QUOTE AND NEWS
OilVoice  Feb 19  Comment 
Talisman Energy Inc. TSXTLM NYSETLM announced today that the holders of its Common Shares and Preferred Shares have approved the proposed arrangement under which Repsol S.A. through a whollyow
Reuters  Feb 18  Comment 
Talisman Energy Inc common shareholders on Wednesday voted to approve an $8.3 billion offer for the Canadian oil and gas producer from Repsol SA, clearing the way...
Benzinga  Feb 10  Comment 
Canada's Talisman Energy Inc (NYSE: TLM) reported a wider loss for the fourth quarter. The Calgary, Canada-based company posted a quarterly net loss of $1.59 billion, or $1.54 per share, versus year-ago loss of $1.01 billion, or $0.98 per share....
Benzinga  Dec 17  Comment 
Talisman Energy Inc. (USA) (NYSE: TLM)'s stock has more than doubled in price since last Tuesday, jumping from $3.74 to over $7.50 in seven days. The upsurge was set in motion by speculation regarding a takeover from Spain's Repsol SA...
Yahoo  Dec 16  Comment 
Spain's Repsol has agreed to buy Talisman Energy , Canada's fifth-largest independent oil producer, for $13 billion as the drop in oil prices pushes energy companies to take the plunge on big M&A deals. ...
TheStreet.com  Dec 15  Comment 
NEW YORK (TheStreet) -- Shares of Talisman Energy closed higher by 19.35% to $5.12 on heavy trading volume Monday following reports that Repsol   is still in talks to acquire the oil and gas company, Bloomberg reports. On Friday, senior...
Benzinga  Dec 15  Comment 
Talisman Energy Inc. (USA) (NYSE: TLM) was up about 19 percent Monday, as the company confirmed its engagement in discussions with Repsol SA (ADR) (OTC: REPYY) regarding a potential acquisition. According to a press release issued by Talisman...
TheStreet.com  Dec 15  Comment 
NEW YORK (TheStreet) -- Shares of Talisman Energy were gaining 22.8% to $5.27 in morning trading Monday after the oil and gas company confirmed it is in talks with Repsol about a potential transaction. In its statement Talisman said that it...




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Talisman Energy (NYSE:TLM) is primarily an Oil and gas exploration and production company with some natural gas midstream operations in Canada. Their operations can be segmented into 3 sections: North America (primarily Canadian natural gas), North Sea (mostly oil) and Southeast Asia (mostly oil with some nat. gas). They also have non-operating interests in African energy plays.

This is a relatively more exciting company in the oil space. Almost all of the growth visibility is mired in nasty oil sands, politically hostile territories, deep beneath the ocean or in the hands of national oil companies who put politics ahead of profits. Throw in an escalating cost environment and the outlook for oil companies is highly uncertain, even as the outlook for the commodity couldn't be stronger.

Company Overview

Like many growing resource companies, TLM's capital expenditure is uneven, swinging from heavy outlays one year to big free cash flow (FCF) another year. At some point, the company has to be able to convert its assets into cash for the owners.

Business Segments

In 2009, TLM earned a total of $6.2 billion in total revenues. This was a decline from its 2008 total revenues of $8.1 billion. As a result, this had an adverse effect on TLM's net income. Between 2008 and 2009, TLM's net income declined from a net profit of $2.75 billion in 2008 to a net loss of $675 million in 2009.

Trends and Forces

Divesting Non core assets

Looking at their capital structure, the company is in the process of divesting non-core assets. They're in the midst of a share buyback program and plan on using sales proceeds to pay down some of the debt and for buybacks. The company pays a small dividend (1% yield on 8% payout ratio) but has increased it near 20% annually over the last few years. The trend of divesting non core assets should help the company improve their overall profitability as it allows TLM to focus on areas where they have the most expertise.

Diverse Portfolio

TLM has a widely diverse portfolio. For instance, they have a big natural gas component in Canada, which is expected perform well as oil sands production ramps up. They also have light oil crude assets in the North Sea and Southeast Asia are in high-demand with good price realizations. Furthermore, Talisman has divested their oil sands assets and now has no bitumen reserves in its portfolio. The diversity of TLM's products as well as its geographic diversity makes TLM's risk lower than it otherwise would be.

Competitors

EnCana – refocused on Canadian oil sands projects and North American natural gas

  • Huge gas wells drilled in the Deep Bossier region of TX
  • Partnering with ConocoPhillips in the oil sands play
  • Oil sands subject to significant cost overruns
  • Rockies exposure not ideal

Devon Energy - attractively valued but paying more for revenues; more balanced gas/oil portfolio Barnett Shale- holdings should provide stable reserves replacement for years

  • good net margins
  • More exposure to oil in Gulf of Mexico
  • Growth primarily through acquisitions ($5.5 billion in goodwill)
  • Riskier exploration plays (10,000 feet deepwater Jack project, Brazilian offshore, etc).
  • Jackfish oil sands project in Alberta subject to oil sands difficulties (higher costs, nat. gas and water shortages, etc)

References

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