please switch off the lights on the board! :) ;)

JMHO DYOR

[rus4] 08/3/2012 07:13

Any news from Barquentine 2 and 4

[thecynical1] 06/3/2012 07:40

plunger...I like your choice of words....the question I am asking myself is "was the job of making this announcement given to the minister to see what the reaction would be"....surely, a decision like that would have to have been made by the Prime Minister.....send a hapless minister out to announce the news...see what the reaction is.....and then you can always drop the minister like a hot stone if the reaction is too negative.......guess we´ll just have to wait and see....have all the regular posters on here sold up and moved on?...I think there were three posts yesterday....

[plunger2] 05/3/2012 23:07

Thanks Super Y - Interesting article.

However the parallel case for COV is surely Riversdale Mining and not Minas de Revobue though the article might lead you to believe there was no difference. However it seems that with M de R there was a Moz company being sold. Therefore a Moz asset and therefore some form of CGT was chargeable.
In our case it is a foreign asset COV being disposed of (which happens to own some Moz assets amongst other assets). There is a big difference in tax law.
So it's back to the argument "well Moz can do what it likes"; yeah right. So APC and the others just sit back and urges the World Bank and the IMF to continue support for Moz?
Rather doubtful I suggest. Like it or not Moz has responsibilities.
Of course a little financial "face saving" may be necessary, may be even to be recommended so that the new owner of COV gets off on the right footing! Just guessing ;-) :)

JMHO DYOR

[jac1104] 05/3/2012 08:04

does anyone have the latest view from michael walters?

[thecynical1] 05/3/2012 07:52

interesting times....

[exmooroil] 05/3/2012 07:30

If Cove agrees to a "transaction charge" by Moz in return for their formal consent to the transfer, then it will come off the acquiror's cash completion for the acquisition of Cove Energy plc, hence a lower price paid to Cove shareholders. Nowt to do with individual shareholders after the completion, as some have suggested here.

[super y] 04/3/2012 23:52

Anyone know the address of the Mozambique tax authorities in order to file a tax return then?

[bountyhunter] 04/3/2012 23:01

"The auction of Cove Energy is in disarray after the Mozambique Government said that it would levy a tax when the gas explorer was sold. Esperança Bias, the Mozambican Minerals Minister, said: "We are monitoring the negotiations and what we have said is that we are going to put in place a capital gains tax." The sale needs the approval of the Mozambique Government to go ahead. Shares in Cove fell 7% to 210p yesterday. The case with Cove is more complicated than some others because the whole company is up for sale, rather than just an asset, leaving the explorer's shareholders potentially on the hook for any tax levied by Mozambique. Canaccord analysts estimated that a 30% capital gains tax could be levied on Cove, equivalent to about 28p per share. Werner Riding, an analyst from stockbroker Peel Hunt, said: "The possibility of ... a tax on the transaction does not come as a huge surprise. But the difference in this case is that an entire company, rather than an asset, is being sold. Either way I expect the Mozambique Government to want to realise a return on their assets," The Times reports."

[exmooroil] 03/3/2012 21:40

mattoil,

Your link is a news report and not a formal statement by either Videocon or Bharat. It is not accurate. Pre-emption would only apply if Cove Energy (Rovuma) Ltd was farming-down all or part of its 8.5% equity, which it clearly is not.

"Bharat Petroleum Corp (NSE:BPCL.NS - NewsBPCL.NS) and Videocon Industries Ltd (:VEDI.NSVEDI.NS) own 10 percent stake each in the Rovuma block and the right of first refusal, the paper said."

Cove Energy (Rovuma) Ltd bought the Artumas interests in Rovuma Offshore Area 1 and Rovuma Onshore Blocks before Wentworth got involved with Artumas. At that time, no wells had been drilled on Offshore Area 1, so presumably the existing partners were happy with their existing equity (and attendant capital commitment to a 5-well programme), and were delighted that a destitute Artumas was replaced by a fully funded Cove Energy.

[b1llyboy] 03/3/2012 21:27

littlebritain.

