NEW YORK (Reuters) - Canadian oil and gas company Talisman Energy Inc TLM.TO is exploring the sale of its shale assets in the Eagle Ford basin in south Texas, hoping it could raise as much as $2 billion, two people familiar with the matter said on Monday.
Talisman is working with Royal Bank of Canada (RY.TO) and has reached out to a few potential buyers, including private equity, to gauge interest, one of the sources added.
The people asked not to be identified because the matter is confidential. They cautioned that the talks are at a very early stage and may not lead to a sale.
Talisman and Royal Bank of Canada declined to comment.
Talisman owns about 74,000 acres of land in the Eagle Ford, where it has a joint venture with Norway’s Statoil ASA STL.OL, according to the company’s website. Its production in the region averaged 15 million barrels of oil equivalent per day (mboe/d) in 2012, up from 5 mboe/d in 2011. Its full-year guidance is currently for around 30 mboe/d.
Talisman has announced that it is considering the sale of $2 billion to $3 billion of non-core assets. But the company’s holdings in the liquids-rich Eagle Ford have generally been considered among the company’s best and therefore core.
Talisman has said it plans to continue to develop its holdings in the region, where it ended 2012 with a significant backlog of wells. It said that constraints with infrastructure have hampered the pace of development and has also worked to speed up the drilling process and cut costs.
One of the sources said that outperformance by peers in the Eagle Ford could be adding to pressure on the Calgary, Alberta-based company. Based on their agreement, Talisman will transfer operatorship of the eastern part of the Eagle Ford shale play to Statoil this year. Talisman entered into a joint venture with Statoil in the Eagle Ford in 2010.
Shale gas - natural gas trapped in layered rock, rather than porous reservoirs - has revolutionized the U.S. gas market by offering an abundant new supply source, driving prices down.
Like many of its peers, Talisman has ratcheted back spending on dry gas in North America, as prices for the fuel have hovered around $3 per million British thermal units, and has gone on the hunt for more lucrative liquids-rich prospects.
Talisman Chief Executive Hal Kvisle, who took over as chief executive last September following the abrupt departure of John Manzoni, is refocusing the company’s sprawling global operations to concentrate on North and South America and Southeast Asia and is shifting its production away from low-value natural gas.
Talisman has said that it is looking at its strategic options on its positions in the Montney and Duvernay shales in Canada, as well as its stake in the Ocensa pipeline in Colombia.
Kvisle has said he expected all its assets outside its core regions could potentially be sold, including its properties in Norway’s North Sea and its new discoveries in Iraq’s Kurdistan region.
The company completed the sale of a 49 percent stake in its North Sea operations to Sinopec for $1.5 billion in December.
Talisman shares closed at C$11.84 on the Toronto Stock Exchange on Monday, giving the company a market value of C$12.3 billion ($12.1 billion).
Reporting by Michael Erman and Greg Roumeliotis in New York; Additional reporting by Euan Rocha in Toronto; Editing by Ryan Woo and Ed Davies