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Cove Energy spuds Lagosta 2 appraisal well offshore Mozambique, shares surge

Last updated: 20:17 13 Dec 2011 AEDT, First published: 21:17 13 Dec 2011 AEDT

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Cove Energy (LON:COV) emerged among the top risers on the AIM market in London after spudding the Lagosta 2 appraisal well on the Rovuma Area 1 block offshore Mozambique.

The East African operating oil and gas firm, which has an 8.5 percent participating interest in the block, expects to complete the well in late January 2012.

Cove added that it is currently involved in early stage discussions with major liquefied natural gas (LNG) off-takers in Asia and Europe, hoping to secure long-term contracts for the planned Rovuma production.

In addition, Cove announced today that it has opened a data room to certain parties who expressed an interest in Cove's stake in the Rovuma Area 1 project.

Lagosta 2 follows the Barquentine-3 well, which was the sixth successful well in the Rovuma Basin Area 1 block that contains the Windjammer, Lagosta, Barquentine and Camarão discoveries, known as the WLBC complex.

The results from the Barquentine-3 well showed the thickest gas pay to date from the block, encountering more than 202 net meters of natural gas pay.

Following the success of Barquentine-3, the WLBC complex is now estimated to contain between 15 to more than 30 trillion cubic feet (tcf) of recoverable gas resources, with between 30 to more than 50 tcf of natural gas in place.

Cove also told investors today that the Rovuma Area 1 partners have secured a long term drill ship to continue the “high impact” appraisal, testing and exploration programme in the block to further increase the recoverable gas resource.

Investors cheered today’s update as shares in Cove Energy surged 10.5 percent to trade at 103.75 pence, valuing the group at £509.4 million.

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