THE FUTURE of Talisman Energy’s stake in Papua New Guinean projects is unclear as Spanish state-owned giant Repsol moves closer to an acquisition of the Canadian company.
Speaking in November 2014 following the release of the group’s third quarter results, Talisman chief financial officer Paul Smith told analysts the company had set a target of C$2 billion to sell “primarily long dated and capital intensive assets” by mid-2015.
“In PNG, we continue to look to farm-down near–term capital expenditure, having concluded an arrangement with Santos in three exploration licenses in the Western Province earlier this year,” he said at the time.
“Further, if there is broader external interest, we may also reduce our exposure with license divestments, or even a full disposition of our position in PNG.”
Talisman holds a 40 per cent stake in the PDL 10 licence, the base of the Stanley liquids and domestic gas project operated by Horizon Oil.
It is also the operator of PNG petroleum production licences 261, 426, in which Australian group Santos holds a 30% stake, and PPL 287 in which Talisman and Santos each own 50%.
In its end of year announcement, Santos said gas discoveries had been made at Manta 1 on PPL 426 – testing at 44 million cubic feet gas per day, and at the NW Koko 1 well in PPL 261, which tested at 48 mmscfd.
Since that announcement was made, both the Talisman board and its shareholders have voted in favour of a takeover bid issued by Repsol – with the deal expected to be concluded during the second quarter of 2015.
Repsol has been investigating acquisition targets, with a focus on North America, since The Wison Ofshore & Marine-built Caribbean FLNG vessel – one of three development options for the Pandora field. Image courtesy Wison Ofshore & Marine. It secured US$5 billion compensation from the Argentine government earlier this year following its seizure of assets from Argentina-focused YPF from Repsol in 2012.
Acquiring the group will see Repsol’s upstream business double, with half of its exploration capital to be dedicated to North America following the deal, with its Latin American interests to make up another 22%.
In the announcement of its 2014 results, Repsol said the acquisition would make it a more balanced group in terms of the composition and geographical location of its assets, saying the increased geographic diversity would incorporate assets that will serve as a platform for future value creation.
The company recorded a net profit of €1.61 billion for the 2014 calendar year, which the group said reflected the strength of its business model.