Las week, PTT Exploration & Production (PINK: PEXNY) one-upped Royal Dutch Shell (NYSE: RDS.A, RDS.B) with a $1.9 billion buyout offer for Cove Energy (PINK: CNVGF).

This is the second time the Bangkok-based PTT has raised the stakes on Shell. The first was in February after Shell offered $1.6 billion for Cove. PTT swooped in with a $1.8 billion bid, which Shell matched last month.

Having now been outbid twice, Shell has extended its offer to June 13. The company said it’s “considering its options and will make a further announcement if appropriate.”

So what makes Cove worth fighting for?

Trillions of cubic feet of natural gas buried off the eastern coast of Africa. Natural gas that one day will be used to fuel the fast-growing economies of Asia.

Cove has an 8.5% stake in Rovuma Area 1 off the coast of Mozambique, where its partner, Anadarko Petroleum (NYSE: APC), recently found as much as 30 trillion cubic feet of natural gas.

Additionally, earlier this month, Anadarko and Cove said another seven trillion to 20 trillion cubic feet of recoverable gas had been discovered in the Golfinho exploration well, which is also located in the Rovuma Basin.

Italy’s Eni SpA (NYSE: E) has also made significant discoveries near Cove’s acreage, and Shell has said it’s interested in those, too.

These discoveries are large and accessible enough to justify building a liquefied natural gas (LNG) plant onshore to freeze and export the fuel to Asia – a market whose energy demand is growing exponentially.

The War for the Pacific

Worldwide demand for natural gas for power generation is projected to rise 85% over the next 30 years, representing nearly half of total gas demand.

And the overwhelming majority of that growth is set to take place in Asia, where the economies of China, India and others are rapidly growing.

India’s gas demand alone is expected to rise to 1.5 billion cubic feet a day by 2017 from about 55 million cubic feet now, according to the country’s oil minister, S. Jaipal Reddy.

To help accommodate that demand, India’s annual LNG re-gasification capacity would increase from its current 13.5 million metric tons to 48 million metric tons by 2017.

Meanwhile, China intends to double its use of gas to 853 billion cubic feet a day, or 8% of its total energy supply, by 2015.

Given this burgeoning energy demand in Asia, Shell aims to secure long-term profits by turning East Africa into a natural gas super-hub. However, the company’s going to have to go through PTT to accomplish that.

With so much at stake, which company has the inside track on securing Cove’s assets?

Simply put, Shell does.

It’s no secret that the Mozambique government would prefer a company with LNG experience. That gives Shell – Europe’s largest energy company – the advantage over the much smaller PTT.

Still, that doesn’t make Shell a shoe-in. Mozambique has said that the sale of Cove would be subject to a 12.8% capital gains tax, so the bigger the bid, the bigger the government’s take. For that reason alone, it’s unlikely that the government would force Cove to accept a lower offer.

Cove would have to pay a $17 million breakup fee to evade the deal it signed with Shell last month, but the company has advised shareholders to accept PTT’s bid anyway, which is 9.1% higher than what Shell offered last month.

Shell could counterbid as much as 300 pence a share for the London-based Cove – up from its current 220 pence per share offer – and the bid would still be on par with what other energy companies have paid for similar assets, according to Investec oil analyst, Stuart Joyner.

For now, Shell will bide its time, hoping to leverage its government support. But another bid is likely.

If PTT wins out, it would be the largest-ever overseas takeover by a Thai company.

Cheers,

Jason Simpkins

For those of you who are new to Wall Street Daily, each Friday I post a brief sampling of technology trends that I’ve been following for the week.

And at the end of these “Friday Briefings,” you get a chance to select which topic interests you most. Then, if a particular trend receives a significant amount of votes, I’m likely to expand on that topic the following week.

Based on results from last Friday, there’s no question which tech trend Wall Street Daily readers want to hear more about.

With 510 of you tuned in to the latest news about Google’s (Nasdaq: GOOG) Project Glass initiative, it received 79% of the total votes.

So here’s a bit more information about what Google has up its sleeve with this innovation.

New Details Emerging

Most of you already know that Project Glass involves a pair of glasses that are capable of showing information on a small display, just above your normal field of vision.

Google’s theory behind why this concept would be popular is that it helps to get technology out of our way. Or as Google’s co-founder, Sergey Brin, says, “You want to be free to experience the world without futzing with a phone.”

I’ve said before that I think it’s a great idea, since it would help us keep in touch with our digital lives without technology interfering.

Here are a few recent developments I didn’t discuss on Friday.

~ Catering to Photographers: Project Glass isn’t just about staying on top of your Facebook (Nasdaq: FB) or Twitter feeds. At the company’s Google+ Photographer’s Conference last week, the project’s tech lead, Max Braun, discussed the innovation’s ability to revolutionize mobile photography, too. He says, “We see Glass as an evolution of cell phone photography… So this means it’s the next step of the camera that’s always with you.”

