Cove Energy Raises New Capital To Fund Projects In Mozambique And Kenya

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AIM listed oil and gas group Cove Energy (LON:COV) has wrapped up a conditional £110m share placing priced at 76p per new share. Proceeds from the deal will be used to fund the company’s share of anticipated costs connected to its existing assets in Mozambique, Tanzania and Kenya and potential new opportunities.

In particular, Cove said it was anticipating an increase in the pace of exploration and appraisal drilling and seismic activity in the Mozambique Rovuma Offshore Area 1, resulting from the recent Barquentine and Windjammer gas discoveries. Elsewhere, the cash will fund the acceleration of a new 3D seismic programme offshore Kenya in 2011, followed by possible exploration drilling in 2012. Cove said it was also earmarking funds to new ventures and business development, including the acquisition of strategically relevant projects and further licence interests.

Separately, Cove reported that drilling operations had commenced at Lagosta 1, the fifth well in the current Mozambique Rovuma Offshore Area 1 drilling programme. Lagosta 1 is located 16 miles south of the Barquentine discovery, which was announced in October. Barquentine was the fourth well in the offshore programme operated by Anadarko Petroleum (NYSE:APC) in the frontier Rovuma Basin Area 1 with Cove holding an 8.5% working interest. The Windjammer discovery, where Cove holds a 10% interest, was announced in February.

John Craven, the CEO of Cove Energy, said: “I am very pleased to announce this successful conditional placing with institutional and other investors. The new funds will ensure that Cove is adequately financed allowing the company to continue the successful high impact exploration and appraisal deepwater drilling programme with its joint venture partners in offshore Mozambique where, following the Barquentine success, gas commercialisation options are now being actively considered. Part of the proceeds from the Placing will also be used to bring forward the acquisition of new 3D seismic data over our recently acquired Kenyan acreage, in order to firm up future drilling prospects.”

Mr Craven said the company’s ability to attract such significant new equity was testament to the strategy implemented by the Board which had yielded a portfolio of quality assets that now contain major gas discoveries at Windjammer and Barquentine and the first oil encountered, offshore East Africa, at the Ironclad well.

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