Sinopec pays $1.5 billion for Talisman North Sea Stake
By Scott Haggett
CALGARY, Alberta (Reuters) - Talisman Energy Inc TLM.TO said on Monday that Sinopec Corp (600028.SS: Quote), China's top refiner, had agreed to buy a 49 percent stake in its North Sea operations for $1.5 billion as the Canadian company looks to strengthen a balance sheet battered by weak natural gas prices.
Talisman, Canada's No. 6 oil and gas exploration company, will form a joint venture with Sinopec to operate the assets, which produced 89,000 barrels per day of oil and 43 million cubic feet per day of natural gas in the first quarter of 2012.
Talisman has long looked to lower its stake in the North Sea, where it has had little exploration success and where higher taxes have lifted costs. Chief Executive John Manzoni has deployed cash generated in the region into Talisman's promising North American shale fields and its Southeast Asian oil fields.
"Talisman has delivered on two key promises for the year," Manzoni said in a statement.
"We are reducing our working interest and capital spend in the UK business by approximately half, allowing us to focus on and fund growth areas within our portfolio."
It was the second major investment in a Canadian oil explorer by a Chinese company announced on Monday, after CNOOC Ltd (0883.HK: Quote) agreed to buy Nexen Inc NXY.TO for $15.1 billion. That was China's largest offer for a foreign oil producer since U.S. regulators foiled an $18.5 billion bid for Unocal Corp in 2005.
Sinopec will take a 49 percent stake in Talisman's North Sea assets, which Talisman will operate. With a partner on board, Talisman said it will defer decommissioning of some platforms and look to do additional infill drilling and exploration.
Talisman, whose stock was up almost 7 percent early on Monday, said Sinopec will be able to appoint its employees into key positions within Talisman Energy (UK) Ltd. Continued...