In other words, it’s not just a camera that you can whip out of your pocket and use anytime you like. With Project Glass technology, taking pictures doesn’t require an extra step. In fact, it doesn’t even require hands. So you’re able to take pictures of what you see faster than ever before, capturing moments as they happen, in real time. (No details yet on exactly how you snap photos hands-free.)

This isn’t just about convenience, either. Since the camera lens is close to your eye – and Google equipped it with an extra wide viewing angle – pictures taken with Glass offer a unique first-person perspective.

That perspective combined with speed and it can produce shots unlike any other camera in existence. Like Braun says, “We think that photography in Glass is going to open up a whole range of pictures that would not have been possible otherwise.”

~ More User Interface Details Revealed: Based on the original concept video that shows off what Project Glass might soon be capable of, I assumed that the user interface would be navigated by using voice commands and eye movements. And while that functionality might end up in the commercial-ready version of the technology, it looks like the current prototype is controlled with a touch-sensitive surface on the right arm of the glasses.

Sergey Brin recently demonstrated the technology on “The Gavin Newsom Show,” swiping his finger along a touchpad to navigate to a photo he had just taken. Although slightly less high-tech, it seems like a safer route to take, as an eye-controlled interface would likely result in unwanted inputs throughout the day.

Another detail that emerged from the interview is that the display won’t be as distracting as some have feared. After seeing the technology in action, Newsom told Wired that “he was impressed by the image quality of the display in the glasses. The politician-slash-talk-show-host noted that… the ‘image was remarkably clear.’ [And] Newsom said he found it easy to quickly focus on Brin… sitting across the desk, and then refocus” on the headset’s screen.

We’ll hopefully soon be able to see just how clear the display is for ourselves, as Brin speculated that Project Glass could be available to consumers sometime next year.

Unfortunately, nothing was mentioned about putting the technology into contacts. But considering it’s taken upwards of three years just to get the technology this far, I doubt we’ll see that anytime soon.

Good investing,

Justin Fritz

Spain’s ailing Bankia SA is ready for a bailout after it asked for 19 billion euros. The Spanish government responded by moving to issue new bonds and dig deep into its bank restructuring fund. But with borrowing costs at an all-time high, the cost will be steep.

So far, the ECB has been distant and silent on the issue. So far it’s dumped trillions into the mission to save the eurozone, and some speculate the ECB may refuse Spain that same generosity. Still, an international solution might be forthcoming.

Although Spain may be forced to seek aid from beyond its own borders, Enrique Quemada, President of One to One Capital Partners, places the blame of Bankia’s current crisis squarely with Spain itself:

“In 2008 the governments of the United States and Great Britain fixed the financial system by injecting public money into banks. In Spain we have let five years go by before doing it and now finally money is going into financial institutions, banks are being nationalized, so the news is positive but clearly there’s the initial shock from the impact of something which should have been done years ago.”

Research in Motion (Nasdaq: RIMM) has seen better days. It’s warned investors of a likely operating loss this quarter and between the widespread adoption of Google’s (Nasdaq: GOOG) Android and Apple’s (Nasdaq: AAPL) iPhone, RIMM’s BlackBerry has been all but squeezed out of the mobile market space.

Now RIMM has hired JPMorgan and RBC Capital Markets to review its business. This could lead to a possible recommendation to sell a part of the company – if there’s anything left to buy, that is. Rick Summer of Morningstar is skeptical:

“You’ve got a declining user base, a very kludgy operating system there at the same time. I am not sure what you buy. You certainly don’t buy an installed base. I think that BlackBerry users are still pretty excited to get it and replace it with something else along those same lines. The handset business frightens us.”

Although the next generation of the BlackBerry is due this coming year, it’s unlikely that it will make a show of competition. Analysts speculate it will flop, marking RIMM’s last stand in a marketspace it once dominated.

Last week, Wall Street Daily’s Justin Fritz reported on new Alzheimer’s treatment research from Genentech that, if successful, would work wonders for patients – and generate potentially massive revenue for its parent company, Roche Holding (PINK: RHHBY).

Now there’s even more hope for curing late onset mental illness, as scientists in Australia have discovered a molecule in the brain that may hold the key to preventing – or even curing – dementia.

That key, it turns out, is exercise, which has long been known to be good for the brain. But scientists were never quite sure why… until now.

Research out of the University of Queensland now shows that exercise excites a particular molecule called fractalkine, which, in turn, stimulates the growth of new cells associated with memory.

Director at Queensland Brain Institute, Professor Perry Bartlett, says their tests present evidence that a cure for dementia might be possible using this molecule. “If we’re right, we think we can not only stop but perhaps reverse some of the cognitive decline.”

