Embattled Talisman Energy is considering a whole or partial sale of its “jewel in the crown” Asia assets as it faces pressure from investors to reduce debt.
Calgary-based Talisman, which owns just over half of the North Sea Talisman Sinopec operation, is reported to be reviewing its Asian oil and gas portfolio, valued at about £2.4billion.
Talisman, Canada’s No. 5 independent oil producer, has been slimming its operations and cutting debt in an effort to boost its share price to satisfy disgruntled and activist investors such as Carl Icahn.
The review marks a major shift in business strategy for a company that classifies its Asian portfolio as a core asset.
Talisman is still thought to be is seeking to sell off its North Sea assets, including its 51% share of a joint venture with Chinese state-owned Sinopec which was formed in a £932million deal in 2012.
But the process could be delayed. Last month Marathon Oil, which owns similar aging North Sea assets and decomissioning liabilities as Talisman, cancelled plans to sell its operations in the UKCS after failing to find a suitable buyer.
The firm continues to struggle with its North Sea assets. In March, Talisman Sinopec had to shut down its Montrose platform after tests revealed firefighting equipment was leaking, rusty and blocked, resulting in the placement of an HSE improvement notice.
The firm also shocked the North Sea oil community by announcing the sudden departure of its UK boss, Geoff Holmes in May.
The review of its assets will force Talisman to make some tough choices.
It is unclear whether it will opt to sell the entire Asian portfolio or retain some assets, sources said. A partial listing of the assets is one of the options being discussed, they added.
Talisman plans to put £1.2billion worth of assets on the market in the next 12-18 months, after raising £3.9billion through asset disposals since 2011, according the company website. The company does not disclose the names of the projects it plans to sell as part of its restructure.
Talisman owns oil and gas assets in Indonesia, Malaysia, Vietnam, and the Asia-Pacific region is expected to generate about £707million, or nearly half, of Talisman’s 2014 estimated cash flow.
Talisman joins a list of other independent oil and gas producers such as Hess Corp and Newfield Exploration in divesting Asian assets in an effort to focus on their core home markets.
