Sound Business Principles for Executives & Business Owners

The Role of Business

Subscribe to The Role of Business: eMailAlertsEmail Alerts newslettersWeekly Newsletters
Get The Role of Business: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn


THE HAGUE, The Netherlands, April 24, 2012 /PRNewswire/ --

- NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

- RECOMMENDED CASH OFFER by Shell Exploration and Production (XL) B.V. (a wholly-owned subsidiary of Royal Dutch Shell plc) for Cove Energy plc

Summary

  • Further to the announcement of a possible offer by Shell Bidco for Cove on 22 February 2012, the boards of directors of Cove and Shell Bidco are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Shell Bidco for the entire issued and to be issued share capital of Cove. Shell Bidco is an indirect wholly-owned subsidiary of Shell incorporated in the Netherlands.  
  • Cove Shareholders who accept the Offer will be entitled to receive 220 pence in cash for each Cove Share.
  • The Offer values the entire issued and to be issued share capital of Cove at approximately £1,120 million and represents a premium of:
  • 134 per cent. to the Closing Price of 94 pence per Cove Share as of 12 December 2011, the last Business Day prior to the date of the announcement by Cove of its proposed sale of the Rovuma Area 1 Interest;
  • 95.6 per cent. to the Closing Price of 112.5 pence per Cove Share as of 4 January 2012, the last Business Day prior to start of the Offer Period; and
  • 42.4 per cent. to the Closing Price of 154.5 pence per Cove Share as of 21 February 2012, the last Business Day prior to the date of the Possible Offer Announcement.
  • Shell's decision to announce a recommended Offer for Cove fits with Shell's strategic aim to drive forward with its investment programme to deliver sustainable and profitable growth. The proposed acquisition of Cove's portfolio would mark Shell's entry into exciting new hydrocarbon provinces, in Mozambique and Kenya, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa. Adding Cove's assets to Shell's portfolio would strengthen and further diversify Shell's existing global LNG portfolio of production and development projects.
  • The announcement of this recommended Offer follows the decision announced by Cove on 5 January 2012 to conduct a formal sale process for the company and the subsequent release of the Possible Offer Announcement by Shell Bidco and Cove. The formal sale process has now been concluded. The end of the formal sale process means that the data room which has been open to participants will be closed with effect from 7.00 am on 24 April 2012. Other potential offerors can still nonetheless announce competing offers for Cove.
  • The Cove Directors, who have been so advised by Standard Chartered, consider the terms of the Offer to be fair and reasonable. In providing its advice to the Cove Directors, Standard Chartered has taken into account the commercial assessments of the Cove Directors.
  • Accordingly, the Cove Directors intend to recommend unanimously that Cove Shareholders accept the Offer as they have irrevocably undertaken to do in respect of their own entire beneficial holdings of Cove Shares and those of their family members and related trusts (representing, in aggregate, approximately 0.95 per cent. of the existing issued share capital of Cove). The Cove Directors have also irrevocably undertaken to accept the Offer in respect of any Cove Shares that they acquire on the exercise of options over, in aggregate, 17,617,647 Cove Shares or any proposals made by Shell Bidco in relation thereto which, together with their existing holdings referred to above, represent approximately 4.38 per cent. of the fully diluted share capital of Cove. Further details of these irrevocable undertakings are contained in paragraph [8] and [Appendix 3] of this announcement.
  • The Panel has consented to Cove entering into a break fee arrangement with Shell Bidco as a participant in Cove's announced formal sale process under Note 2 of Rule 1.2 of the Takeover Code. As such, Cove has agreed to pay Shell Bidco a break fee of £11,140,147 (subject to adjustment for VAT) if an Independent Competing Offer is announced (whether under Rule 2.4 or Rule 2.7 of the Takeover Code or otherwise) prior to the Offer lapsing or being withdrawn and such Independent Competing Offer or other Independent Competing Offer becomes or is declared unconditional in all respects.
  • The Offer is conditional upon, amongst other things:

- the receipt of written consent of the Republic of Mozambique's Minister of Mineral Resources (or through one or more delegated representatives) required as a result of the indirect change of control of Cove Mozambique and the Rovuma Area 1 Interest, such consent to be in a form satisfactory to Shell Bidco and such consent, once given, not having been revoked or withdrawn or otherwise having lapsed; and

- Cove Mozambique being the owner of the entire legal and beneficial interest in the Rovuma Area 1 Interest and, following the release of this announcement, no circumstances having arisen which might reasonably be expected to result in Cove Mozambique no longer being the owner of the entire legal and beneficial interest in the Rovuma Area 1 Interest.

Commenting on the Offer, Michael Blaha, Executive Chairman of Cove, said:

"The Board believes that the recommended cash offer from Shell Bidco provides very significant value to Cove Shareholders. The proposed transaction is in line with the company's long term strategy, as set out in May 2009, of delivering value to shareholders through exploration and appraisal.

The Cove Directors are delighted that, in addition to this being a very attractive cash offer for shareholders, Shell represents an excellent partner for all the stakeholders in the Rovuma LNG project given its extensive project development, operating and marketing experience in the entire LNG value chain. I am confident, following our discussions with the Government of Mozambique, that timely consent for Shell's offer will be forthcoming.

I would like to thank all the Cove Directors and the Cove team for their tremendous commitment and contribution to the success of the company and its projects, which I am sure will continue to flourish under Shell's ownership."

This summary should be read in conjunction with, and is subject to, the full text of this announcement and its Appendices.

The Offer will be made on the terms and subject to the Conditions set out in Appendix 1 of this announcement and the further terms and conditions set out in the Offer Document, which include valid acceptances of the Offer being received (and not, where permitted, withdrawn) by no later than 1.00 p.m. on the First Closing Date (or such time(s) and/or date(s) as Shell Bidco may, with the consent of the Panel or in accordance with the Takeover Code, decide) in respect of not less than 90 per cent. (or such lower percentage as Shell Bidco may decide) in nominal value of the Cove Shares to which the Offer relates.

The sources and bases of certain financial information contained in this announcement are set out in Appendix 2. Details of irrevocable undertakings received by Shell Bidco from the Cove Directors are set out in Appendix 3 to this announcement. Certain definitions and terms used in this announcement are set out in Appendix 4.

A copy of this announcement will be made available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Shell's website at http://www.shell.com/home/content/investor/ and Cove's website at http://www.cove-energy.com by no later than 12 noon on 25 April 2012.


Morgan Stanley is acting as financial adviser to Shell Bidco and no one else in relation to the Offer and will not be responsible to anyone other than Shell Bidco for providing the protections afforded to the clients of Morgan Stanley nor for providing advice in relation to the Offer, the contents of this announcement or any other matter or arrangement referred to herein.

Standard Chartered, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Cove and for no one else in connection with the Offer and will not be responsible to anyone other than Cove for providing the protections afforded to clients of Standard Chartered nor for giving advice in relation to the Offer or any matter or arrangement referred to in this announcement.

Cenkos Securities, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Cove as nominated adviser and broker and is not acting for or advising any other person and accordingly will not be responsible to any person other than Cove for providing advice in relation to the contents of this announcement. Neither Cenkos Securities nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a customer of Cenkos Securities in connection with this announcement, any statement contained herein or otherwise.

Further information

This announcement is for information purposes and is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities pursuant to the Offer or otherwise.  This announcement does not constitute a prospectus or a prospectus equivalent document. Shareholders are advised to read carefully the formal documentation in relation to the Offer once it has been despatched. The Offer will be made solely through the Offer Document, when issued, which will contain the full terms and conditions of the Offer, including details of how to accept the Offer. Please read carefully the Offer Document in its entirety before making a decision with regard to the Offer. Any acceptance should be made on the basis of the information in the Offer Document.

This announcement has been prepared in accordance with English law, the Takeover Code and the AIM Rules and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law or regulation and therefore persons into whose possession this announcement and/or the Offer Document comes should inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a violation of securities laws of any such jurisdictions. To the fullest extent permitted by law, Shell Bidco and Cove disclaim any responsibility or liability for the violation of such restrictions by such persons.

The availability of the Offer to Cove Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by Shell Bidco or required by the Takeover Code and permitted by applicable law and regulation, the Offer is not being, and will not be, made, directly or indirectly, in or into or by the use of the mails of, or by any other means or instrumentality (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national state or other securities exchange of any Restricted Jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

Accordingly, unless otherwise determined by Shell Bidco or required by the Takeover Code and permitted by applicable law and regulation, copies of this announcement are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction and persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in, into or from such jurisdiction.  

Any person (including, without limitation, any custodian, nominee or trustee) who would, or otherwise intends to, or who may have a contractual or legal obligation to forward this announcement and/or the Offer Document and/or any other related document to any jurisdiction outside of the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction before taking any action.

Shell Bidco reserves the right to elect with the agreement of Cove and the consent of the Panel (where necessary) to implement the acquisition of the entire issued and to be issued share capital of Cove by way of a court-approved scheme of arrangement in accordance with Part 26 of the 2006 Act. In such event, the acquisition will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Offer.

Definitions and cautionary statement

Resources: Shell's use of the term "resources" in this announcement includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves or SEC proven mining reserves.Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies in which Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this announcement, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent. shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward-looking statements concerning the financial condition, results of operations and businesses of Shell and the Wider Shell Group. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Wider Shell Group to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Wider Shell Group and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Shell's 20-F for the year ended 31 December 2011 (available at  http://www.shell.com/investor  and  http://www.sec.gov  ). These factors also should be considered by the reader. Each forward-looking statement speaks only as of the date of this announcement, 24 April 2012. None of Shell, its subsidiaries or any member of the Wider Shell Group undertakes any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.

Shell may have used certain terms, such as resources, in this announcement that the SEC strictly prohibits Shell from including in its filings with the SEC. U.S. investors are urged to consider closely the disclosure in Shell's Form 20-F, File No 1-32575, available on the SEC website http://www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

This announcement, including information included or incorporated by reference in this announcement, may contain "forward-looking statements" concerning the Wider Cove Group. Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested by them. Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement.  The Wider Cove Group does not assume any obligation to, and does not intend to, update these forward-looking statements, except as required pursuant to applicable lawor regulation.

