) entered into a sales agreement with Russian oil behemoth Lukoil
CHEVRON CORP (CVX): Free Stock Analysis
TALISMAN ENERGY (TLM): Free Stock Analysis
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Per the deal, Lukoil will acquire 25% interest in an offshore
exploration and development block - SL-4B-10 - in the Gulf of
Guinea from Talisman. However, none of the firms disclosed the
financial aspects of the transaction.
Spanning over an area of nearly 850 square miles, the SL-4B-10
concession lies off the coast of Sierra Leone at a water depth of
about 330 feet to 9850 feet. Talisman acts as the operator of the
block, while Malaysia-based Petronas and U.K.'s Prontinal Ltd.
co-partners the project with 25% and 20% stakes, respectively.
While, in 2003, the framework agreement for the SL-4B-10 block
was signed, first phase of the project - comprising 2D and 3D
seismic surveys - were completed in 2009. The evaluation showed
the possible presence of a number of pay zones.
The offshore region of African nation - Sierra Leone is
attracting many foreign companies in recent times. In late
September, an affiliate of
) announced its plan to explore two deepwater blocks - SL-08A and
SL-08B, in the region.
We maintain our long-term Neutral recommendation on Talisman - a
major independent oil and gas company that conducts operations in
North America (primarily Canada) and several other international
regions. Talisman currently holds a Zacks #3 Rank (Hold rating)
in the short run.
Recently, the company reported weak third-quarter 2012 results
due to lower price realizations. Talisman announced loss per
share from continuing operations (excluding non-operating items)
of 4 cents, as against the Zacks Consensus Estimate for earnings
of 6 cents.
However, we expect Talisman to reap benefits from its solid base
business in Western Canada and in the U.K. North Sea in the
coming days. The company's major position in the prolific
Marcellus Shale play in western Pennsylvania and the nascent
Montney formation in northeastern British Columbia and
northwestern Alberta also provides a highly visible and
cost-effective production-growth profile.