Just cut and paste onto google search,a way round the FT paywall except LEX.

[plunger2] 03/3/2012 20:41

Mattoil - the other licence holders were I suspect talking in the context of COV selling off their Moz assets as distinct from selling themselves.
Are you seriously suggesting that if XOM take over APC that such an event triggers a pre-emption right to Videocon and the others - I don't think so!
There is no difference conceptually between RDS taking COV and XOM taking APC - a few zeros maybe but the principle is the same.

JMHO

[plunger2] 03/3/2012 20:32

Well Ms Bias has thrown a spanner into the works of the IOCs in Moz. I really doubt she meant to. This is not Uganda - there is no oil yet. All there is is a highly rewarding but highly technical LNG development that only a limited number of IOCs can undertake with the necessary experience/finance to be sure of success. This is why APC want to farm down. This may also be why ENI will want to farm out.
The concept that Moz can do this on their own is simply not a runner. AND they need the International community. If this project gets delayed because of in fighting over tax then all hell could break loose and Moz will have flushed away their own future prosperity. I am certain that all current members of consortia drilling in Moz will want proper clarification real quick. If APC turn tail there will be a 2 year delay on the LNG project and Moz will be viewed in a whole new light by the IMF, India and China - Untrustworthy.
So the worst could happen but it's unlikely.
Far more likely is that COV agree a form of ex gratia payment to give the Minister a "victory". We'll not be told what it is but the bidding will conclude positively. However this cannot be at a level anything like Uganda - the pariahs. But it could still be material to Moz without derailing this deal and subsequent farm outs.
They can change all the laws they like but not retrospectively or if they do they sentence their people to ever more prolonged poverty.

JMHO DYOR

[mattoil] 03/3/2012 20:32

Then how do you explain the other license holders comments? I find it hard to believe they do not have greater insight into the terms of the agreement than any of us. Fact to the matter is, Shell will be holder of that license and that will trigger the right of first refusal. This is the reason that Wentworth Resources did not buy Artumas, but instead completed a reverse takeover involving a renaming. Wentworth was an all cash company that normally would have bought Artumas, but instead they completed the transaction in a way that avoided triggering these rights.

[exmooroil] 03/3/2012 19:54

Mattoil,

By buying Cove Energy plc, the acquiror is buying the pre-emption rights along with all Cove's assets. Cove Energy (Rovuma) Ltd, a wholly owned subsidiary of Cove Energy plc, owns the 8.5% interest in Rovuma Area 1, and will continue to do so after the plc sale. Therefore, the other partners cannot exercise pre-emption rights because the immediate owner hasn't sold the interest. This is standard stuff in setting up a plc which in turn owns 100% of the shares of a private subsidiary company, which in turn owns the licence interests.

In the case of Mozambique E+PSAs, the transfer of licence interests has to be with the consent of the Gov't since the relevant contract clause ties in the beneficial owner of the assets, namely Cove Energy plc, to the transaction, and by continuation ties in the acquiror of Cove Energy plc.

If the Mozambique Gov't doesn't like the acquiror of Cove Energy plc, it can withhold consent. In all probability, Shell is the preferred bidder. Let's hope Shell at least matches the PTTEP proposed bid, should it ever metamorphose into a formal offer. So far, no potential acquiror has made a firm offer.

[oilman123] 03/3/2012 11:40

Mattoil there is no right of first refusal..because the deal is to buy the company NOT equity in each permit Cov is in. if the latter then you are right. right of first refusal etc. but not if the whole cmpany is being bought.

[aaainvestment] 03/3/2012 10:37

A little write up in the Telegraph - nothing new though:

[littlebritain] 03/3/2012 07:25

Decent sized piece in the times today on this - also referencing the Heritage story. Describes the sale process as being thrown into disarray - Slightly dramatic wording imv.
It does quote one broker indicating that he felt that Shell and PTP will have factored tax into the price but the liklihood is that this situation will prevent any further bids. Cant c&p the article afraid.