Nothing in this announcement is intended, or is to be construed, as a profit estimate or forecast or projection of the future financial performance of the Wider Shell Group, the Wider Cove Group or the Combined Group or to be interpreted to mean that the earnings per Shell share or Cove Share or those of the Combined Group for the current or future financial years, will necessarily match or exceed the historical published earnings per Shell share or Cove Share, or those of the Combined Group (as the case may be).

Notice to United States investors

The Offer will be made for securities of a UK company and Cove Shareholders in the United States should be aware that this announcement, the Offer Document and any other documents relating to the Offer have been or will be prepared in accordance with the Takeover Code, the AIM Rules and UK disclosure requirements, format and style, all of which differ from those generally applicable in the United States.  The financial statements of Shell and Cove and all financial information that is included in this announcement, or that may be included in the formal offer documentation or any other documents relating to the Offer, have been or will be prepared in accordance with IFRS and may not be comparable to the financial statements or other financial information of US companies.

The Offer will be for the securities of a non-US company which does not have securities registered under Section 12 of the US Securities Exchange Act.  The Offer will be made in the United States pursuant to Section 14(e) of, and Regulation 14E under, the US Securities Exchange Act, subject to the exemptions provided by Rule 14d-1 under the US Securities Exchange Act and otherwise in accordance with the requirements of the Takeover Code. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and laws. In the United States, the Offer will be deemed made solely by Shell Bidco and not by any of its financial advisers.

In accordance with and to the extent permitted by the Takeover Code, normal UK market practice and Rule 14e-5 under the US Securities Exchange Act, Shell Bidco or its nominees, or its brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, Cove Shares outside the United States, other than pursuant to the Offer, before or during the period in which the Offer remains open for acceptance.  These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices.  Such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the Takeover Code and the rules of the London Stock Exchange, and Rule 14e-5 under the US Securities Exchange Act to the extent applicable.  In addition, in accordance with, and to the extent permitted by, the Takeover Code, normal UK market practice and Rule 14e-5 under the US Securities Exchange Act, Morgan Stanley and its respective affiliates will continue to act as exempt principal traders in Cove Shares on the London Stock Exchange and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law.  Any information about such purchases will be disclosed as required in the UK and will be available to all investors (including US investors) from any Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website,  http://www.londonstockexchange.com.

Each US shareholder of Cove is urged to consult with his independent professional adviser regarding any acceptance of the Offer including, without limitation, to consider the tax consequences associated with such holder's acceptance of the Offer.

Neither the SEC nor any other United States state securities commission has approved or disapproved the Offer, or passed judgment upon the adequacy or completeness of this announcement or the Offer Document.  Any representation to the contrary is a criminal offence.

It may be difficult for US holders of Cove Shares to enforce their rights and any claim arising out of the US federal securities laws, since Shell Bidco and Cove are incorporated under the laws of countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States.  US holders of Cove Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws.  Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment or jurisdiction.

Disclosure requirements of the Takeover Code

Under Rule8.3(a) of the Takeover Code, any person who is interested in onepercent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the announcement in which any paper offeror is first identified.  An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company, and (ii) any paper offeror(s).  An Opening Position Disclosure by a person to whom Rule8.3(a) applies must be made by no later than 3.30p.m. (London time) on the tenth business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30p.m. (London time) on the tenth business day following the announcement in which any paper offeror is first identified.  Relevant persons who deal in the relevant securities of the offeree company, or of any paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror.  A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule8.  A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or any paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company and any other offerors and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at  http://www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified.  If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Publication on websites

A copy of this announcement will be made available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Shell's website at  http://www.shell.com/home/content/investor/  and Cove's website at  http://www.cove-energy.com  by no later than 12noon on 25 April2012.


1. Introduction


Further to the announcement of a possible offer by Shell Bidco for Cove on 22 February 2012, the boards of directors of Cove and Shell Bidco are pleased to announce that they have reached agreement on the terms of a recommended cash offer to be made by Shell Bidco for the entire issued and to be issued share capital of Cove. Shell Bidco is an indirect wholly-owned subsidiary of Shell incorporated in the Netherlands.

 

2.The Offer


The Offer will be on the terms and subject to the Conditions set out below and in Appendix 1 to this announcement and to be set out in the Offer Document and the Form of Acceptance.  Under the terms of the Offer, each Cove Shareholder will be entitled to receive:

for each Cove Share 220 pence in cash

The Offer values the entire issued and to be issued share capital of Cove at approximately £1,120 million and represents a premium of:

  • 134 per cent. to the Closing Price of 94 pence per Cove Share as of 12 December 2011, the last Business Day prior to the date of the announcement by Cove of its proposed sale of the Rovuma Area 1 Interest;
  • 95.6 per cent. to the Closing Price of 112.5 pence per Cove Share as of 4 January 2012, the last Business Day prior to start of the Offer Period; and
  • 42.4 per cent. to the Closing Price of 154.5 pence per Cove Share as of 21 February 2012, the last Business Day prior to the date of the Possible Offer Announcement.

The Cove Directors intend to recommend unanimously that all Cove Shareholders accept the Offer. The terms of this recommendation are described in paragraph [4] below.

 

3. Background to, and reasons for, the Offer


Shell's decision to announce a recommended Offer for Cove fits with Shell's strategic aim to drive forward with its investment programme to deliver sustainable and profitable growth.

East Africa is a major prospective hydrocarbon province, which has seen a significant increase in exploration activity in recent years. Shell already has interests in Tanzania, and the acquisition of Cove would mark Shell's entry into exciting new hydrocarbon provinces in Kenya and Mozambique, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa.

Shell is one of the world's largest LNG producers, with a key role at every stage of the LNG value chain (from upstream production facilities and liquefaction plants to shipping fleets, regasification facilities and pipeline networks), as well as one of the most diverse LNG portfolios and access to strategic global markets. Shell holds the largest equity share of LNG capacity among IOCs - currently holding in the region of 20 mtpa of equity LNG capacity on-stream. Adding Cove's assets to Shell's portfolio would strengthen and further diversify Shell's existing global LNG portfolio of production and development projects.

In Mozambique, the Rovuma offshore basin is a frontier exploration area that holds large resources of natural gas reserves, suitable for LNG projects. According to Cove, the play represents the potential for 30+ tcf and six LNG trains. Shell understands that bringing these resources on stream is a strategic priority for the Mozambican Government in order to foster further economic and community development in the country, and Shell is committed to being a partner in that process.

Furthermore, Shell has set industry records for LNG plant construction times and operational start-ups, safely delivering projects from concept to first production for/with its partners. In joint ventures with partners, Shell currently produces LNG in Australia, Brunei, Malaysia, Nigeria, Oman, Russia and Qatar, with excellent production reliability performance achieved at all these plants.

In addition to Shell's technical expertise, its marketing and shipping know-how enables the delivery of long-term added value together with project partners. Shell has access to the key LNG markets of Europe, Asia Pacific, Middle East and North America. In 2011, Shell joint ventures supplied more than 30 per cent. of global LNG volumes. Shell is the largest manager of LNG shipping in the world, providing ship management services to 47 LNG carriers.

Shell would also bring its extensive project finance experience across the LNG value chain. Shell's experience in LNG project finance extends over many projects, e.g.: Oman LNG, Nigeria LNG, Qatargas 4, Sakhalin II.

Shell management is confident that its innovative technologies, leading plant designs, unmatched LNG operational experience and proven commercialisation strategies can add significant value to Mozambique and Kenya and the partners in the ventures.  

 

4. Recommendation


The Cove Directors, who have been so advised by Standard Chartered, consider the terms of the Offer to be fair and reasonable. In providing its advice to the Cove Directors, Standard Chartered has taken into account the commercial assessments of the Cove Directors.

Accordingly, the Cove Directors intend to recommend unanimously that Cove Shareholders accept the Offer as they have irrevocably undertaken to do in respect of their own entire beneficial holdings of Cove Shares and those of their family members and related trusts (representing, in aggregate, approximately 0.95 per cent. of the existing issued share capital of Cove). The Cove Directors have also irrevocably undertaken to accept the Offer in respect of any Cove Shares that they acquire on the exercise of options over, in aggregate, 17,617,647 Cove Shares or any proposals made by Shell Bidco in relation thereto which, together with their existing holdings referred to above, represent approximately 4.38 per cent. of the fully diluted share capital of Cove.

 

5. Background to, and reasons for, recommending the Offer


The recommendation follows an extensive process run by Cove and its advisers, which has resulted in an opportunity for Cove Shareholders to crystallise significant value created through Cove's highly successful exploration and appraisal track record.  The price achieved reflects the high quality and strategic nature of Cove's assets and the proposed transaction is in line with Cove's long-term strategy of maximising value for shareholders.  

The Cove Directors intend to unanimously recommend the all-cash offer, not only due to the 134 per cent. premium to the Closing Price of 94 pence per Cove Share as of 12 December 2011, but also taking into account other factors of relevance to Cove Shareholders including transaction execution, financing and completion.  Shell is one of the world's leading IOC's with world class LNG expertise.  It is the view of the Cove Directors that this track record will be attractive to all stakeholders and will increase transaction certainty whilst also delivering outstanding value to Cove Shareholders.

The formal sale process has now been concluded. The end of the formal sale process means that the data room which has been open to participants will be closed with effect from 7.00 am on 24 April 2012. Other potential offerors can still nonetheless announce competing offers for Cove.

 

6. Break fee


The Panel has consented to Cove entering into a break fee arrangement with Shell Bidco as a participant in Cove's announced formal sale process under Note 2 of Rule 21.2 of the Takeover Code.  

As such, Cove has agreed to pay Shell Bidco a break fee of £11,140,147 (subject to adjustment for VAT) if an Independent Competing Offer is announced (whether under Rule 2.4 or Rule 2.7 of the Takeover Code or otherwise) prior to the Offer lapsing or being withdrawn and such Independent Competing Offer or other Independent Competing Offer becomes or is declared unconditional in all respects.

