Takeover report spurs Talisman
JEFFREY JONES
Reuters
May 26, 2008 at 4:41 PM EDT
CALGARY — Talisman Energy Inc. shares jumped more than 6 per cent Monday after a Hong Kong newspaper reported CNOOC Ltd, China's No. 3 oil company, was in talks to buy the Canadian firm or some of its assets.
Talisman, Canada's third largest independent oil explorer, jumped $1.51 to $24.70 on the Toronto Stock Exchange following the report in the South China Morning Post, quoting unnamed sources.
It comes a week after Calgary-based Talisman laid out details of an overhaul aimed at concentrating money and efforts on its highest-return assets around the world, a program that could mean up to $2-billion in asset sales.
A Talisman spokeswoman declined to comment on the CNOOC report.
Talisman Energy
Chief executive officer John Manzoni plans to sell operations in the Netherlands, Trinidad and Denmark that produce up to 40,000 barrels of oil equivalent a day.
Talisman, with a stock market value of more than $24-billion, will focus its efforts on assets in Southeast Asia, the North Sea and on unconventional oil and natural gas in North America, Mr. Manzoni said recently.
“I don't know of anything going on but I can't see any reason why CNOOC would not be interested in Talisman. Everybody should be interested in Talisman,” Raymond James analyst Stephen Calderwood said.
After Talisman released its strategic plan last week, Mr. Calderwood raised his six-to 12-month target price by 12 per cent to between $25 and $28 and kept his “outperform” rating on the stock.
He noted that Talisman's previous CEO, Jim Buckee, was resistant to calls from some investors to break the company into smaller firms along geographic lines, citing the prospect of a tax hit.
However, a breakup could still be possible through a cash bid at a premium to the current price, then a reorganization of the assets over a number of years, he wrote last week.
Some analysts also said it could be possible that CNOOC was in talks to acquire assets Talisman has earmarked for sale.
The goal of the company's reorganization is to rebuild credibility with investors who have been disappointed by a series of missed operational and financial targets.
Mr. Manzoni spent much of last week explaining the strategy to investors in New York, Toronto and Calgary.
A big question mark for any oil acquisition by a Chinese state-controlled company would be the reaction of Ottawa, which recently blocked a foreign takeover of MacDonald, Dettwiler and Associates Ltd.'s space robotic and satellite technology business on national security concerns.
In 2005, CNOOC's bid for another big North American oil company, Unocal, was thwarted when U.S. politicians scuttled the deal.
Talisman's Asian operations, seen as major drivers of the company's plans for steady production increases, are located in Indonesia, Malaysia and Vietnam.
In January, CNOOC and Talisman settled a long-running dispute over ownership of the Tangguh liquefied natural gas project in Indonesia, when the Chinese company sold Talisman a 3.06 per cent interest for $212.5-million.