(Adds quotes, details on Pertamina, Duvernay, Talisman)
By Nia Williams
CALGARY, Alberta, June 11 (Reuters) - Indonesia’s state energy firm Pertamina is in talks with Canadian energy company Talisman Energy Inc about a potential partnership in Alberta’s Duvernay shale play, Pertamina chairman Dr Sugiharto said on Wednesday.
Speaking at an energy conference in Calgary, Alberta, Sugiharto said discussions were in their initial phases but Talisman had huge undeveloped reserves in the Duvernay and Pertamina should be able to develop a partnership in Canada.
“We spent the whole morning yesterday with them and met their CEO, they made a full presentation about the Duvernay blocks,” Sugiharto said, speaking to reporters after a speech.
“I believe having experienced since 1998 partnership with Talisman we should be able to develop a partnership here in Canada.”
Talisman, Canada’s No. 5 independent oil producer, is already in partnership with Pertamina in five blocks in Indonesia. South-East Asia’s largest economy was once self-sufficient in oil and gas but is now buying overseas oil and gas assets to supplement declining domestic output.
Pertamina’s capital expenditure budget is $7.9 billion in 2014, Sugiharto said. Over the next five years, the company plans to spend $61 billion, 83 percent of which will be on upstream development including mergers and acquisitions.
Sugiharto said Pertamina still needed to undertake due diligence on the Duvernay blocks and the company had no time line in mind.
It would be Pertamina’s first investment in Canada’s oil industry. Last year the company held discussions with Norwegian company Statoil and Thailand’s PTTEP Canada about their oil sands leases.
“Last year we had been trying to solicit merger and acquisition here in Canada, the blocks operated by Statoil and PTT, but we felt that the target would not sit with our terms and conditions,” Sugiharto said, referring to PTTEP Canada’s parent company.
Talisman holds approximately 352,000 net acres of land in the liquids-rich Duvernay play in west-central Alberta and has said it will hunt for a joint-venture partner for its substantial holdings.
The company has been selling assets and cutting costs as it looks to return to consistent profitability and boost shares that have underperformed its peers in recent years.
“In the Duvernay, we drilled two wells in the first quarter to retain acreage and to delineate our extensive land holdings. We will need third party funding to fully develop the play and work is underway to bring in a suitable partner,” chief executive officer Hal Kvisle said in an earnings call last month.
Talisman spokesman Kyle Glennie declined to comment on the Pertamina talks.
Shares in Talisman were last up 23 cents on the day at C$11.23 on the Toronto Stock Exchange. (Additional reporting by Scott Haggett; editing by Andrew Hay)