 

7. Further terms and conditions to the Offer


Cove Shares will be acquired pursuant to the Offer by Shell Bidco fully paid and free from all liens, equitable interests, charges, encumbrances, rights of pre-emption and other third party rights of any nature whatsoever and together with all rights attaching thereto including without limitation the right to receive and retain all dividends and distributions (if any) declared, made or payable after the date of this announcement.

The Offer is conditional upon, among other things:

  • valid acceptances of the Offer being received (and not, where permitted, withdrawn) by no later than 1.00 p.m. on the First Closing Date (or such time(s) and/or date(s) as Shell Bidco may, with the consent of the Panel or in accordance with the Takeover Code, decide) in respect of not less than 90 per cent. (or such lower percentage as Shell Bidco may decide) in nominal value of the Cove Shares to which the Offer relates;
  • the receipt of written consent of the Republic of Mozambique's Minister of Mineral Resources (or through one or more delegated representatives) required as a result of the indirect change of control of Cove Mozambique and the Rovuma Area 1 Interest, such consent to be in a form satisfactory to Shell Bidco and such consent, once given, not having been revoked or withdrawn or otherwise having lapsed. The condition is set out in paragraph 1(b) of Appendix 1 to this announcement; and
  • Cove Mozambique being the owner of the entire legal and beneficial interest in the Rovuma Area 1 Interest and, following the release of this announcement, no circumstances having arisen which might reasonably be expected to result in Cove Mozambique no longer being the owner of the entire legal and beneficial interest in the Rovuma Area 1 Interest. The condition is set out in paragraph 1(c) of Appendix 1 to this announcement.

8. Irrevocable undertakings


Shell Bidco has received irrevocable undertakings from all of the Cove Directors to accept the Offer in respect of their own entire beneficial holdings of Cove Shares and those of their family members and related trusts amounting, in aggregate, to 4,684,179 Cove Shares (representing approximately 0.95 per cent. of the existing issued share capital of Cove), and to accept the Offer in respect of any Cove Shares that they acquire on the exercise of options over, in aggregate, 17,617,647 Cove Shares or any proposals made by Shell Bidco in relation thereto which, together with their existing holdings referred to above, represent approximately 4.38 per cent. of the fully diluted share capital of Cove. These irrevocable undertakings will continue to be binding on such persons in the event that a third party makes a higher competing offer but will cease to have effect in certain circumstances, as set out in Appendix 3 to this announcement.

Further details of these irrevocable undertakings are set out in Appendix 3 to this announcement.

 

9. Information relating to the Shell Group


Shell Group

The Shell Group is a global group of energy and petrochemicals companies with approximately 90,000 employees in more than 80 countries and territories.  It is organised into: Upstream, Downstream, and Projects & Technology.

Businesses

Upstream International manages the Upstream businesses outside the Americas. It searches for and recovers crude oil and natural gas, liquefies and transports gas, and operates the upstream and midstream infrastructure necessary to deliver oil and gas to market. Upstream International also manages Shell's LNG and GTL businesses. Its activities are organised primarily within geographical units, although there are some activities that are managed across the businesses or provided through support units.

Upstream Americas manages the Upstream businesses in North and South America. It searches for and recovers crude oil and natural gas, transports gas and operates the upstream and midstream infrastructure necessary to deliver oil and gas to market. Upstream Americas also extracts bitumen from oil sands that is converted into synthetic crude oil. Additionally, it manages the US-based wind business. It comprises operations organised into business-wide managed activities and supporting activities.

Downstream manages Shell's manufacturing, distribution and marketing activities for oil products and chemicals. These activities are organised into globally managed classes of business, although some are managed regionally or provided through support units. Manufacturing and supply includes refining, supply and shipping of crude oil. Marketing sells a range of products including fuels, lubricants, bitumen and liquefied petroleum gas (LPG) for home, transport and industrial use. Chemicals produces and markets petrochemicals for industrial customers, including the raw materials for plastics, coatings and detergents. Downstream also trades Shell's flow of hydrocarbons and other energy-related products, supplies the Downstream businesses, governs the marketing and trading of gas and power and provides shipping services. Additionally, Downstream oversees Shell's interests in alternative energy (including biofuels but excluding wind) and CO2 management.

Projects & Technology manages the delivery of Shell's major projects and drives the research and innovation to create technology solutions. It provides technical services and technology capability covering both Upstream and Downstream activities. It is also responsible for providing functional leadership across Shell in the areas of safety and environment, and contracting and procurement.

For the year to 31 December 2011, the Shell Group reported revenue of US$470,171 million (2010: US$368,056 million) and income attributable to Shell's shareholders of US$30,918 million (2010: US$20,127 million). The Shell Group's total assets at 31 December 2011 amounted to US$345,257 million.

Shell Bidco

Shell Bidco is an entity incorporated in the Netherlands as an indirect wholly-owned subsidiary of Shell. Shell Bidco has not traded since incorporation, nor has it entered into any obligations other than in connection with the Offer and the financing of the Offer.

 

10. Information relating to Cove


Cove is an E&P company with a strategy of value creation through exploration and appraisal. Cove is incorporated in England and Wales and was re-admitted to trading on AIM in 2009 after acquiring its current interests in East Africa and completing an associated fund raising to finance the company's initial participation in these assets. Key interests held by Cove are listed below:

 

MozambiqueOffshore: Cove has the Rovuma Area 1 Interest in Mozambique which contains significant discoveries holding estimated recoverable resources of 17 to 30+ tcf. The partnership is currently undertaking an extensive exploration, appraisal and development planning programme targeted at achieving final investment decision by the end of 2013 leading to the construction of a liquefaction facility to support the sale of significant volumes of LNG to export markets.

MozambiqueOnshore: Cove has a 10 per cent. working interest in the Mozambique Rovuma Onshore concession covering 12,000 sq km. A work programme comprising c 1,000 km of 2D seismic is planned for 2012, followed by a potential 2 well drilling programme in 2013.

KenyaOffshore: Cove has a 10 per cent. working interest in blocks L5, L7, L11A, L11B and L12 covering an area of 30,682 sq km offshore Kenya. Two 3D seismic programmes were completed in 2011 and the first exploration well is planned in 2012.

Cove also has a 25 per cent. working interest in offshore blocks L10A and a 15 per cent. working interest in Kenya offshore block L10B.  L10A and L10B together cover an area of more than 10,400 sq km. A programme of 2D and 3D seismic was recently completed on these blocks.

On 30 January 2012 Cove announced it has entered into an agreement to divest its Tanzanian interests, comprising a 16.38 per cent. interest in production operations and 20.475 per cent. interest in exploration operations in the Mnazi Bay Production Sharing Contract to Wentworth Resources Ltd ("Wentworth") in exchange for:

  • an increase in profit share from Mozambique Rovuma Offshore Area 1 Block through the termination by Wentworth of a profit petroleum royalty interest of 4.95 per cent. over Cove's Rovuma Area 1 Interest;
  • two million newly issued fully paid shares in Wentworth to be retained by Cove; and
  • contingent payments of up to US$8.5 million, depending on future natural gas production thresholds from the Mnazi Bay Production Sharing Contract being achieved.

In 2010, Cove had revenues of US$363,000. As at 31 December 2010, Cove had gross assets of US$275 million. For the six months ended 30 June 2011, Cove made a net loss of US$1,259,000.

 

11. Assistance of Cove in relation to required approvals


Cove has agreed to assist Shell Bidco in relation to obtaining any required governmental consents, including the consent of the Republic of Mozambique's Minister of Mineral Resources, as soon as reasonably practicable after the release of this announcement. In addition, Cove has agreed to co-operate with, and provide assistance to, Shell Bidco in relation to obtaining any regulatory and/or anti-trust clearances required in connection with the Offer.

 

12. Management, employees and location(s)


Subject to the transitional arrangements referred to below, it is expected that following completion of the Offer none of the directors, employees or consultants will continue with the business and that the current offices of Cove located in London and Dublin will be closed. Discussions are ongoing between the parties about ensuring the smooth transition of the business of Cove to Shell which may involve the executive directors and certain consultants providing services to Shell for a limited period of time following completion of the Offer. Notwithstanding the above, Shell Bidco has provided assurances to the Cove Directors that, following completion of the Offer, the existing employment rights of all employees of Cove will be observed at least to the extent required by applicable law.

 

13. Cove Share Option Schemes


The Offer will extend to any Cove Shares unconditionally allotted or issued pursuant to the exercise of options granted under the Cove Share Option Schemes while the Offer remains open for acceptance or prior to such earlier date as Shell Bidco may (subject to the Takeover Code or with the consent of the Panel) decide.

To the extent that options under the Cove Share Option Schemes are not so exercised, appropriate proposals will be made in due course to participants in the Cove Share Option Schemes.

 

14. Financing of the Offer


Full acceptance of the Offer is expected to require the payment by Shell Bidco of up to approximately £1,120 million in cash, representing the Offer Price for Cove's fully diluted issued share capital assuming the exercise in full of all outstanding Cove Share Options.

Shell Bidco will finance the Offer from its existing resources.

As required by the Takeover Code, Morgan Stanley, as financial adviser to Shell Bidco, is satisfied that sufficient financial resources are available to Shell Bidco to satisfy in full the cash consideration payable to Cove Shareholders under the terms of the Offer.

 

15. Offer Document


It is expected that the Offer Document and the Forms of Acceptance accompanying the Offer Document will be posted as soon as practicable and, in any event, (save with the consent of the Panel) within 28 days of this announcement. The Offer Document and Forms of Acceptance (in respect of Cove Shareholders who hold the Cove Shares in certificated form) will be made available to all Cove Shareholders, other than those in Restricted Jurisdictions, at no charge to them on Shell's website at http://www.shell.com/home/content/investor/ and Cove's website at http://www.cove-energy.com.

Cove Shareholders are urged to read the Offer Document and, if the Cove Shares are held in certificated form, the Form of Acceptance when they are sent to them because they will contain important information, including what steps to take to accept the Offer.

