Talisman Energy Inc. (TSX: TLM)(NYSE: TLM) has announced it is
deepening its strategic relationship with Sasol Limited (Sasol) in
the Montney shale play, to include the sale of a 50% net working
interest in its Cypress A assets, for a total consideration of
C$1,050 million. Talisman will operate and manage the Cypress A and
Farrell Creek areas as an integrated development project.
"This transaction allows Talisman and Sasol to unlock additional
value in the world-class Montney shale play and potentially
accelerate development of the resources in the area," said John A.
Manzoni, President & CEO of Talisman. "The Cypress A assets are
very similar to Farrell Creek and, with our partner, we will now
build an integrated long-term development plan for the area."
"This additional acquisition of another high quality natural gas
asset will accelerate our upstream growth while also potentially
advancing Sasol's already strong GTL value proposition utilizing
our proprietary technology," said Sasol chief executive, Pat
Davies.
In December 2010, Talisman and Sasol announced a similar
transaction for the acquisition of a 50% net interest in Talisman's
Farrell Creek properties in the Montney shale play, with Sasol
acquiring an estimated 4.8 tcfe of net contingent resource. This
transaction closed on March 1, 2011.
The Cypress A transaction represents the sale of approximately
14% (5.6 tcfe) of Talisman's remaining estimated 39 tcfe of net
contingent resource in the play and approximately 17% (28,600 net
acres) of the company's net Tier 1 acres of land in the Montney
shale. Sasol will pay 25% of the consideration (approximately C$260
million) in cash at closing. Sasol will also provide an additional
C$790 million to fund 75% of Talisman's future capital commitments
in the integrated joint-venture development area.
The Cypress A transaction is subject to regulatory approvals and
is expected to close by the end of the third quarter 2011.
Upon closing, Talisman will hold an estimated 34 tcfe of net
contingent resource and 139,000 net acres of Tier 1 acreage in the
Montney shale play, including Farrell Creek, Greater Groundbirch
and the Greater Cypress area. The Cypress A properties are part of
the Greater Cypress area, approximately 25 miles northwest of
Farrell Creek. The Talisman and Sasol joint venture partners do not
expect to commence commercial development at Cypress A, which is
less mature than Farrell Creek, for several years. A number of
options for long term egress from the area are being
considered.
Sasol and Talisman have commenced a feasibility study to examine
a world scale gas-to-liquids (GTL) facility in Western Canada, with
Talisman having the option to participate as a 50% partner in the
facility. This could provide a strategic alternative to traditional
North America pipeline or LNG markets. The GTL process produces
premium, clean liquids fuel. Sasol is leading this study with a
front-end engineering design decision likely in the second half of
next year.
Sasol is an integrated energy and chemicals company. Sasol is
one of two companies with commercial GTL technology, with operating
GTL projects in South Africa and Qatar, a project under
construction in Nigeria and proposed developments in a number of
countries around the world. Sasol is looking at expanding its
proprietary GTL technology in new markets. Sasol is listed on the
Johannesburg and New York Stock Exchanges, with a market
capitalization of approximately US$35 billion. The company is also
active in exploration and development across Africa and Asia.
Goldman, Sachs & Co. and Jefferies & Company acted as
advisors for Talisman on this transaction.
Talisman Energy Inc. is a global, diversified, upstream oil and
gas company, headquartered in Canada. Talisman's three main
operating areas are North America, the North Sea and Southeast
Asia. The Company also has a portfolio of international exploration
opportunities. Talisman is committed to conducting business safely,
in a socially and environmentally responsible manner, and is
included in the Dow Jones Sustainability (North America) Index.
Talisman is listed on the Toronto and New York stock exchanges
under the symbol TLM. Please visit our website at
www.talisman-energy.com.
Advisories
Forward-Looking Information
This news release contains information that constitutes
"forward-looking information" or "forward-looking statements"
(collectively "forward-looking information") within the meaning of
applicable securities legislation. This forward-looking information
includes, among others, statements regarding: business strategy,
priorities and plans; planned development and future capital
commitments; future consideration of options for long term egress,
the expected timing to closing of the transaction; future
consideration of alternative marketing options for GTL technology
and the potential outlook for GTL in North America; the expected
timing of an engineering design decision for a downstream GTL
facility; and other expectations, beliefs, plans, goals,
objectives, assumptions, information and statements about possible
future events, conditions, results of operations or
performance.
Undue reliance should not be placed on forward-looking
information. Forward-looking information is based on current
expectations, estimates and projections that involve a number of
risks which could cause actual results to vary and in some
instances to differ materially from those anticipated by Talisman
and described in the forward-looking information contained in this
news release. The material risk factors include, but are not
limited to: the risks of the oil and gas industry, such as
operational risks in exploring for, developing and producing crude
oil and natural gas, market demand and unpredictable facilities
outages; risks and uncertainties involving geology of oil and gas
deposits; uncertainty related to securing sufficient egress and
markets to meet shale gas production; the uncertainty of reserves
and resources estimates, and underlying reservoir risk; potential
delays or changes in plans with respect to exploration or
development projects or capital expenditures; fluctuations in oil
and gas prices, foreign currency exchange rates and interest rates;
the outcome and effects of any future acquisitions and
dispositions; health, safety and environmental risks; changes in
general economic and business conditions; and the possibility that
government policies or laws may change or governmental approvals
may be delayed or withheld.
The foregoing list of risk factors is not exhaustive. Additional
information on these and other factors which could affect the
Company's operations or financial results or strategy are included
in Talisman's most recent Annual Information Form. In addition,
information is available in the Company's other reports on fie with
Canadian securities regulatory authorities and the SEC.
Forward-looking information is based on the estimates and opinions
of the Company's management at the time the information is
presented. The Company assumes no obligation to update
forward-looking information should circumstances or management's
estimates or opinions change, except as required by law. Closing of
the transaction will be subject to receipt of all necessary
regulatory approvals and completion of definitive agreements.
Talisman defines "Tier 1" acreage as acreage with the potential
to have a breakeven of approximately USD $4/mcf.
Oil and Gas Information
In this news release, Talisman discloses contingent resources as
at July 1, 2010. Where not otherwise indicated, the contingent
resources included in this news release are best estimates.
Contingent resources are defined as those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology
under development, but which are not currently considered to be
commercially recoverable due to one or more contingencies. In North
America, the contingencies that prevent the resources from being
classified as reserves are: additional testing; production and
performance appraisal activities; demonstration of economic
viability; facilities and egress; access to equipment and services;
frac technology; commodity prices and regulatory approvals. There
is no certainty that it will be commercially viable to produce any
portion of the resources. Any resource data contained in this news
release reflects Talisman's internal estimates of its
resources.
Where not otherwise indicated, production volumes are stated on
a gross basis, which means they are stated prior to the deduction
of royalties and similar payments.
Contacts: Talisman Energy Inc. - Media and General Inquiries
David Mann, Vice-President, Corporate & Investor Communications
(403) 237-1196 (403) 237-1210 (FAX) tlm@talisman-energy.com
Talisman Energy Inc. - Shareholder and Investor Inquiries
Christopher J. LeGallais, Vice-President, Investor Relations (403)
237-1957 (403) 237-1210 (FAX) tlm@talisman-energy.com
www.talisman-energy.com
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