Talisman Energy Inc. (TLM) has agreed to sell a number of its non-core Canadian assets for total proceeds of C$1.9 billion. The sale is expected to take place in five transactions.
These transactions include the sale of roughly one million net acres of land in the greater Peace River Arch, central Alberta Foothills and greater Hinton areas in Alberta, as well as the company’s Ontario properties. The current production capacity of these assets is about 42,500 barrels of oil equivalent per day (Boe/d), consisting roughly 90% natural gas. Net proved reserves for the assets sum to 120 million barrels of oil equivalent (MMBoe).
The sale equates to approximately $44,000 per Boe/d and $16 per Boe of proved reserves and seven times cash flow. These transactions are expected to be finalized by the end of the second quarter of 2010, subject to normal regulatory approvals.
Management believes the sale of these excellent assets is value accretive and will help the company focus on financing and building its growing, low-cost North American shale gas business.
Calgary, Alberta-based Talisman Energy is an upstream oil and gas company engaged in the exploration, development, production, transportation, and marketing of crude oil, natural gas, and natural gas liquids. Talisman’s three main operating areas are North America, the North Sea and Southeast Asia. The company also has a portfolio of international exploration opportunities.
We like Talisman for its solid base business in Western Canada and the U.K. North Sea, while offering exposure to some of the most prospective unconventional natural gas plays in North America and high-impact exploration prospects worldwide.
We continue to believe that Talisman remains better positioned to navigate the current downturn, given its growing resource-play focus and balance sheet strength. However, given its exposure to the highly cyclical and capital-intensive E&P sector offset we maintain our Neutral recommendation on TLM.
Read the full analyst report on “TLM”
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