 

16. Opening Position Disclosure


The deadline for Shell Bidco to make an Opening Position Disclosure under Rule 8.1(a) of the Takeover Code was 7 March 2012 (being 10 Business Days from the date of the Possible Offer Announcement).  Since neither Shell Bidco nor any party deemed to be acting in concert with Shell Bidco had any interest in relevant securities in Cove which were required to be disclosed under Rule 8.1(a) of the Takeover Code, no Opening Position Disclosure was made under Rule 8.1(a) of the Takeover Code.

 

17. Compulsory acquisition, delisting, cancellation of admission to trading and re-registration


If Shell Bidco receives acceptances under the Offer in respect of, and/or otherwise acquires or contracts to acquire, 90 per cent. or more in nominal value of the Cove Shares to which the Offer relates and of the voting rights attaching to those Cove Shares and assuming that all of the other Conditions have been satisfied or waived (if capable of being waived), Shell Bidco intends to exercise its rights in accordance with Chapter 3 of Part 28 of the 2006 Act to acquire compulsorily the remaining Cove Shares on the same terms as the Offer.

Following the Offer becoming or being declared unconditional in all respects and subject to any applicable requirements of the AIM Rules, Shell Bidco intends to procure that Cove applies to the London Stock Exchange for the cancellation of trading in the Cove Shares on AIM. It is anticipated that such cancellation will take effect no earlier than 20 Business Days after the Offer becomes or is declared unconditional in all respects, subject to compliance with applicable requirements of the AIM Rules. The cancellation of trading of Cove Shares will significantly reduce the liquidity and marketability of any Cove Shares not acquired by Shell Bidco.

It is intended that, following the Offer becoming or being declared unconditional in all respects and after the Cove Shares are delisted, Cove be re-registered as a private limited company under the relevant provisions of the 2006 Act.

 

18. Display documents


Copies of the following documents will be available on Shell's and Cove's websites at http://www.shell.com/home/content/investor/ and http://www.cove-energy.com respectively by no later than 12 noon on 25 April 2012:

 

a)irrevocable undertakings given by the Cove Directors, details of which are set out in paragraph 8 and Appendix 3 to this announcement;

b)break fee agreement, details of which are set out in paragraph 6 of this announcement; and

c)letter of undertaking setting out the commitments to co-operate and assist in relation to any required approvals, details of which are set out in paragraph 11 of this announcement.

 

19. General


The Offer will comply with the applicable rules and regulations of the London Stock Exchange, the Takeover Code and the AIM Rules, will be governed by English law and will be subject to the exclusive jurisdiction of the courts of England.  In addition, it will be on the terms and subject to the Conditions set out herein, and to be set out in the Offer Document.

Appendix 2 to this announcement contains the sources and bases of certain information contained in this announcement. Appendix 3 to this announcement provides details of the irrevocable undertakings received by Shell Bidco. Appendix 4 to this announcement contains definitions of certain terms used in this announcement.

In accordance with Rule 2.10 of the Takeover Code, as at the close of business on 23 April 2012, Cove's issued share capital consisted of 490,995,300 shares of 1 pence each. The international securities identification number for Cove's ordinary shares is GB0034353531.


Morgan Stanley is acting as financial adviser to Shell Bidco and no one else in relation to the Offer and will not be responsible to anyone other than Shell Bidco for providing the protections afforded to the clients of Morgan Stanley nor for providing advice in relation to the Offer, the contents of this announcement or any other matter or arrangement referred to herein.

Standard Chartered, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Cove and for no one else in connection with the Offer and will not be responsible to anyone other than Cove for providing the protections afforded to clients of Standard Chartered nor for giving advice in relation to the Offer or any matter or arrangement referred to in this announcement.

Cenkos Securities, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Cove as nominated adviser and broker and is not acting for or advising any other person and accordingly will not be responsible to any person other than Cove for providing advice in relation to the contents of this announcement. Neither Cenkos Securities nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a customer of Cenkos Securities in connection with this announcement, any statement contained herein or otherwise.

Further information

This announcement is for information purposes and is not intended to, and does not, constitute or form part of any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities pursuant to the Offer or otherwise.  This announcement does not constitute a prospectus or a prospectus equivalent document. Shareholders are advised to read carefully the formal documentation in relation to the Offer once it has been despatched. The proposals for the Offer will be made solely through the Offer Document, when issued, which will contain the full terms and conditions of the Offer, including details of how to accept the Offer. Please read carefully the Offer Document in its entirety before making a decision with regards to the Offer. Any acceptance or other response to the proposals should be made on the basis of the information in the Offer Document.

This announcement has been prepared in accordance with English law, the Takeover Code and the AIM Rules and information disclosed may not be the same as that which would have been prepared in accordance with the laws of jurisdictions outside England.

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law or regulation and therefore persons into whose possession this announcement and/or the Offer Document comes should inform themselves about and observe such restrictions. Any failure to comply with these restrictions may constitute a violation of securities laws of any such jurisdictions. To the fullest extent permitted by law, Shell Bidco and Cove disclaim any responsibility or liability for the violation of such restrictions by such persons.

The availability of the Offer to Cove Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by Shell Bidco or required by the Takeover Code and permitted by applicable law and regulation, the Offer is not being, and will not be, made, directly or indirectly, in or into or by the use of the mails of, or by any other means or instrumentality (including, without limitation, electronic mail, facsimile transmission, telex, telephone, internet or other forms of electronic communication) of interstate or foreign commerce of, or any facility of a national state or other securities exchange of any Restricted Jurisdiction and will not be capable of acceptance by any such use, means, instrumentality or facility or from within any Restricted Jurisdiction.

Accordingly, unless otherwise determined by Shell Bidco or required by the Takeover Code and permitted by applicable law and regulation, copies of this announcement are not being, and must not be, directly or indirectly, mailed, transmitted or otherwise forwarded, distributed or sent in, into or from any Restricted Jurisdiction and persons receiving this announcement (including, without limitation, custodians, nominees and trustees) must not mail or otherwise forward, distribute or send it in, into or from such jurisdiction.  

Any person (including, without limitation, any custodian, nominee or trustee) who would, or otherwise intends to, or who may have a contractual or legal obligation to forward this announcement and/or the Offer Document and/or any other related document to any jurisdiction outside of the United Kingdom should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdiction before taking any action.

Shell Bidco reserves the right to elect with the agreement of Cove and the consent of the Panel (where necessary) to implement the acquisition of the entire issued and to be issued share capital of Cove by way of a court-approved scheme of arrangement in accordance with Part 26 of the 2006 Act. In such event, the acquisition will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Offer.

Definitions and cautionary statement

Resources: Shell's use of the term "resources" in this announcement includes quantities of oil and gas not yet classified as SEC proved oil and gas reserves or SEC proven mining reserves. Resources are consistent with the Society of Petroleum Engineers 2P and 2C definitions.

The companies in which Royal Dutch Shell plc directly and indirectly owns investments are separate entities. In this announcement "Shell", "Shell Group" and "Royal Dutch Shell" are sometimes used for convenience where references are made to Royal Dutch Shell plc and its subsidiaries in general. Likewise, the words "we", "us" and "our" are also used to refer to subsidiaries in general or to those who work for them. These expressions are also used where no useful purpose is served by identifying the particular company or companies. "Subsidiaries", "Shell subsidiaries" and "Shell companies" as used in this announcement refer to companies in which Shell either directly or indirectly has control, by having either a majority of the voting rights or the right to exercise a controlling influence. The companies in which Shell has significant influence but not control are referred to as "associated companies" or "associates" and companies in which Shell has joint control are referred to as "jointly controlled entities". In this announcement, associates and jointly controlled entities are also referred to as "equity-accounted investments". The term "Shell interest" is used for convenience to indicate the direct and/or indirect (for example, through our 23 per cent. shareholding in Woodside Petroleum Ltd.) ownership interest held by Shell in a venture, partnership or company, after exclusion of all third-party interest.

This announcement contains forward-looking statements concerning the financial condition, results of operations and businesses of Shell and the Wider Shell Group. All statements other than statements of historical fact are, or may be deemed to be, forward-looking statements. Forward-looking statements are statements of future expectations that are based on management's current expectations and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in these statements. Forward-looking statements include, among other things, statements concerning the potential exposure of Shell and the Wider Shell Group to market risks and statements expressing management's expectations, beliefs, estimates, forecasts, projections and assumptions. These forward-looking statements are identified by their use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "goals", "intend", "may", "objectives", "outlook", "plan", "probably", "project", "risks", "seek", "should", "target", "will" and similar terms and phrases. There are a number of factors that could affect the future operations of Shell and the Wider Shell Group and could cause those results to differ materially from those expressed in the forward-looking statements included in this announcement, including (without limitation): (a) price fluctuations in crude oil and natural gas; (b) changes in demand for Shell's products; (c) currency fluctuations; (d) drilling and production results; (e) reserves estimates; (f) loss of market share and industry competition; (g) environmental and physical risks; (h) risks associated with the identification of suitable potential acquisition properties and targets, and successful negotiation and completion of such transactions; (i) the risk of doing business in developing countries and countries subject to international sanctions; (j) legislative, fiscal and regulatory developments including regulatory measures addressing climate change; (k) economic and financial market conditions in various countries and regions; (l) political risks, including the risks of expropriation and renegotiation of the terms of contracts with governmental entities, delays or advancements in the approval of projects and delays in the reimbursement for shared costs; and (m) changes in trading conditions. All forward-looking statements contained in this announcement are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. Readers should not place undue reliance on forward-looking statements. Additional factors that may affect future results are contained in Shell's 20-F for the year ended 31 December 2011 (available at  http://www.shell.com/investor  and  http://www.sec.gov  ). These factors also should be considered by the reader.  Each forward-looking statement speaks only as of the date of this announcement, 24 April 2012. None of Shell, its subsidiaries or any member of the Wider Shell Group undertakes any obligation to publicly update or revise any forward-looking statement as a result of new information, future events or other information. In light of these risks, results could differ materially from those stated, implied or inferred from the forward-looking statements contained in this announcement.

