Talisman frustrated at pace of asset sales, but encouraged by Duvernay interest

CALGARY – Talisman Energy has not been able to sell assets as quickly as it would like, but its land in Alberta’s promising Duvernay shale has been attracting more interest recently, CEO Hal Kvisle said Tuesday.

As to what sorts of discussions Talisman may be having with Repsol SA about a possible deal, Kvisle was tight-lipped on an analyst conference call. He only reiterated a statement last week confirming the Spanish firm had approached Talisman regarding “various transactions,” but there were no assurances any would come to fruition.

Since Kvisle took charge of Talisman nearly two years ago, the company has been looking to slim down its global portfolio. On Tuesday, the company said it aimed to do $2 billion in deals over the next 12 to 18 months for “long dated, non-core, capital intensive assets,” the proceeds of which would be used to bolster its balance sheet.

The CEO said he’s been “a bit frustrated” with the pace of the company’s divestiture program.

“We’ve been through two or three years of a relatively difficult marketplace. We’re determined not to give assets away for 60 cents on the dollar and I’m very pleased actually at the proceeds we’ve been able to generate as we’ve divested different assets,” he said.

“I’d always like to proceed more quickly on divestments. There are periods in the market when buyers are much more enthusiastic than they have been. Lately, we’ve seen much more interest, for example, in our Duvernay joint venture discussions than was the case a year ago.”

Chief financial officer Paul Smith said Talisman has been “active in the marketplace with potential counterparties from across the globe” regarding a Duvernay partnership and that the company expects to see proposals during the third quarter.

But Talisman is holding off on seeking a deal for its potentially huge oil discovery in the semi-autonomous Iraqi region of Kurdistan “given the complex geopolitical landscape” in the region, Smith said.

Kvisle said the company may need to make some “tough decisions” on whether to abandon higher-cost properties in the North Sea, where operational upsets have been a chronic problem.

Last year, the company announced a $1.5-billion deal to sell most of its natural gas holdings in northeastern British Columbia’s Montney formation to Malaysia’s Petronas, as well as the $595-million sale of its stake in a Colombian oil pipeline. A handful of smaller deals in Western Canada and southeast Asia were announced this year.

Talisman has for years been the subject of takeover speculation, but observers say Repsol is likely more interested in scooping up individual Talisman assets rather than buying the whole package.

Following the expropriation of its Argentinian holdings in 2012, Repsol has signalled it would look for growth in countries that are members of the Organization for Economic Co-Operation and Development, but good chunk of Talisman’s portfolio does not fall into that category. However, analysts have said the Duvernay land could be a good fit for Repsol.

Talisman is focused on two core regions: the Americas, which includes North American shale deposits and Colombian oilfields, and southeast Asia.

Earlier Tuesday, Talisman said it lost US$237 million during the second quarter, as an impairment charge and hedging loses weighed on its bottom line.

The net loss amounted to 23 cents per share, compared to a profit of $97 million, or nine cents per share, during the same period a year earlier.

Stripped of unusual items, Talisman posted a loss of a penny per share, missing the average analyst estimate of a four-cent profit, according to Thomson Reuters.

Cash flow was $567 million, up eight per cent year-over-year and in line with analyst expectations of 55 cents per share.

Revenue was $1.24 billion compared with $1.19 billion in the same quarter last year.

Total production was 375,000 barrels of oil equivalent per day, up four per cent year-over-year.

Production of lucrative liquids from Talisman’s core areas was up 20 per cent from a year earlier.

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