Royal Dutch Shell
Cove's directors recommended the offer from oil major Shell, which matched rather than beat a rival offer made by Thai state-controlled oil firm PTT Exploration and Production Pcl
PTTEP is currently considering its options and will make a further announcement as and when appropriate, the Thai firm said in a statement on Tuesday.
Industry interest in East Africa has been gathering pace after huge gas discoveries were made there, with the region tipped to become a major natural gas producing region supplying liquid natural gas (LNG) to energy hungry Asian markets.
Shares in Cove traded above Shell's 220 pence offer price up 3.7 percent to 225 pence, signalling investors are hopeful of a higher bid.
Competing offers can still be made and the shares will now likely trade to a slight premium on the hope that PTTEP will trump Shell, said Investec analysts.
However, Westhouse Securities analyst Andrew Matharu said Mozambique would likely favour Shell's offer.
A key component of this is how the Mozambique authorities want to develop their resources and a project of this scale needs an oil major with the financial resources and the expertise of bringing world class scale projects to fruition so you need someone like a Shell, he said.
Shell said the deal was conditional upon approval from the government of Mozambique amongst other things.
Cove's directors, in possession of a collective 4.38 percent stake in the company, said they would be accepting the offer.
Cove's main asset is an 8.5 percent stake in the Rovuma Offshore Area 1 in Mozambique, where operator Anadarko
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, Cove's Executive Chairman Michael Blaha said in a statement.
The deal includes a break fee clause, meaning Cove will have to pay Shell 11.1 million pounds if it later accepts a rival bid.
Shell said its latest offer represented a 95.6 percent premium to the closing price of Cove's shares on January 4, the day before the company put itself up for sale.
The company had previously made a $1.6 billion approach for Cove in February, before PTTEP beat the offer, prompting hopes of a bidding war, with an Indian consortium saying at one point it was also considering entering the fray.
(Editing by Mark Potter and Mike Nesbit)