Shell may have used certain terms, such as resources, in this announcement that the SEC) strictly prohibits Shell from including in its filings with the SEC.  U.S. investors are urged to consider closely the disclosure in Shell's Form 20-F, File No 1-32575, available on the SEC website http://www.sec.gov. You can also obtain these forms from the SEC by calling 1-800-SEC-0330.

This announcement, including information included or incorporated by reference in this announcement, may contain "forward-looking statements" concerning the Wider Cove Group.  Generally, the words "will", "may", "should", "continue", "believes", "expects", "intends", "anticipates" or similar expressions identify forward-looking statements.  The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those suggested by them.  Many of these risks and uncertainties relate to factors that are beyond the companies' abilities to control or estimate precisely, such as future market conditions and the behaviours of other market participants, and therefore undue reliance should not be placed on such statements which speak only as at the date of this announcement.  The Wider Cove Group does not assume any obligation to, and does not intend to, update these forward-looking statements, except as required pursuant to applicable lawor regulation.

Nothing in this announcement is intended, or is to be construed, as a profit estimate or forecast or projection of the future financial performance of the Wider Shell Group, the Wider Cove Group or the Combined Group or to be interpreted to mean that the earnings per Shell share or Cove Share or those of the Combined Group for the current or future financial years, will necessarily match or exceed the historical published earnings per Shell share or Cove Share, or those of the Combined Group (as the case may be).

Notice to United States investors

The Offer will be made for securities of a UK company and Cove Shareholders in the United States should be aware that this announcement, the Offer Document and any other documents relating to the Offer have been or will be prepared in accordance with the Takeover Code, the AIM Rules and UK disclosure requirements, format and style, all of which differ from those generally applicable in the United States.  The financial statements of Shell and Cove and all financial information that is included in this announcement, or that may be included in the formal offer documentation or any other documents relating to the Offer, have been or will be prepared in accordance with IFRS and may not be comparable to the financial statements or other financial information of US companies.

The Offer will be for the securities of a non-US company which does not have securities registered under Section 12 of the US Securities Exchange Act.  The Offer will be made in the United States pursuant to Section 14(e) of, and Regulation 14E under, the US Securities Exchange Act, subject to the exemptions provided by Rule 14d-1 under the US Securities Exchange Act and otherwise in accordance with the requirements of the Takeover Code. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under US domestic tender offer procedures and laws. In the United States, the Offer will be deemed made solely by Shell Bidco and not by any of its financial advisers.

In accordance with and to the extent permitted by the Takeover Code, normal UK market practice and Rule 14e-5 under the US Securities Exchange Act, Shell Bidco or its nominees, or its brokers (acting as agents) or their respective affiliates may from time to time make certain purchases of, or arrangements to purchase, Cove Shares outside the United States, other than pursuant to the Offer, before or during the period in which the Offer remains open for acceptance.  These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices.  Such purchases, or arrangements to purchase, will comply with all applicable UK rules, including the Takeover Code and the rules of the London Stock Exchange, and Rule 14e-5 under the US Securities Exchange Act to the extent applicable.  In addition, in accordance with, and to the extent permitted by, the Takeover Code, normal UK market practice and Rule 14e-5 under the US Securities Exchange Act, Morgan Stanley and its respective affiliates will continue to act as exempt principal traders in Cove Shares on the London Stock Exchange and engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law.  Any information about such purchases will be disclosed as required in the UK and will be available to all investors (including US investors) from any Regulatory Information Service including the Regulatory News Service on the London Stock Exchange website,  http://www.londonstockexchange.com.

Each US shareholder of Cove is urged to consult with his independent professional adviser regarding any acceptance of the Offer including, without limitation, to consider the tax consequences associated with such holder's acceptance of the Offer.

Neither the SEC nor any other United States state securities commission has approved or disapproved the Offer, or passed judgment upon the adequacy or completeness of announcement or the Offer Document.  Any representation to the contrary is a criminal offence.

It may be difficult for US holders of Cove Shares to enforce their rights and any claim arising out of the US federal securities laws, since Shell Bidco and Cove are incorporated under the laws of countries other than the United States, and some or all of their officers and directors may be residents of countries other than the United States.  US holders of Cove Shares may not be able to sue a non-US company or its officers or directors in a non-US court for violations of the US securities laws.  Further, it may be difficult to compel a non-US company and its affiliates to subject themselves to a US court's judgment or jurisdiction.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in one per cent. or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer Period and, if later, following the announcement in which any paper offeror is first identified.  An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company, and (ii) any paper offeror(s).  An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the tenth business day following the commencement of the Offer Period and, if appropriate, by no later than 3.30 p.m. (London time) on the tenth business day following the announcement in which any paper offeror is first identified.  Relevant persons who deal in the relevant securities of the offeree company, or of any paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Takeover Code, any person who is, or becomes, interested in one per cent. or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror.  A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8.  A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or any paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company and any other offerors and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at  http://www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the Offer Period commenced and when any offeror was first identified.  If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

Publication on websites

A copy of this announcement will be made available free of charge, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Shell's website at  http://www.shell.com/home/content/investor/  and Cove's website at  http://www.cove-energy.com  by no later than 12noon on 25 April 2012.

 

APPENDIX 1

CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE OFFER


The Offer, which will be made by Shell Bidco, will comply with the applicable rules and regulations of the London Stock Exchange, the Takeover Code and the AIM Rules, will be governed by English law and will be subject to the exclusive jurisdiction of the courts of England.  In addition it will be subject to the terms and conditions set out in the Offer Document and related Form of Acceptance.

1. Conditions to the Offer


The Offer will be subject to the following conditions:

Acceptance Condition

(a) valid acceptances of the Offer being received (and not, where permitted, withdrawn) by no later than 1.00 p.m. (London time) on the First Closing Date (or such later time(s) and/or date(s) as Shell Bidco may, in accordance with the Takeover Code or with the consent of the Panel, decide) in respect of not less than 90 per cent. (or such lesser percentage as Shell Bidco may decide) of the Cove Shares to which the Offer relates and of the voting rights attached to those shares, provided that this condition will not be satisfied unless Shell Bidco and/or any member of the Shell Group shall have acquired or agreed to acquire (whether pursuant to the Offer or otherwise) Cove Shares carrying in aggregate more than 50 per cent. of the voting rights then normally exercisable at a general meeting of Cove, including for this purpose (except to the extent otherwise agreed by the Panel) any such voting rights attaching to Cove Shares that are unconditionally allotted or issued before the Offer becomes or is declared unconditional as to acceptances whether pursuant to the exercise of any outstanding subscription or conversion rights or otherwise.


For the purposes of this condition:

i) Cove Shares which have been unconditionally allotted shall be deemed to carry the voting rights they will carry upon issue;

ii) and the expression "Cove Shares to which the Offer relates" shall be construed in accordance with Chapter 3 of Part 28 of the 2006 Act;


Mozambique Condition

(b) the receipt of written consent of the Republic of Mozambique's Minister of Mineral Resources (or through one or more delegated representatives) as required under Article 24.1 of the Mozambique EPC, such consent to be in a form satisfactory to Shell Bidco and such consent, once given, not having been revoked or withdrawn or otherwise having lapsed;


Title to Rovuma Area 1 Interest

(c) Cove Mozambique being the owner of the entire legal and beneficial interest in the Rovuma Area 1 Interest and, following the release of this announcement, no circumstances having arisen which might reasonably be expected to result in Cove Mozambique no longer being the owner of the entire legal and beneficial interest in the Rovuma Area 1 Interest;


Other Third Party clearances

(d) no central bank, government or governmental, quasi-governmental, supranational, statutory, regulatory, environmental, administrative, fiscal or investigative body, court, trade agency, association, institution, environmental body, employee representative body or any other body or person whatsoever in any jurisdiction (each a "Third Party") having decided to take, institute, implement or threaten any action, proceeding, suit, investigation, enquiry or reference, or having required any action to be taken or otherwise having done anything or having enacted, made or proposed any statute, regulation, decision, order or change to published practice and there not continuing to be outstanding any statute, regulation, decision or order which would or might reasonably be expected to:

i) make the Offer, its implementation or the acquisition or proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Cove Group by any member of the Wider Shell Group void, illegal and/or unenforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prevent, prohibit, or materially restrain, restrict, impede, challenge or delay the implementation (in each case to an extent which is material in the context of the Wider Cove Group) of, or impose additional material conditions or obligations with respect to, the Offer or the acquisition of any shares or other securities in, or control or management of Cove by any member of the Wider Shell Group or require amendment of the Offer;

ii) require, prevent or materially delay the divestiture or materially alter the terms envisaged for such divestiture by any member of the Wider Shell Group or by any member of the Wider Cove Group of all or any part of their businesses, assets or property or impose any limitation on the ability of all or any of them to conduct their businesses (or any part thereof) or to own, control or manage any of their assets or properties (or any part thereof) to an extent which is material in the context of the Wider Cove Group taken as a whole or the Shell Group taken as a whole in the context of the Offer (as the case may be);

iii) impose any material limitation on, or result in a material delay in, the ability of any member of the Wider Shell Group directly or indirectly to acquire or hold or to exercise effectively all or any rights of ownership in respect of shares or other securities in Cove (or any member of the Wider Cove Group) or on the ability of any member of the Wider Cove Group or any member of the Wider Shell Group directly or indirectly to hold or exercise effectively any rights of ownership in respect of shares or other securities (or the equivalent) in, or to exercise management control over, any member of the Wider Cove Group to an extent which is material in the context of the Wider Cove Group taken as a whole or the Shell Group taken as a whole in the context of the Offer (as the case may be);

iv) other than pursuant to the implementation of the Offer, require any member of the Wider Shell Group or the Wider Cove Group to acquire or offer to acquire any shares, other securities (or the equivalent) or interest in any member of the Wider Cove Group or any asset owned by any third party which is material in the context of the Wider Cove Group or the Wider Shell Group, in either case taken as a whole;

v) require, prevent or materially delay a divestiture by any member of the Wider Shell Group of any shares or other securities (or the equivalent) in any member of the Wider Cove Group;

vi) result in any member of the Wider Cove Group ceasing to be able to carry on business under any name under which it presently carries on business to an extent which is material in the context of the Wider Cove Group taken as a whole or in the context of the Offer;

vii) impose any limitation on the ability of any member of the Wider Shell Group or any member of the Wider Cove Group to conduct, integrate or co-ordinate all or any part of their respective businesses with all or any part of the business of any other member of the Wider Shell Group and/or the Wider Cove Group in a manner which is materially adverse to the Wider Shell Group and/or the Wider Cove Group, in either case, taken as a whole or in the context of the Offer; or

viii) except as Disclosed, otherwise affect the business, assets, value, profits, prospects or operational performance of any member of the Wider Cove Group or any member of the Wider Shell Group in each case in a manner which is adverse to and material in the context of the Wider Cove Group taken as a whole or of the obligations of any members of the Wider Shell Group taken as a whole in connection with the Offer;


and all applicable waiting and other time periods (including any extensions thereof) during which any such Third Party could decide to take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or take any other step under the laws of any jurisdiction in respect of the Offer or the acquisition or proposed acquisition of any Cove Shares or otherwise intervene having expired, lapsed, or been terminated;

