UPDATE 2-Talisman to sell non-core assets in overhaul plan
(Adds investor, analyst comments, details)
By Jeffrey Jones and Scott Haggett
CALGARY, Alberta, May 20 (Reuters) - Talisman Energy Inc (TLM.TO) plans to sell operations in the Netherlands, Trinidad and Denmark in a restructuring to hone its assets and wring out higher, more predictable returns, Canada's No. 3 independent oil explorer said on Tuesday.
As part of the strategy, in the works since John Manzoni took over as chief executive last year, Talisman aims to sell non-core assets pumping up to 45,000 barrels of oil equivalent a day, for as much as C$2 billion ($2 billion), by the end of 2009.
That would represent up to 11 percent of the volume that the company produced in the first quarter of this year.
With oil prices at record highs near $130 a barrel, Talisman will boost spending this year by C$500 million to C$4.9 billion, and may spend C$5.8 billion in 2009, to bolster exploration and production in Southeast Asia, Norway and in unconventional North American operations, it said.
Manzoni, a former BP Plc (BP.L) executive, said after taking the helm in September that Talisman had to rebuild credibility with investors following a series of missed financial and operational targets.
The key was a sweeping review of the company's widespread businesses, which are also located in North Africa and Peru.
Talisman's shares are up 14 percent in the past year, underperforming a 27 percent gain in the Toronto Stock Exchange's oil and gas subindex. They closed up 96 Canadian cents, or 4 percent, at C$24.90 on Tuesday.
"The stock has lagged, production increases have been disappointing for the last couple of years and that's been part of the problem as they've made promises and not delivered. Something had to be done," said Len Racioppo, chief investment officer for Jarislowsky Fraser, Talisman's top stockholder with 67.7 million shares at the end of March, according to Reuters data.
AIMS TO BOOST OUTPUT
Manzoni aims to boost output by 5 percent to 8 percent a year through 2009, then 5 percent to 10 percent through 2012.
As part of the plan, Talisman will reposition itself in the North Sea to maintain output at 80,000 to 100,000 barrels a day. The region brought Talisman some of its biggest production gains, but also many recent operational delays amid large capital expenditures.
Cash flow from those assets and North American output will fund growth projects elsewhere. The company will still spend about C$1 billion a year in the U.K. North Sea, however.
"It's in line with what Manzoni has been indicating," Genuity Capital Markets analyst Phil Skolnick said. "It's absolutely what (Talisman) needed to do, go after longer-life assets and no longer try to grow as fast as you can in the U.K. North Sea."
Talisman had already announced the $83 million sale of its Danish unit and served notice that it will prune elsewhere.
In recent years, the Trinidad and Tobago properties had been touted as having major exploration potential.
"It has gas upside but we were looking for a big oil hit," Talisman spokesman Dave Mann said.
Most of the new 2008 spending will be directed at unconventional gas plays in North America, the company said.
Prospects like tight sands and shale gas plays -- which require numerous wells and high-tech rock fracturing techniques -- have created a buzz in the industry as several players have announced finds in the trillions of cubic feet.
Talisman has such prospects in British Columbia and Quebec as well as in the Appalachian region of the United States, and may spend as much as C$1.3 billion evaluating them, it said. ($1=$0.99 Canadian) (Editing by Rob Wilson)
