PTTEP 'to bankroll Cove for $1.3bn'

Opening wallet: PTTEP for gas investment

Thailand’s PTT Exploration & Production (PTTEP) intends to pump $1.3 billion into the operations of newly acquired Cove Energy over the next five years after raising $3 billion in the country’s biggest equity sale ever, according to a report.

The $1.9 billion acquisition of the UK independent, agreed earlier this year after a bidding battle with Shell, gives PTTEP access to massive gas discoveries off East Africa held through Cove’s 8.5% stake in  Anadarko Petroluem-operated Area 1 in Mozambique’s offshore Rovuma basin.

The deal also includes Cove’s small stakes in seven licences off Kenya.

“From now on, we will use the proceeds from the equity sale and cash flow to finance our investments,” PTTEP chief executive Tevin Vongvanich was reported as saying by Reuters.

Earlier this month, the company raised 92.3 billion baht ($3 billion) by offering 650 million shares at 142 baht apiece to existing shareholders in an issue that was oversubscribed by more than two times.

The sale came amid a boom in fund-raising for South-East Asian equity capital markets and will also help repay a $1.5 billion bridging loan taken by PTTEP to finance the acquisition of Cove, as well as fund aggressive expansion plans.

The company intends to make big investments in Cove as part of its plan to spend invest 600 billion baht ($19.6 billion) until 2020 with the aim of doubling output to 600,000 barrels of oil equivalent per day.

The Rovuma basin gas discoveries are a potential major source of liquefied natural gas for energy-hungry Asian countries like Thailand, with Area 1’s resources at 60 trillion cubic feet that could increase to 100 Tcf taken with other finds in surrounding acreage to underpin a regional LNG project.

The Rovuma field is expected to begin operations in 2018 with initial output of 10 million tonnes of LNG, Tevin said.

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