(e) all notifications, filings or applications which are necessary or deemed by Shell Bidco (acting reasonably) to be necessary having been made in connection with the Offer and all necessary waiting and other time periods (including any extensions thereof) under any applicable legislation or regulation of any jurisdiction having expired, lapsed or been terminated (as appropriate) and all statutory and regulatory obligations in any jurisdiction having been complied with and all Authorisations which are necessary or deemed by Shell Bidco (acting reasonably) to be necessary in any jurisdiction for or in respect of the Offer or the acquisition or the proposed acquisition of any shares or other securities in, or control of, Cove by any member of the Wider Shell Group having been obtained in terms and in a form reasonably satisfactory to Shell Bidco from all appropriate Third Parties or (without prejudice to the generality of the foregoing) from any person or bodies with whom any member of the Wider Cove Group or the Wider Shell Group has entered into contractual arrangements and all such Authorisations which are necessary or deemed by Shell Bidco (acting reasonably) to be necessary to carry on the business of any member of the Wider Cove Group in any jurisdiction having been obtained in each case where the direct consequence of a failure to make such notification or filing or to wait for the expiry, lapse or termination of any such waiting or other time period or to comply with such obligation or obtain such Authorisation would be unlawful in any relevant jurisdiction or have a material adverse effect on the Wider Cove Group, any member of the Shell Group or the ability of Shell Bidco to implement the Offer and all such Authorisations remaining in full force and effect at the time at which the Offer becomes otherwise wholly unconditional and there being no notice or intimation of an intention to revoke, suspend, restrict, modify or not to renew such Authorisations;

(f) no temporary restraining order, preliminary or permanent injunction, preliminary or permanent enjoinment, or other order threatened or issued and being in effect by a court or other Third Party which has the effect of making the Offer or any acquisition or proposed acquisition of any shares or other securities or control or management of, any member of the Wider Cove Group by any member of the Wider Shell Group, or the implementation of either of them, void, voidable, illegal and/or unenforceable under the laws of any relevant jurisdiction, or otherwise directly or indirectly prohibiting, preventing, restraining, restricting, materially delaying or otherwise materially interfering with the consummation or the approval of the Offer or any matter arising from the proposed acquisition of any shares or other securities in, or control or management of, any member of the Wider Cove Group by any member of the Wider Shell Group;


Confirmation of absence of adverse circumstances

(g) except as Disclosed, there being no provision of any arrangement, agreement, licence, permit, franchise, lease or other instrument to which any member of the Wider Cove Group is a party or by or to which any such member or any of its assets is or may be bound or be subject or any event or circumstance which, as a consequence of the Offer or the acquisition or the proposed acquisition by any member of the Wider Shell Group of any shares or other securities in Cove or because of a change in the control or management of any member of the Wider Cove Group or otherwise, would or might reasonably be expected to result in, in each case to an extent which is material in the context of the Wider Cove Group taken as a whole or to the obligations of any member of the Shell Group in connection with the Offer:

i) any monies borrowed by, or any other indebtedness, actual or contingent, or any grant available to any member of the Wider Cove Group being or becoming repayable, or capable of being declared repayable, immediately or prior to its or their stated maturity date or repayment date, or the ability of any such member to borrow monies or incur any indebtedness being withdrawn or inhibited or being capable of becoming or being withdrawn or inhibited;

ii) the rights, liabilities, obligations, interests or business of any member of the Wider Cove Group or any member of the Wider Shell Group under any such arrangement, agreement, licence, permit, lease or instrument or the interests or business of any member of the Wider Cove Group or any member of the Wider Shell Group in or with any other firm or company or body or person (or any agreement or arrangement relating to any such business or interests) being or likely to become terminated or adversely modified or affected or any onerous obligation or liability arising or any adverse action being taken thereunder;

iii) any member of the Wider Cove Group ceasing to be able to carry on business under any name under which it presently carries on business to an extent which is material in the context of the Wider Cove Group taken as a whole;

iv) any assets or interests of, or any asset the use of which is enjoyed by, any member of the Wider Cove Group being or falling to be disposed of or charged or any right arising under which any such asset or interest could be required to be disposed of or charged or could cease to be available to any member of the Wider Cove Group otherwise than in the ordinary course of business;

v) the creation or enforcement of any mortgage, charge or other security interest over the whole or any part of the business, property or assets of any member of the Wider Cove Group or any mortgage, charge or other security interest (whenever created, arising or having arisen), becoming enforceable;

vi) the business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider Cove Group being prejudiced or adversely affected;

vii) the creation or acceleration of any liability (actual or contingent) by any member of the Wider Cove Group; or

viii) any liability of any member of the Wider Cove Group to make any severance, termination, bonus or other payment to any of its directors or other officers;


No material transactions, claims or changes in the conduct of the business of the Cove Group

(h) except as Disclosed, no member of the Wider Cove Group having since 31 December 2010:

i) save as between Cove and its wholly-owned subsidiaries or between such wholly-owned subsidiaries and save for the issue of Cove Shares on the exercise of options granted before 24 April 2012 in the ordinary course, issued or agreed to issue or authorised or proposed the issue of additional shares of any class, or securities or securities convertible into, or exchangeable for, or rights, warrants or options to subscribe for or acquire, any such shares or convertible securities;

ii) recommended, declared, paid or made or proposed to recommend, declare, pay or make any bonus, dividend or other distribution (whether payable in cash or otherwise) other than to Cove or one of its wholly-owned subsidiaries;

iii) save as between Cove and its wholly-owned subsidiaries or between such wholly-owned subsidiaries, merged with (by statutory merger or otherwise) or demerged from or acquired any body corporate, partnership or business or acquired or disposed of, or, other than in the ordinary course of business, transferred, mortgaged or charged or created any security interest over, any assets or any right, title or interest in any asset (including shares and trade investments) or authorised, proposed or announced any intention to do so;

iv) save as between Cove and its wholly-owned subsidiaries or between such wholly-owned subsidiaries, made, authorised, proposed or announced an intention to propose any change in its loan capital;

v) issued, authorised or proposed the issue of any debentures or (save in the ordinary course of business and save as between Cove and its wholly-owned subsidiaries or between such wholly-owned subsidiaries) incurred or increased any indebtedness or become subject to any contingent liability to an extent which is material in the context of the Wider Cove Group or in the context of the Offer;

vi) entered into, varied, authorised or proposed entry into or variation of, or announced its intention to enter into or vary, any contract, transaction, arrangement or commitment (whether in respect of capital expenditure or otherwise): (a) which is of a long term, unusual or onerous nature; or (b) which involves or could reasonably be expected to involve an obligation of a nature or magnitude which is, in any such case, material in the context of the Wider Cove Group or in the context of the Offer; or (c) which is or is reasonably likely to be restrictive on the business of any member of the Wider Cove Group to an extent which is or is reasonably likely to be material to the Wider Cove Group taken as a whole or in the context of the Offer;

vii) entered into any licence or other disposal of intellectual property rights of any member of the Wider Cove Group which are material in the context of the Wider Cove Group and outside the normal course of business;

viii) entered into, varied or authorised or proposed entry into or variation of, or announced its intention to enter into or vary the terms of or made any offer (which remains open for acceptance) to enter into or vary the terms of, any contract, commitment, arrangement or any service agreement with any director or senior executive of the Wider Cove Group save for salary increases, bonuses or variations of terms in the ordinary course;

ix) proposed, agreed to provide or modified in any material respect the terms of any share option scheme, incentive scheme, or other benefit relating to the employment or termination of employment of any employee of the Wider Cove Group which, taken as a whole, are material in the context of the Wider Cove Group taken as a whole;

x) implemented or effected, or authorised, proposed or announced its intention to implement or effect, any joint venture, asset or profit sharing arrangement, partnership, composition, assignment, reconstruction, amalgamation, commitment, scheme or other transaction or arrangement (other than the Offer) which is material in the context of the Wider Cove Group taken as a whole or in the context of the Offer;

xi) purchased, redeemed or repaid or announced any proposal to purchase, redeem or repay any of its own shares or other securities or reduced or, save in respect of the matters mentioned in sub-paragraph (i) above, made any other change to any part of its share capital;

xii) waived, compromised or settled any claim otherwise than in the ordinary course of business which is material in the context of the Wider Cove Group taken as a whole or in the context of the Offer;

xiii) made any material alteration to its articles of association or other constitutional documents;

xiv) (other than in respect of a member which is dormant and was solvent at the relevant time) taken or proposed any steps, corporate action or had any legal proceedings instituted or threatened against it in relation to the suspension of payments, a moratorium of any indebtedness, its winding-up (voluntary or otherwise), dissolution, reorganisation or for the appointment of any administrator, receiver, manager, administrative receiver, trustee or similar officer of all or any of its assets or revenues or any analogous proceedings in any jurisdiction or appointed any analogous person in any jurisdiction or had any such person appointed;

xv) been unable, or admitted in writing that it is unable, to pay its debts or commenced negotiations with one or more of its creditors with a view to rescheduling or restructuring any of its indebtedness, or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

xvi) entered into any contract, commitment, agreement or arrangement otherwise than in the ordinary course of business or passed any resolution or made any offer (which remains open for acceptance) with respect to or announced an intention to, or to propose to, effect any of the transactions, matters or events referred to in this condition; or

xvii) terminated or varied the terms of any agreement or arrangement between any member of the Wider Cove Group and any other person in a manner which would or might be expected to have a material adverse effect on the financial position of the Wider Cove Group taken as a whole;


