Shell has dropped out of its takeover bid for Mozambique-focused explorer Cove Energy, paving the way for Thailand's only listed gas explorer PTT Exploration & Production to acquire it.
In a statement, Shell said it has decided not to increase its offer of £2.20 in cash for each share of Cove, or take part in a formal auction for the company
PTTEP's offer of £2.40 per share remains the highest bid.
Shell and PTT had until Monday to submit a final bid for Cove before the auction, which will start today.
A Shell spokeswoman told Platts, "This is a decision based on market valuation and the economic potential of Cove's assets."
In June shareholders expected Shell to up the stakes in the bid after PTT extended the deadline for investors to accept its $1.9 billion offer.
Cove announced the formal sale process in January 2012 and hoped to attract companies to its East African assets.