As per media reports, Canadian energy explorer, Talisman Energy Inc. (TLM) is planning to sell 40.1% and 33.3% of its stake respectively in Laminaria and Corallina oil fields’ projects − located off the coast of northern Australia. Woodside Petroleum Limited – an Australian upstream energy firm – operates both projects and owns the remaining interest.
In a joint venture with Woodside Petroleum, Talisman Energy started the Laminaria and Corallina oil fields’ developments – worth $1.3 billion in total – in 1999.
Talisman Energy’s plan to divest its stake in both the oil fields reflects its intention to get rid of those properties that do not fit into its long-term growth plan. The proceeds from the sale will likely be allocated by the company toward its growth projects and for paying off the pending net debt − which was roughly $3.8 billion as of Mar 2014. Talisman Energy sold assets worth $2.0 billion in 2013 and also targets the divestiture of more non-core resources in the coming 18 months to generate another $2.0 billion.
Calgary, Alberta-based 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.
We like Talisman Energy for its solid base business in Western Canada and in the U.K. North Sea, while offering exposure to some of the most prospective unconventional natural gas plays in North America and high-impact exploration prospects worldwide.
However, Talisman Energy’s extensive natural gas exposure raises its sensitivity to gas price fluctuations, compared to its more diversified independent peers with higher oil production. The company, which derives more than half of its reserves/production from natural gas, has seen its sales and income fluctuate in recent times due to volatile gas prices.
As a result, the company currently carries a Zacks Rank #3 (Hold), which implies that it would to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at better-ranked players in the energy sector like QEP Resources Inc. (QEP), Ultra Petroleum Corp. (UPL) and Pembina Pipeline Corp. (PBA). All these stocks sport a Zacks Rank #1 (Strong Buy).