Shell tops bidding for Mozambique explorer Cove

The long and winding auction of the East Africa-focused oil explorer Cove Energy took another turn yesterday as the AIM-listed company recommended an increased £1.12bn bid from Shell.

The 220p-a-share offer would hand an estimated windfall of $35m (£22m) to Cove's top three managers – the chief executive, John Craven, chairman, Michael Blaha, and finance director, Michael Nolan. But no sooner had the deal been announced than Shell's main rival for Cove, Thailand's PTT Exploration and Production, raised the prospect of a higher offer.

"PTT is currently considering its options and will make a further announcement as and when appropriate," the Thai suitor said.

Shell made the first bid of the auction in February with an informal offer of 195p a share, or £992.4m. This was topped by an indicative bid of 220p a share from PTT, which Shell matched this morning. Two Indian groups, Oil and Natural Gas Corp and Gail India, could also make a bid.

The sale process halted in March when Mozambique said it would slap capital gains tax on the deal. But two weeks ago it said it would levy tax on the transaction at 12.8 per cent, not seen as prohibitively high.