According to the research, there are molecular pathways in mice that affect the brain’s ability to regenerate. And exercise regulates the condition of those pathways.

Bartlett says that fractalkine is “the major regulator of this process [of memory].” It stimulates the production of new nerve cells, which enable learning. With age, the development of those cells slows, reducing the brain’s ability to form new memories. “It turns out these cells, in fact, either stimulate or inhibit the production of these new nerve cells.”

The experiment that supplies the evidence for these claims is relatively simple…

Researchers placed mice on a rotating turntable, a section of which carried a small electrical charge. The mice were then challenged to remember and avoid where the electrical section was, says neuroscientist, Dr. Jana Vukovic. “It doesn’t take them very long to figure out that there is a zone that they should avoid.”

For older mice, however, it was much more difficult. But not after running on an exercise wheel.

After running, the mice developed higher levels of the fractalkine protein in their brains compared to mice that received no exercise.

Should human trials confirm these findings, the discovery could eventually lead to the development of fractalkine supplements, which could be taken to prevent the onset of dementia, or even reverse it.

Fortunately, to benefit from these findings, there’s no need to wait for the supplements to hit the market. Since fractalkine can be generated simply by exercising, just get up off the couch and you’re good to go.

If you’re getting squeamish right about now, chances are you don’t share my feelings on the subject. And you’re certainly not alone, as one of the most common reasons people don’t give blood is that they just don’t like needles.

However, there is one way to ease the stress of giving blood or receiving injections. If you’re hung up on the pain, simply averting your gaze might do the trick, according to a recent study.

Scientific American’s Rose Eveleth reports that researchers “simulated needle pricks by giving participants a little shock to their hand. As they did that, subjects had to watch three different videos. One was of a needle pricking a hand, another was of a Q-tip touching a hand, and the third was just a hand all by its lonesome self.”

In short, participants said that the pain from the shock was much more intense while watching the needle prick video than with the Q-tip.

That trick can’t work for everyone, though. A 2009 study in Australia found that 22% of people aren’t just annoyed with needles, but are downright afraid of them. And that number jumps to 79% for children age seven and up, according to a study conducted by Impulse Research Corporation.

Not good when 8.3% of the U.S. population has diabetes and requires insulin injections on a regular basis, and the CDC projects that the number of people diagnosed with the disease will jump 165% by 2050.

Luckily, researchers at MIT have developed a new injection technology that’s not only painless, but takes drug delivery to another level.

Drug Delivery At the Speed of Sound

This new system looks like a high-tech syringe. But instead of pumping the drugs into the body with applied pressure, the system combines a magnet and a conductive coil to generate the necessary power.

Essentially, once a charge is sent through the coil, the magnet begins to produce force, which activates a piston that sends the drug down the injector’s nozzle.

The delivery speed reaches almost the speed of sound at around 340 meters per second, which can breach the skin without a needle. And it penetrates the skin through an opening no larger than a mosquito would make. If you’ve ever wound up with several mosquito bites without even knowing the insects were around, you can see how this process would cause zero pain.

That would be huge for getting, say, diabetics with an aversion to needles to take their meds regularly. Like one of the lead researchers involved with the technology, Catherine Hogan, says, “If you are afraid of needles and have to frequently self-inject, compliance can be an issue… We think this kind of technology … gets around some of the phobias that people may have about needles.”

The idea behind the technology isn’t exactly new. In fact, WSD Insider subscribers were alerted to a similar technology back in 2010 and were able to pocket gains of 29% on the company behind the breakthrough. (Go here for more information on how to upgrade your subscription to WSD Insider now.)

But this technology kicks it up a notch by allowing doctors to alter the velocity of the drug delivery. That’s huge, considering some people would require less pressure than others. As Hogan says, “If I’m breaching a baby’s skin to deliver vaccine, I won’t need as much pressure as I would need to breach my skin.”

This also means “the device can be programmed to deliver a range of doses to various depths – an improvement over similar jet-injection systems that are now commercially available,” says Jennifer Chu of MIT News.

Better yet, the process can also be used to remove fluid from the body. So eventually, it can work on getting more people comfortable with donating blood, as well.

Not to mention patients aren’t the only ones who would benefit from this technology. “The Centers for Disease Control and Prevention estimates that hospital-based health care workers accidentally prick themselves with needles 385,000 times each year,” says Chu.

Meaning the technology could be just as helpful for inept hospital staff.

Good investing,

Justin Fritz

So what? We all know that China holds nearly $2 trillion in Treasuries, financing around 13% of our national debt.

But China is actually the only central bank in the world that’s allowed to buy Treasuries directly. Every other bank needs to operate through Wall Street banks known as primary dealers.

The trouble is this: Primary dealers don’t charge commissions, so this move isn’t saving China any money. And that means it’s all about secrecy.

