John Craven - Cove Energy

Year: 2012

Category: International

Sector: other (exploration & mining)

John Craven is CEO of Cove Energy plc (Cove), a Dublin-based company involved in joint venture oil and gas exploration with a specific focus on the emerging basins of East Africa.

Cove Energy plc was established in 2009 when Craven, and a group of like-minded investors, took control of a listed mining ‘shell’ and implemented a new strategy to create value through acquiring oil and gas exploration and appraisal assets in geologically promising areas.

A respected Petroleum Geologist by profession, Craven had previously founded Petroceltic International plc and set a strategy for Cove to be an opportunity-driven business that targeted assets in areas where larger oil companies were not yet active or had overlooked opportunities, particularly focusing on capturing value through exploration and appraisal.

Its first deal brought Cove in to a Joint Venture in Mozambique where it successfully drilled and identified the largest worldwide gas field to be discovered within the last 10 years and plans are currently afoot to build large plants to ship the gas abroad in its liquefied, natural form.

In addition to its two separate and distinct gas discovery areas in Mozambique, the Company holds almost 10.5 million acres of deepwater exploration interests off the coasts of Kenya - where promising 3D seismic results have been produced and two wells are planned for Q1 2013 – and the Mnazi Bay Gas Field in Tanzania which is currently under sale to Wentworth Resources.

In order to fund the significant drilling and seismic costs involved in such a high-risk and costly industry, Cove has successfully raised c.

£180 million from public markets over the past three years, and today holds a market cap of some £1.4 billion, representing over eight times capital invested.

In keeping with the company’s strategy of delivering and capturing value created by exploration success, the Board of Directors elected to put Cove up for sale earlier this year and offers up to £2.40 per share are currently under consideration from Shell and the National Oil Company of Thailand.

The Group currently has no debt.

It has unrestricted cash reserves of £60 million and is confident that it is fully funded for exploration and appraisal programmes into 2013.

Whilst the global economic environment is undoubtedly challenging, Cove’s successful equity placings throughout 2009 and 2010 and debt-free status ensured that the firm maintained a strong balance sheet into 2012.

Going forward, Cove intends to complete the sale process which started at the beginning of the year, until this time it is business as usual.

Services: The company is involved in the identification, exploration and discovery of petroleum in geologically-promising areas around the world, with a current focus on the young and emerging oil and gas basins off the coast of East Africa.

Clients: Cove Energy subsequently matures its discoveries in to marketable opportunities for medium and large-scale oil and utility companies.

1.

What vision prompted you to start-up in business? Having worked for Big Oil (Gulf/Chevron) who are generally risk adverse, I felt could apply my Petroleum geology skills to starting a new Oil and Gas company focused on exploration.

Started my own business in 1985 prompted by the takeover of Gulf and the Helvick oil discovery in the Celtic Sea (10,000 bbls/d.) 2.

Describe your progression from start-up to current status? Cove Energy plc began in2009.

I and some investors took control of a listed mining “shell” Lapp Plats, changed its name to Cove, and implemented a new strategy focusing on oil and gas exploration in East Africa.

The first deal bought Cove in to a Joint Venture in Mozambique where we have found the largest gas field worldwide in the last 10 years delineated by 12 consecutive gas discoveries.

In order to fund the drilling and seismic costs we have raised circa £180million from public markets.

Cove’s market cap today is some £1.4 billion representing over 8 x capital invested.

In keeping with company strategy of delivering and capturing value created by exploration success we put the company for sale at the beginning of 2012.

We are currently considering offers of £2.4/sh from Shell and the National Oil co of Thailand.

3.

Is there any interesting or unusual circumstances surrounding the inception of the company or its evolution? Cove has achieved record returns to shareholders in record time unprecedented in the Junior Resource sector.

This has been due to a number of factors coming together;

• Recognition of the geological potential and the petroleum system
• Partnering with a competent operator
• Having a drilling rig secured under a long term contract
• Having top quality 3D seismic to identify prospects
• Access to capital markets
• An executive who understand the oil and gas business

4.

What are the biggest challenges you faced starting up and how did you overcome them? Selecting the right Board Sourcing the right opportunity Raising equity capital in what was in 2009 adverse economic circumstances Overcome by the right contacts, trust and intuition 5.

What are the biggest challenges you face now? Ensuring that the Company sales process succeeds 6.

What role does CSR play in your business strategy? In Mozambique, we participated in financing in pediatric hospital and training for pediatric doctors.

Our Production Sharing Contract with the Mozambique government will ensure that the country of Mozambique will benefits substantially from production of gas from our block.

7.

What motivates you to succeed? Winning The thrill of a discovery well Proving doubters wrong 8.

What is your biggest business achievement? Starting and running Cove Energy 9.

What is the best business advice you ever received? Work with people you like and trust 10.

What advice would you give entrepreneurs starting out today? Same as above Work in your chosen career first Use equity capital 11.

Has anyone acted as a mentor to you? Yes Mauro Beltrandi my first boss in Gulf Oil who gave young petroleum geologists freedom to pursue their own ideas and Gene Van Dyke a veteran oil and gas explorer who has gone from rags to riches many times in his 82 years.

12.

Has your Irish-ness contributed to your success? I am not Irish but I have lived here for 30 years.

Being in Ireland was very helpful in starting Cove as there is a core group of investors who like the thrill of oil and gas exploration and can provide startup capital.

13.

How do you recharge your batteries? Running on Sandymount Strand, Exercise, Family, Old English sports cars.

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