No material adverse change

(i) since 31 December 2010, and except as Disclosed;

(i) there having been no adverse change and no circumstance having arisen which would reasonably be expected to result in any adverse change or deterioration in the business, assets, value, financial or trading position, profits, prospects or operational performance of any member of the Wider Cove Group to an extent which is material to the Wider Cove Group taken as a whole or in the context of the Offer or in the obligations of any member of the Shell Group in connection with the Offer;

(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings having been threatened, announced or instituted by or against or remaining outstanding against any member of the Wider Cove Group or to which any member of the Wider Cove Group is or may become a party (whether as claimant or defendant or otherwise) and no enquiry, review, investigation or enforcement proceedings by, or complaint or reference to, any Third Party against or in respect of any member of the Wider Cove Group having been threatened, announced or instituted by or against, or remaining outstanding in respect of, any member of the Wider Cove Group which, in any such case, might reasonably be expected to have a material adverse effect on the Wider Cove Group taken as a whole or in the context of the Offer;

(iii) no contingent or other liability having arisen, increased or become apparent which is reasonably likely to adversely affect the business, assets, financial or trading position, profits, prospects or operational performance of any member of the Wider Cove Group to an extent which is material to the Wider Cove Group taken as a whole or in the context of the Offer; and

(iv) no steps having been taken and no omissions having been made which are reasonably likely to result in the withdrawal, cancellation, termination or modification of any licence held by any member of the Wider Cove Group, which is necessary for the proper carrying on of its business and the withdrawal, cancellation, termination or modification of which is material and likely to have an adverse effect on the Cove Group taken as a whole or in the context of the Offer;

(j) since 31 December 2010, and except as Disclosed, Shell Bidco not having discovered:

(i) that any financial, business or other information concerning the Wider Cove Group publicly announced or disclosed to any member of the Wider Shell Group at any time by or on behalf of any member of the Wider Cove Group is misleading, contains a misrepresentation of fact or omits to state a fact necessary to make that information not misleading and which is, in any case, material in the context of the Wider Cove Group taken as a whole or in the context of the Offer;

(ii) that any member of the Wider Cove Group is subject to any liability, contingent or otherwise, which is not disclosed in the Annual Report and Accounts or Interim Results of Cove, and which is material in the context of the Wider Cove Group or in the context of the Offer; or

(iii) any information which affects the import of any information disclosed to Shell Bidco at any time by or on behalf of any member of the Wider Cove Group which is material in the context of the Wider Cove Group;


Environmental and other issues

(k) except as Disclosed, Shell Bidco not having discovered that:


Environmental liabilities

(i) any past or present member of the Wider Cove Group has not complied in any material respect with all applicable legislation or regulations of any jurisdiction or any Authorisations relating to the storage, carriage, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to impair the environment (including property) or harm human health or otherwise relating to environmental matters or the health and safety of humans, which non-compliance would be likely to give rise to any material liability including any penalty for non-compliance (whether actual or contingent) on the part of any member of the Wider Cove Group; or

(ii) there has been a disposal, discharge, spillage, accumulation, leak, emission, release or the migration, production, supply, treatment, storage, transport or use of any waste or hazardous substance or any substance likely to impair the environment (including any property) or harm human health which (whether or not giving rise to non-compliance with any law or regulation) would be likely to give rise to any material liability (whether actual or contingent) on the part of any member of the Wider Cove Group; or

(iii)there is or is reasonably likely to be any liability (whether actual or contingent) or requirement to make good, remediate, repair, re-instate or clean up any property or asset currently or previously owned, occupied or made use of by any past or present member of the Wider Cove Group (or on its behalf), or in which any such member may have or previously have had or be deemed to have had an interest, under any environmental legislation, common law, regulation, notice, circular, Authorisation, other legally binding requirement or order of any Third Party or to contribute to the cost thereof or associated therewith or indemnify any person in relation thereto in any such case to an extent which is material in the context of the Wider Cove Group; or

(iv) circumstances exist (whether as a result of the Offer or otherwise) which would be reasonably likely to lead to any Third Party instituting, or whereby any member of the Wider Shell Group or any present or past member of the Wider Cove Group would be likely to be required to institute, an environmental audit or take any other steps which would in any such case be reasonably likely to result in any liability (whether actual or contingent) to improve, modify existing or install new plant, machinery or equipment or carry out changes in the processes currently carried out or make good, remediate, repair, re-instate or clean up any land or other asset currently or previously owned, occupied or made use of by any past or present member of the Wider Cove Group (or on its behalf) or by any person for which a member of the Wider Cove Group is or has been responsible, or in which any such member may have or previously have had or be deemed to have had an interest which is material in the context of the Wider Cove Group; or

(v) circumstances exist whereby a person or class of persons would be likely to have any claim or claims in respect of any product or process of manufacture or materials used therein currently or previously manufactured, sold or carried out by any past or present member of the Wider Cove Group which claim or claims would be likely, materially and adversely, to affect any member of the Wider Cove Group and which is material in the context of the Cove Group;


Anti-corruption

(vi) any member of the Wider Cove Group or any person that performs or has performed services for or on behalf  of any such company is or has at any time engaged in any activity, practice or conduct which would constitute an offence under the Bribery Act 2010 or any other applicable anti-corruption legislation;

(vii) any member of the Wider Cove Group is ineligible to be awarded any contract or business under section 23 of the Public Contracts Regulations 2006 or section 26 of the Utilities Contracts Regulations 2006 (each as amended); or


No criminal property

(viii) any asset of any member of the Wider Cove Group constitutes criminal property as defined by section 340(3) of the Proceeds of Crime Act 2002 (but disregarding paragraph (b) of that definition).

 

2. Waiver of Conditions


Shell Bidco reserves the right to waive in whole or in part all or any of conditions (b) to (k) (inclusive).  Conditions (b) to (k) inclusive must be satisfied as at, or waived (where possible) on or before, midnight on the 21st day after the later of the First Closing Date and the date on which condition (a) is fulfilled (or, in each case, such later date as the Panel may agree).  

Shell Bidco shall be under no obligation to waive or determine to be, or treat as, fulfilled, any of conditions (b) to (k) inclusive by a date earlier than the date specified above for the fulfilment thereof notwithstanding that the other conditions of the Offer may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any of such conditions may not be capable of fulfilment.  In any event, all of the conditions to the Offer must be satisfied as at, or waived (where possible) on or before midnight on the 81st day following the date on which the Offer Document is published or such other date as may be agreed with the Panel.

If Shell Bidco is required by the Panel to make an offer for Cove Shares under the provisions of Rule 9 of the Takeover Code, Shell Bidco may make such alterations to the terms and conditions of the Offer as are necessary to comply with the provisions of that Rule.

 

3. Further Terms of the Offer


Shell Bidco reserves the right to elect with the agreement of Cove and the consent of the Panel (where necessary), to implement the acquisition of Cove by way of a court approved scheme of arrangement in accordance with Part 26 of the 2006 Act.  In such event, the acquisition will be implemented on substantially the same terms, subject to appropriate amendments, as those which would apply to the Offer.

 

APPENDIX 2

SOURCES AND BASES OF INFORMATION


Unless otherwise stated in this announcement:

1. the value attributed to the fully diluted issued share capital of Cove is based on 490,995,300 Cove Shares in issue and 17,917,647 Cove Shares being subject to options under the Cove Share Option Schemes, in each case as at 23 April 2012, being the last Business Day prior to the publication of this announcement;

2. unless otherwise stated, the financial information relating to Shell is extracted or derived (without any adjustment) from the audited consolidated financial statements of Shell for the relevant years, prepared in accordance with IFRS; and

3. unless otherwise stated, the financial information relating to Cove is extracted or derived (without any adjustment) from the audited consolidated financial statements of Cove for the relevant years and the Interim Results, prepared in accordance with IFRS;

4. unless otherwise stated, all prices for Cove Shares have been derived from the Daily Official List and represent Closing Prices on the relevant date(s).

 

APPENDIX 3

DETAILS OF IRREVOCABLE UNDERTAKINGS TO ACCEPT THE OFFER

1. Cove Directors


The following Cove Directors have given irrevocable undertakings to accept (or procure acceptance of the Offer) in respect of their own beneficial holdings (or those of their family members and related trusts) of Cove Shares in respect of a total of 4,684,179 issued Cove Shares representing, in aggregate, approximately 0.95 per cent. of the existing issued share capital of Cove, comprised as follows:

                            Total Number of       Percentage of existing
    Name                      Cove Shares        issued share capital (%)
    Michael Blaha                450,000                    0.09
    John Craven                2,797,579                    0.57
    Michael Nolan              1,360,000                    0.28
    Frank H Moxon                 57,100                    0.01
    Stephen Staley                 9,500                    0.00
    Anthony Golding               10,000                    0.00



 

The following Cove Directors have given irrevocable undertakings to accept the Offer in respect of any Cove Shares that they acquire on the exercise of options over, in aggregate, 17,617,647 Cove Shares or any proposals made by Shell Bidco in relation thereto, comprised as follows:

 

                            Total Number of      Percentage of fully diluted
    Name                Cove Shares under option  issued share capital (%)
    Michael Blaha              7,700,000                    1.51
    John Craven                7,700,000                    1.51
    Michael Nolan              2,217,647                    0.44



 

Accordingly, Shell Bidco has received irrevocable undertakings from Cove Directors in respect of a total of 4,684,179 issued Cove Shares and 17,617,647 Cove Shares that they acquire on the exercise of options, representing in aggregate, approximately 4.38 per cent. of the fully diluted share capital of Cove.