By not revealing its bidding procedures to the primary dealers, China can mask its true demand for U.S. bonds. In fact, since the move, China’s bond purchases haven’t even shown up in the official numbers. You can see below that the net purchases have dropped significantly. That’s because China’s selling still shows up, but buying doesn’t.

Even more curious is that this was done without any public notice or acknowledgment. We will eventually pay back that debt – or our children will – and we deserve a reasonable level of transparency concerning whom we owe it to.

Why all the secrecy?

The innocuous explanation is that China believes its money managers can eke out a slightly higher return by managing its trading more efficiently than passing it through Wall Street’s primary dealers. That’s reasonable.

But as China amasses more and more U.S. assets, the ability for Beijing to use its position as our largest creditor to influence policy decisions strengthens.

If we’re going to allow China to amass such holdings behind closed doors, there’s only one defense we have left. There’s a saying that goes: When you owe the bank a million dollars, the bank owns you. When you owe the bank $2 trillion, you own the bank.

The only thing that keeps our own debt from being used as a weapon is that any such actions would tank the value of China’s holdings.

That’s what the numbers say at least… but with these backdoor dealings, who knows how much longer we’ll even have numbers to look at.

Ahead of the tape,

Matthew Weinschenk

Illicit oil operations in Nigeria are rampant. All told, the Niger Delta currently loses an estimated one-fifth of its oil revenue to theft and virtually every village in the area is involved. Royal Dutch Shell (NYSE: RDS.A), the biggest player in the region, claims a loss of 7% of its two million barrels over syndicated theft.

Given such pervasiveness, the country has little hope of ending corruption, but it’s making efforts in that direction nevertheless. The army is carrying out raids to stamp out the illicit aspect of the trade and a new oil law that increases trading transparency is in the pipeline.

However, many fear the proposed transparency of the new law doesn’t go nearly far enough. The government will still be allowed to leave payments and extraction quantities undeclared, keeping the door open wide for continued corrupt transactions and black market operations.

Bypassing the intermediate use of the U.S. dollar, on June 1 China and Japan will begin trading their respective currencies directly. The move comes as part of an agreement forged last year between Tokyo and Beijing to establish free trade between China, Japan and South Korea.

The direct trading will boost the yuan’s profile, reduce transaction costs, narrow trading spreads, and generally shore up trade and financial ties between Asia’s two biggest economies. Despite such benefits, however, its effects will be marginal, according to Head of Japan Strategy at Jefferies Japan, Naomi Fink:

“This measure is small compared to something like an FTA (Free Trade Agreement). If incorporated, if it actually leads to something like a greater economic partnership, then it will only provide additional liquidity, but on its own, it’s probably not enough to change the current structure of the market.”

The saying says, “Sell in May, and go away,” but the selloff actually started in April.

The prices of many small-cap stocks have been decimated to the point where one would think we’re in a bear market.

Yet signs of economic activity abound, interest rates are low and even housing has perked up noticeably. In fact, just last week, the numbers showed a double-digit year-over-year gain in median home prices.

So what gives?

The simplest answer, which is usually the best, is that these small-cap names just aren’t performing as well as their large-cap counterparts. Investors are still skittish, and when a small-cap name doesn’t deliver on its projections or expectations, the prices get trashed.

Additionally, projecting future sales, earnings, margins and growth are much more difficult for a small company than they are for a larger, more established one. Combine that with a small float (fewer shares available for trading) and less overall liquidity (less trading volume), and significant downdrafts can occur in very short periods of time.

The upside to this, however, is that rebounds are that much more dynamic.

And right now, company insiders are signaling that small caps are undervalued … to the point that they are willing to bet big money on a bullish upturn.

The roster of buys in this space is filling up fast and significant money is being spent.

Over just the past few weeks the following companies have seen insiders pony up some big bucks:

• Rait Financial (NYSE: RAS), a high dividend-paying REIT.
• Meru Networks (Nasdaq: MERU), a purveyor of mobile internet communications hardware.
• Windstream (Nasdaq: WIN), a telecommunications company paying a 10%-plus dividend.
• Basic Energy (NYSE: BAS), a supplier of equipment and services to drillers.
• Mela Sciences (Nasdaq: MELA), a company about to launch the most sophisticated Melanoma screening device.
• And Mitek Systems (Nasdaq: MITK), the technology company behind some of the cutting-edge advancements in mobile banking.

In the case of Windstream and Basic Energy, those purchases amounted to millions of dollars.

What’s more, these buys happened when the general market was faltering, which is an even better sign.

That means we have an opportunity to lock-in some big gains by trading on patterns that point to upward momentum in certain stocks.

And remember, that’s the key: It’s not enough for insiders to simply buy shares, there has to be a pattern, as well as fundamentally sound reasons to invest.

Ahead of the tape,

Karim Rahemtulla