Canadian energy explorer
Talisman Energy Inc.
), inked a deal with Progress Energy Canada Ltd. - a unit of
Malaysia's national oil firm, Petronas - to partly sell off its
Montney assets in north-east British Columbia for a cash
consideration of approximately $1.4 billion (C$1.5 billion). The
move is part of its restructuring program.
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The natural gas asset sale involves about 127,000 net acres or
75% of Talisman's holding in the Farrell Creek and Cypress areas.
As of Oct 1, the Farrell Creek assets produced about 65 million
cubic feet equivalent per day. The acreage is expected to see
increased production in the fourth quarter as the company
finishes its 2013 completion program. The deal also includes an
$800 million drilling cost.
Per management, the Montney sale brings significant returns on
the company's investment. The divestment is in accordance with
the $2-$3 billion asset sale the company plans to achieve by mid
2014. Following necessary regulatory approvals - expected in the
first quarter of next year - Talisman plans to utilize the sale
proceeds to lower the debt level and strengthen financials.
The Calgary, Alberta-based company would retain about 48,000 net
acreage in the Montney area, through its Groundbirch and Saturn
assets. The sale facilitates the company to give greater
attention to its Edson-Duvernay assets.
Post announcement, shares of Talisman were up 1.3% from the
previous close, settling at $11.86 on Nov 8.
Talisman Energy is a major independent oil and gas exploration
and production (E&P) company, with operations in North
America (primarily Canada) and several international regions.
Talisman Energy currently retains a Zacks Rank #3 (Hold),
implying that it is expected to perform in line with the broader
U.S. equity market over the next one to three months.
Meanwhile, there are other companies in the E&P industry that
are expected to perform better in the short term. These include
Zacks Rank #1 (Strong Buy)
TransGlobe Energy Corp.
Baytex Energy Corp.
Bellatrix Exploration Ltd.