- The irrevocable undertakings given by the persons above will continue to be binding in the event of a higher competing offer.


These irrevocable undertakings will cease to have effect if:

(a) the Offer Document is not posted to Cove Shareholders within 28 days (or such longer period as the Panel may agree) after the date of this announcement; or

(b) the Offer lapses or is withdrawn.

 

APPENDIX 4

DEFINITIONS


The following definitions apply throughout this announcement unless the context otherwise requires:

    "2006 Act"                         the Companies Act 2006, as amended from
                                       time to time
    "AIM"                              the market of that name which is
                                       operated by the London Stock Exchange
    "AIM Rules"                        the rules applicable to companies whose
                                       shares are traded on AIM, published by
                                       the London Stock Exchange as amended
                                       from time to time
    "Annual Report and Accounts of     the annual report and audited accounts
    Cove"                              of Cove for the year ended 31 December
                                       2010
    "Authorisations"                   authorisations, orders, grants,
                                       recognitions, confirmations, consents,
                                       licences, clearances, certificates,
                                       permissions or approvals
    "Business Day"                     a day, not being a public holiday,
                                       Saturday or Sunday, on which clearing
                                       banks in London are open for normal
                                       business
    "Cenkos Securities"                Cenkos Securities plc, a company
                                       incorporated in England and Wales
                                       (registered number 05210733) and having
                                       its registered office at 6.7.8
                                       Tokenhouse Yard, London EC2R 7AS
    "Closing Price"                    the closing middle market price of a
                                       Cove Share as derived from the Daily
                                       Official List on any particular date
    "Combined Group"                   the Shell Group and the Cove Group
                                       following completion of the Offer
    "Conditions"                       the conditions to the implementation of
                                       the Offer as set out in Appendix 1 to
                                       this announcement
    "Cove"                             Cove Energy plc
    "Cove Directors"                   the directors of Cove
    "Cove Group"                       Cove, its subsidiaries and its
                                       subsidiary undertakings and where the
                                       context permits, each of them
    "Cove Mozambique"                  Cove Energy Mozambique Rovuma Offshore Ltd
    "Cove Share Options"               the options over Cove Shares granted
                                       under the Cove Share Option Schemes
    "Cove Share Option Schemes"        the Cove Energy plc Unapproved Share
                                       Option Scheme and the Cove Energy plc
                                       Unapproved Executive Share Option Scheme;
    "Cove Shareholder(s)"              holders of Cove Shares
    "Cove Shares"                      ordinary shares of 1 pence each in the
                                       capital of Cove
    "Daily Official List"              means the daily official list of the
                                       London Stock Exchange
    "Disclosed"                        disclosed in:
                                       (i) the Annual Report and Accounts of
                                       Cove or the Interim Results;
                                       (ii) any public announcement by or on
                                       behalf of Cove before 5.00 p.m. on 23
                                       April 2012 (by delivery of an
                                       announcement to a Regulatory
                                       Information Service); or
                                       (iii) any documents or information made
                                       available to Shell Bidco and its
                                       professional advisers prior to 23 April
                                       2012, (a) in the electronic data room
                                       established by Cove for the purpose of
                                       its formal sale process or (b)
                                       otherwise in writing
    "Financial Services Authority" or  Financial Services Authority or its
     FSA"                              successor from time to time
    "First Closing Date"               the date which is 21 days after the
                                       date of posting of the Offer Document
    "Form of Acceptance"               the Form of Acceptance and Authority
                                       relating to the Offer which will be
                                       sent to holders of certificated Cove
                                       Shares along with the Offer Document
    "Independent Competing Offer"      an offer (as defined in the Takeover
                                       Code) (whether or not on a
                                       pre-conditional basis) which is
                                       announced, made or entered into by a
                                       person (other than Shell Bidco) who is
                                       not acting in concert with Shell Bidco
                                       (as defined in the Takeover Code)
    "IFRS"                             international accounting standards and
                                       international financial reporting
                                       standards and interpretations thereof,
                                       approved or published by the
                                       International Accounting Standards
                                       Board and adopted by the European Union
    "Interim Results"                  the interim results of Cove for the six
                                       months ended 30 June 2011
    "London Stock Exchange"            the London Stock Exchange plc or its
                                       successor from time to time
    "Morgan Stanley"                   Morgan Stanley & Co. Limited
    "Mozambique EPC"                   the Exploration and Production
                                       Concession Contract between the
                                       Government of the Republic of
                                       Mozambique, Anadarko Moçambique Area 1
                                       Limitada and Empresa Nacional de
                                       Hidrocarbonetos, E.P. dated 20 December
                                       2006 in respect of Mozambique Rovuma
                                       Offshore Area 1 Block to which Cove
                                       Mozambique has acceded pursuant to its
                                       acquisition of the Rovuma Area 1
                                       Interest from Artumas Group in 2009
    "Mozambique Rovuma Offshore Area 1 the Area 1 "Offshore" of the Rovuma
    Block"                             Block of the Republic of Mozambique
    "Offer"                            the recommended offer to be made by
                                       Shell Bidco to acquire all the Cove
                                       Shares on the terms and subject to the
                                       conditions set out in the Offer
                                       Document and the Form of Acceptance
                                       including, where the context so
                                       requires, any subsequent revision,
                                       variation, extension or renewal of such
                                       offer and includes any election
                                       available in connection with it
    "Offer Document"                   the document containing and setting out
                                       the terms and conditions of the Offer
    "Offer Period"                     the period commencing on (and
                                       including) 5 January 2012 and ending on
                                       whichever of the following dates shall
                                       be the latest: (a) 1 p.m. on the First
                                       Closing Date; (ii) the date on which
                                       the Offer lapses; and (iii) the date on
                                       which the Offer becomes or is declared
                                       unconditional as to acceptances
    "Offer Price"                      220 pence per Cove Share
    "Panel"                            the Panel on Takeovers and Mergers
    "Possible Offer Announcement"      the announcement by Shell Bidco and
                                       Cove on 22 February 2012 in relation to
                                       a possible offer by Shell Bidco for the
                                       entire issued and to be issued share
                                       capital of Cove
    "Regulatory Information Service"   any information service authorised from
                                       time to time by the FSA for the purpose
                                       of disseminating regulatory
                                       announcements
    "Restricted Jurisdiction"          any jurisdiction where local laws or
                                       regulations may result in a significant
                                       risk of civil, regulatory or criminal
                                       exposure if information concerning the
                                       Offer is sent or made available to Cove
                                       Shareholders in that jurisdiction
    "Rovuma Area 1 Interest"           Cove Mozambique's 8.5 per cent.
                                       participating interest in the
                                       Mozambique Rovuma Offshore Area 1 Block
    "SEC"                              the Securities and Exchange Commission
                                       of the United States
    "Shell"                            Royal Dutch Shell plc
    "Shell Bidco"                      Shell Exploration and Production (XL) B.V.
    "Shell" and "Shell Group"          Shell, its subsidiaries and its
                                       subsidiary undertakings and where the
                                       context permits, each of them
    "Standard Chartered"               Standard Chartered Bank
    "subsidiary", "subsidiary          shall be construed in accordance with
    undertaking" and "undertaking"     the 2006 Act
    "Takeover Code"                    the Takeover Code issued by the Panel
                                       on Takeovers and Mergers, as amended
                                       from time to time
    "UK" or "United Kingdom"           United Kingdom of Great Britain and
                                       Northern Ireland
    "US" or "United States"            the United States of America, its
                                       territories and possessions, any state
                                       of the United States of America, the
                                       District of Columbia and all other
                                       areas subject to its jurisdiction
    "US Securities Exchange Act"       the United States Securities Exchange
                                       Act of 1934, as amended
    "Wider Cove Group"                 Cove and associated undertakings and
                                       any other body corporate, partnership,
                                       joint venture or person in which the
                                       Cove and such undertakings (aggregating
                                       their interests) have an interest of
                                       more than 20 per cent. of the voting or
                                       equity capital or the equivalent
    "Wider Shell Group"                the Shell Group and associated
                                       undertakings and any other body
                                       corporate, partnership, joint venture
                                       or person in which Shell Bidco and such
                                       undertakings (aggregating their
                                       interests) have an interest of more
                                       than 20 per cent. of the voting or
                                       equity capital or the equivalent


All times referred to in this announcement are London time unless otherwise stated.

All references to "£", "GBP", "pound", "pence" and "p" are to the lawful currency of the United Kingdom.

All references to "US dollar" or "US$" are to the lawful currency of the United States.

   
    Enquiries

    Shell Media Relations                                                +44-207-934-5550
                                                                         +31-70-377-8750

    Shell Investor Relations    
    Europe                                                               +31-70-377-3996
    United States                                                        +1-713-241-2069
    Morgan Stanley & Co. Limited (Financial adviser to Shell Bidco)
    Michael O'Dwyer    
    Ian Hart    
    Andrew Foster    
    +44-207-425-8000
    Cove
    Michael Blaha, Executive Chairman                                    +44-20-3008-5260
    John Craven, CEO                                                     +353-1-662-4351
    Michael Nolan, Finance Director                                      +353-1-662-4351
    Standard Chartered (Financial adviser to Cove)                       +44-20-7885-8888
    Amer Baig
    Geraldine Murphy
    Rob Tims
    Hein Pieter Boers
    Aditya Yadav

    Cenkos Securities plc (Nominated adviser and broker to Cove)
    Jon Fitzpatrick                                                      +44-20-7397-8900
    Ken Fleming                                                          +44-13-1220-6939
    Joe Nally (Corporate Broking)                                        +44-20-7397-8900

    FTI Consulting (Cove Media Relations)                                +44-20-7831-3113
    Billy Clegg
    Edward Westropp


SOURCE Royal Dutch Shell plc

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.