Talisman, boosted by Repsol talk, may be worth more in pieces

Thu Jul 24, 2014 7:59pm EDT
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By Scott Haggett and Euan Rocha

CALGARY/TORONTO, July 24 (Reuters) - Canadian oil and gas producer Talisman Energy, approached by Spain's Repsol for talks over a potential deal, may find that its appeal lies more in its individual assets than as a candidate for a complete takeover.

Talisman, which has a market capitalization of nearly $11 billion ($10.2 billion), has long been considered a takeover target as its stock slumped on weak natural gas prices.

Its far-flung global operations include attractive assets stretching from Texas to Vietnam. But it also owns assets in the North Sea that have consistently missed production targets.

Bankers, former investors and analysts say the Calgary firm will not lack for suitors for its individual assets. But taking on the entire company, which has been in midst of restructuring that has seen it cut debt and trim operations, may be a tough ask, partly because its assets are disparate.

"Everyone is looking at tuck-in assets like conventional oil and conventional gas and deepwater oil that they can add to their portfolio and keep the growth curve going," said an energy banker familiar with Talisman who asked not to be identified.

"I think that a sale of the company is not going to happen, because I don't think the final price per share would be fair for them, or particularly attractive."

The banker said a more likely scenario was a bidding war for Talisman's more lucrative assets, such as those in Southeast Asia which are seen as its crown jewels. These include oil and gas assets in Indonesia, Malaysia and Vietnam expected to generate a large part of its 2014 cash flow.

"The assets that people want are the assets that everybody wants," he said.   Continued...